IMF approves $6.68bn loan for Pakistan
The Executive Board of the International Monetary Fund (IMF) approved today a 3-year arrangement under the Extended Fund Facility (EFF) for Pakistan in an amount equivalent to SDR 4.393 billion (US$6.64 billion1, or 425 percent of Pakistan’s quota) to support the country’s economic reform program to promote inclusive growth. The Executive Board’s approval enables an initial disbursement by the IMF of an amount equivalent to SDR 360 million (about US$544.5 million), and the remaining amount will be evenly disbursed over the duration of the program, subject to the completion of quarterly reviews.
US ambassador signs agreement for 50MW energy project
United States Ambassador Richard Olson, signed on Wednesday a $95 million, ten-year loan on behalf of the Overseas Private Investment Corporation (OPIC) to Sapphire Wind Power Company to build a 50MW wind power plant in Sindh. Situated in the Ghoro-Keti Bandar wind corridor near Jhimpir, the plant will be designed to generate 133-gigawatt hours of emissionfree electricity annually using 33 General Electric (GE) turbines. OPIC has invested in 123 projects in Pakistan since 1975. Its current Pakistan portfolio includes 14 active projects worth nearly $300 million in key industries including energy, health care, financial services for small and medium-sized enterprises, and telecommunications.
D.G Khan Expansion Plans
The DGKC directors also approved plans of setting up a green field cement production line of up to 2.6m tonnes a year at Hub, district Lasbela, on the land already acquired. The board also noted: “On the basis of due diligence we have decided to abandon the idea of establishing a plant in Mozam-bique due to lack of major infrastructure required to set up a cement plant.” Although several cement manufacturers admitted that the plans of D.G. Khan to go ahead with its expansion could widen the rift among cement producers, no one thought that a price war among producers was imminent.
T-bills auction: banks reluctant to invest
Banks are reluctant to invest in the long-term government securities mainly due to expected hike in the key policy rate. A very thin participation was witnessed in the auction of the Market Treasury Bills held on Wednesday and not a single bid was received for the sale of 6-month and 12-month T-bills as banks are expecting some increase in discount rate in the upcoming monetary policy to be announced on September 14, 2013. The State Bank of Pakistan (SBP) on Wednesday conducted auction of Market Treasury Bills (MTBs) and received bids only for 3-month T-bills, while not a single bid was received for 6-month and 12-month bills. As per expectations high participation was witnessed in the 3-month MTBs and bids worth Rs 87.925 billion (realized amount) were received. The cut-off yield for the three months T-bills continues to stay unchanged at 8.9583 percent with accepted amount of Rs 82.145 billion. As per auction calendar a target of Rs 250 billion was set for the 5th auction of MTBs, however against the target only Rs 82.145 billion was borrowed. Overall target for this quarter was Rs 1.6 trillion, while so far government has borrowed Rs 781 billion through five auctions in first quarter of FY14. Economists said the realized amount remained far below the targeted amount as the SBP seems unwilling to increase cut-off yield significantly.