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    Foreign debt reduced to 36 billion...

    Although still a long way to go, but a step in right direction.
    http://www.dawn.com/2002/06/11/ebr3.htm

    Foreign debt reduced to $36bn: Ishrat


    By Our Reporter

    LAHORE, June 10: State Bank Governor Dr Ishrat Hussain has said that the stock of external debt and liabilities had been reduced from $38 billion in October 1999 to $36 billion this month for the first time in the history of the country.

    Speaking at a pre-budget seminar here on Monday the SBP Governor said that the country had also repaid expensive commercial and short term debt to the extent of $4.5 billion and contracted new soft term concessional loans of $2.5 billion instead. The country had also generated current account surplus for the first time in many decades and had enough reserves to cover six months' exports. The inflation rate had slowed down from 5 per cent in 1999 to less than 3 per cent at present.

    He said that the government had not only reduced the debt but also paid back $5.8 billion to the foreign lending agencies over and above the total loans provided to the country since October 1999. The lending agencies provided $5.9 billion to Pakistan during the period and received $ 11.7 billion in the form of repayments.

    He said that the biggest quantum leap in the forex reserves had taken place between July 2000 and June 2001 i.e, well before September 2001. The reserves had increased to $ 3.8 billion during the period.The pace of increase slowed down between July 2001 and May 2002 despite all the external grants,saving in oil imports and huge inflow of workers' remittances. The reserves have increased to $5.56 billion during the last 11 months.

    He said that the impression that the Poverty Reduction and Growth Facility of the International Monetary Fund and Structural Adjustment Credit facility of the World Bank had not been made available to Pakistan due to its support to the US campaign against terrorism was far from the truth. Negotiations with both the institutions had been concluded and documents circulated for the approval well before September 11. The PRGF and SAC had been earned by the people of Pakistan by making sacrifices for meeting the conditionalities of the World Bank and the IMF standby programme for year 2000.

    Dr. Ishrat Hussain said that the SBP had taken major and minor actions against certain banks and financial institutions for violations of rules and regulations or betrayal of the confidence of depositors. For the first time in the history of the country the licence of a scheduled bank had been cancelled and the decision had been upheld by the court.

    He said that the SBP had also changed the ownership and management of another scheduled bank and transferred it to a sound investment house. It had also forced the merger of a major development financial institution NDFC, which had become almost bankrupt, with a strong and large commercial bank. The depositors did face some inconvenience for a few days but they got their every single penny back.

    He said that all the development finance institutions had been closed because 80 to 85 per cent of their loans were non- performing. The profit rates of 17 to 18 per cent offered by the DFIs had to be subsidized as a result. He said that SBP had also removed the directors of a major bank from the board and debarred them from holding office in any other banking institution. All actions were taken in accordance with the provisions of the Banking Companies Ordinance.

    He said that the government planned to reform the banking sector completely. Nationalized commercial banks were being privatized and small banks were being encouraged to merge into a fewer but stronger banks. Capital adequacy ratios were satisfactory and minimum capital requirements were being raised. Non-performing loans were being recovered, restructured and transferred to CIRC. The profitability of the banking sector had improved as a result of the regulatory controls.

    Secretary General, Finance, Moin Afzal said that domestic savings rate had decreased substantially due to decrease in profit rates. He said that the government was encouraging private sector instead of the public sector because of huge losses in the latter. Only the KESC had left a hole of Rs92 billion in the exchequer.

    He said that the current account deficit of 4 per cent was high and should be 1.5 per cent for a country like Pakistan. He said that foreign debt burden was only $12 billion in 1980 and came to 66 per cent of the GDP. The sustainable debt-GDP ratio was 60 per cent. The debt service was 20 per cent of GDP in 1960's and had increased to 102 per cent of GDP at present. The GDP growth was 2.6 per cent last year and was expected to grow to 3.6 per cent this year. It could have increased to 4.5 per cent if drought had not hit the country.

    He said that the happenings of September 11 had affected exports. There was, however a surge in foreign remittances last year. Inflation had come down to 2.5 per cent this year. Its average rate during the past three years was 3.5 per cent. High inflation was the worst tax on the poor and the fixed income groups. Exports had increased from $7.5 billion in 1999 to $9 billion this year.

    He said that the SBP was working on a real time payment and settlement plan whereby the banking customers would be able to carry out transactions throughout the country on the same day without waiting for cheques to be cleared in a week. The SBP had also initiated the reform of payments system recently. It would take at least two years to produce any discernible results. He said that the SBP's target of money supply was 9 to 10 per cent annually and was closely adhered to.

    He said that the SBP had made purchases of $4 billion from the kerb market for bolstering up its reserves and ensuring repayment of installments of foreign loans in time.

    [This message has been edited by ZulfiOKC (edited June 11, 2002).]

    [This message has been edited by ZulfiOKC (edited June 11, 2002).]
    Unity, Faith & Discipline....
    --Jinnah

    #2
    Perfect. It reduced to 2 billion within 2 years Now, by having trade relations with other countries, we'll see some positive result afterwards Godwilling

    LONG LIVE PAKISTAN

    Comment


      #3
      I hope when the new govt sworns in after elections, it does not swell up to previous limits

      Comment


        #4
        Originally posted by Pakistani Tiger:
        Perfect. It reduced to 2 billion within 2 years Now, by having trade relations with other countries, we'll see some positive result afterwards Godwilling

        LONG LIVE PAKISTAN
        Absolutely true. Also, what we need to do is explore non- traditional ventures, like the Indians have developed their diamond industry.
        Unity, Faith & Discipline....
        --Jinnah

        Comment


          #5
          No offence guys, but didn't we see a news item that the new IMF inflow increased the debt by 2 billion dollars (though to a softer interest rate)


          Is this 2 billion decrease after the increase or before the increase?

          Comment


            #6
            Originally posted by kumarakn:
            No offence guys, but didn't we see a news item that the new IMF inflow increased the debt by 2 billion dollars (though to a softer interest rate)


            Is this 2 billion decrease after the increase or before the increase?
            kumarakn ji, the news items clearly states that till May 2002, Pakistan's total debt was $38 billion, and in June 2002 it's $36 billion.

            Unity, Faith & Discipline....
            --Jinnah

            Comment


              #7
              yes you are right, it is the total loan (including the fresh loans borrowed by Pakistan).

              also, the loan amounts are not compared from may 2002 to june 2002. It is compared from october 1999 (when Military took over) to june 2002.


              to be exact the break up is as follows:

              Oct 1999 Loans in hand - 38.00 Billion
              New loans - 5.90 Billion
              Loans repaid -(11.70)Billion
              Interest accumlated - 3.80 Billion
              -----------------------------------------
              Total as of today - 36.00 Billions


              [This message has been edited by kumarakn (edited June 11, 2002).]

              Comment


                #8
                The government had not only reduced the debt but also paid back $5.8 billion to the foreign lending agencies over and above the total loans provided to the country since October 1999. The lending agencies provided $5.9 billion to Pakistan during the period and received $ 11.7 billion in the form of repayments.


                Kum ji, if you read the article it gives you further insight.
                Unity, Faith & Discipline....
                --Jinnah

                Comment


                  #9
                  Originally posted by kumarakn:
                  yes you are right, it is the total loan (including the fresh loans borrowed by Pakistan).

                  also, the loan amounts are not compared from may 2002 to june 2002. It is compared from october 1999 (when Military took over) to june 2002.
                  I'm sorry, I meant to type in October 1999.

                  Unity, Faith & Discipline....
                  --Jinnah

                  Comment


                    #10
                    Just came across this one....
                    http://www.balochistanpost.com/item.asp?ID=2131


                    36 billion is expected to become 38 billion in 4 months.

                    Comment


                      #11
                      ha ha..... So this is where they are spending money they got from US...After betraying thier "best freind" Taliban...

                      they says True muslims are always Faithfull to thier Friends....
                      Means Pakistani are not Muslims...

                      Comment


                        #12
                        Originally posted by kumarakn:
                        Just came across this one....
                        http://www.balochistanpost.com/item.asp?ID=2131


                        36 billion is expected to become 38 billion in 4 months.

                        I can't expect it would become 38 billion.

                        Future is always uncertain!

                        LIVE & LET LIVE


                        [This message has been edited by Pakistani Tiger (edited June 12, 2002).]

                        Comment


                          #13
                          Originally posted by munnu:
                          ha ha..... So this is where they are spending money they got from US...After betraying thier "best freind" Taliban...

                          they says True muslims are always Faithfull to thier Friends....
                          Means Pakistani are not Muslims...
                          Huh? Who the hell you are to say Pakistanis are good Muslims or not?

                          I, personally, never liked Talibans. Those who like them are Extremists. Do you want me to count you as a pro-supporter of VHP/RSS?


                          LIVE & LET LIVE

                          Comment


                            #14
                            Originally posted by munnu:
                            ha ha..... So this is where they are spending money they got from US...After betraying thier "best freind" Taliban...

                            they says True muslims are always Faithfull to thier Friends....
                            Means Pakistani are not Muslims...

                            Munnu ji, the topic of the thread is "Pakistan's debt has been reduced". Therefore, please stick to the topic. However, if you do want to participate in Pakisan- Taliban relationship, I would recommend that you post it in the related comment, or post a new thread...
                            Unity, Faith & Discipline....
                            --Jinnah

                            Comment

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