FINANCE

 

Sept  29 - Oct 05 , 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF


ADB TO PROVIDE $200M FOR SME SECTOR UPLIFT

The Asian Development Bank last week proposed $200 million for the SME sector development programme for this year to further strengthen the private sector by providing better access to finance for SMEs, capacity building, partial credit guarantee facility to financial institutions to increase their capacity and restructuring of SME Bank. Speaking at a seminar on "ADB Private Sector Development Strategy", ADB Country Director Marshuk Ali Shah

 

observed that Pakistan

 

was the single largest recipient of the bank's direct assistance to the private sector amongst all development member countries of the ADB.

Total assistance to the sector now stood at $402 million (Rs14 billion), including $241 million as assistance to private sector enterprises and over $129 million as complementary loans. In addition to the direct assistance provided to the private sector, the ADB generates business opportunities for the private sector through its public sector activities and helps governments create enabling conditions for private sector investment. In this connection, it had provided more than $2 billion so far. He said an SME Sector Development Programme for $200 million was proposed for this year.

Privatization and Investment Minister, Dr Hafiz Sheikh, on the occasion assured the Asian Development Bank of his government's full support in its programme for strengthening private sector, particularly the SME sector in view of its role in economic development. The minister commended the ADB's decision to launch a Public-Private Infrastructure Finance Project for $200 million. Referring to his experience of working with the World Bank and as adviser to the government of Sindh, he said it was for the government to set the pace for multilateral agencies in the initiatives for development and not vice versa.

RS70BN DEBT RAISED THRU PIBS IN '02-03

The government raised more than Rs70 billion local debt through sale of long-term Pakistan Investment Bonds in fiscal year July/June 2002/03 against the initial target of Rs25 billion. Senior bankers say what forced the government to increase its borrowing through PIBs to this extent was a one-time big auction of Rs30 billion bonds towards the close of the last fiscal year.

The government did this to increase the yield on these bonds that serves as a benchmark for determining the rates of return on national saving schemes. But generally the government borrowing through PIBs overshot the target because it helped the government retire more expensive debt secured through national saving schemes in the past. Government sources say that Rs25 billion target set initially in the last year budget for borrowing through long-term bonds was indicative in nature.

OPIC MAY NOT APPROVE FINANCING FOR TEXTILE

The textile sector may not be considered for project financing out of the $100 million facility, the Citibank has earmarked for project financing after entering into a risk-sharing participation agreement with Overseas Private Investment Corporation (OPIC) of the USA. Top bankers well versed with OPIC financing said the textile sector would not be able to get project financing under this facility primarily because OPIC would not approve of it. The reason is that the US itself is a textile exporting country and OPIC normally does not encourage financing of textile sector of the competing nations. When a bank makes loans under a facility approved by OPIC for risk sharing it normally has to seek the OPIC approval for the reason that OPIC being a party to it has to evaluate all risks involved.

 

PTCL DECLARES 35PC DIVIDEND

Pakistan Telecommunication Company Limited (PTCL) declared dividend at Rs3.50 (35 per cent) for the year ended June 30, 2003 and net earnings slightly above Rs23 billion, beating analysts' forecasts on both counts. Market was expecting the telecom giant to announce dividend at Rs3 (30 per cent) per share and post after tax profit in the range of Rs21.2 to Rs21.8 billion.

PICIC TO SET UP INSURANCE COMPANY

Pakistan Industrial Credit and Investment Corporation (PICIC) proposes to establish an insurance company that would offer general insurance services.PICIC already owns a commercial bank and had recently expressed intention to launch into consumer financing. The PICIC board also declared right issues for all the 13 ICP funds under PICIC management. The 13 ICP funds constitute Lot 'B' and comprise 2nd; 5th; 6th; 7th; 9th; 10th; 13th; 14th; 16th; 17th; 18th; 22nd and 24th Mutual Funds.

GOLD SHOOTS UP

Gold prices have shot up by Rs168 per 10 grams in the local markets to close at Rs7,210 on September 22 from Rs7,042 per 10 grams on September 18, as a result of rising international prices in the world markets.

SLIC HOLDS 82PC MARKET SHARE

With State Life Insurance Company of Pakistan (Slic) still clinging on to the lion's share of 82 per cent of the life insurance market in Pakistan, the four private sector life insurance companies are struggling to wrest their portion of the business, with mixed success. Ten years down the road, following the re-opening of life insurance business to the private sector in 1993, progress, albeit slow, is noted in the four companies all listed at the stock market.

At the close of last financial year ended December 31, 2002, the total gross industry premium stood at Rs10,288 million, of which Slic commanded 81.5 per cent. Among the private companies, EFU Life took the lead with 10.64 per cent; Commercial Union followed with 5.2 per cent; American Life Assurance held 2.42 per cent and Metropolitan Life the tinniest of the companies eked out just about 0.22 per cent of the gross premium. Total premium underwritten by the private sector companies during the year was up by 23.7 per cent over the earlier year.