Dec 16  - Dec 22 , 2002










Banks disbursed Rs12 billion fresh credit to the private sector in the last two weeks of October this year and bankers have said the pace of disbursement may show further pickup from November onwards.The State Bank cut its discount rate by 1.5 percentage point to 7.5 per cent in a belated move on November 16 and on November 27 it lowered the benchmark six-month treasury bills yield also by 1.5 percentage points to 4.6 per cent.


The twin move has made it very difficult for the banks to continue to invest surplus funds in government securities and they are now finding ways to lend more to the private sector.

Bankers say that the Rs12 billion fresh credit disbursement in the last two weeks of October was due to seasonal pickup in credit demand mainly on the back of cotton financing. They say that with the start of sugarcane crushing last month the private sector credit would show an upward movement in November onwards adding that the rate cuts would also increase credit offtake as banks have started offering cheaper loans to selected clients after November 16.

The credit plan for this fiscal year envisages Rs94.7 billion credit for the private sector but at the end of October net credit offtake was still at minus Rs798 million. But despite the net credit being still negative the last two weeks of October saw Rs12 billion fresh borrowing from the private sector due to a pickup in demand.

Bankers say that net credit to private sector has been on the rise from November onwards but statistics are yet to pour in as the banks take some time in compiling credit data from across the country.

But they say that the target of Rs94.7 billion may be missed as they do not foresee any dramatic increase in private sector credit demand. The new democratic government that has retained two key economic managers of the military regime is following the economic policies of the past which Pakistan had to formulate in conformity of the IMF-World Bank prescriptions.


Pakistan, Afghanistan and Turkmenistan will sign a tripartite Gas Pipeline Framework Agreement at a summit meeting in Ashkabad on Dec 26-27 to formally launch the $3.2 billion Trans-Afghanistan Pipeline Project, a senior government official said this the other day.

"Subject to confirmation of dates by the heads of the states, the tripartite summit would take place in Ashkabad on Dec 26 to sign the agreement," secretary petroleum M. Abdullah Yousaf said.

It was, however, unclear yet whether the president or the prime minister would represent Pakistan at the Ashkabad summit, said the secretary petroleum who had a meeting at the prime minister secretariat earlir.

Accordingly, a steering committee meeting scheduled for Dec 16-17 in Islamabad is being postponed till February next year. "The steering committee meeting is now likely to be postponed till February next year," he confirmed.


The International Monetary Fund believes that the present government must have a strong political will to sustain the ongoing reform agenda relating to devolution, civil service, tax policy and public financial management.

Sources in multilateral agencies said that IMF was very much concerned whether the present government will be able to implement reforms initiated by President Gen Pervez Musharraf.

The new government, sources said, was being expected to fulfil all the conditionalities attached to three years $1.3 billion Poverty Reduction Growth Facility.

Pakistan has already acquired four instalments of the PRGF and fears were being expressed that remaining tranches could be withheld in case the new government continued what was termed "relaxing the conditionalities on its own".


Industries and Production Minister Liaquat Ali Jatoi has said the government intended to set up "one desk operation" to provide facilities to local and foreign investors.

"I will get the approval of setting up the one desk operation from the cabinet in the next meeting," he recently told a large gathering of businessmen and industrialists at the head office of Site Association of Industry.


Prime Minister's Adviser on Finance and Economic Affairs Shaukat Aziz has estimated a backlog of 5.38 million housing units in the country which represent a big demand for housing finance and calls for an active role of banks.

Inaugurating a two-day Housing Finance Conference organized by the State Bank of Pakistan recently, the adviser has estimated total housing finance demand close to Rs68 billion if commercial banks design products for construction of at least half-a-million housing units every year in the country.


Prime Minister's Adviser on Finance Shaukat Aziz said that foreigners' traffic to Lahore and Islamabad had somewhat improved lately, but Karachi remained a problem city mainly because of a negative image.

Responding to a question in a businessmen meeting of Karachi Chamber of Commerce and Industry, the adviser said the government was pursuing hard to erase a negative image of the country created by 'no travel advices' to Pakistan by some of the governments to their respective nationals.


Iran's reformist President Mohammed Khatami is expected to visit Pakistan by the end of this month, informed sources told this the other day.

Foreign Secretary Riaz Khokhar and Additional Secretary Aziz Ahmed Khan left for Tehran to extend to the Iranian President a fresh invitation from the newly elected government.