Oil Drops Below $34 To Lowest in 5 Years

LONDON: Oil fell below $34 on Friday to its lowest level in almost five years as the global economic slowdown overshadowed OPEC’s record supply cuts.

U.S. light crude for January delivery fell $2.64 to $33.58 a barrel by 6:50 a.m. EST. It earlier touched $33.44, the lowest since early February 2004.

London Brent crude was trading 18 cents up at $43.54.

Oil prices have fallen by more than $110 from their peak above $147 in July. They look set for their second biggest weekly decline since 2003.

“Until traders see a sustained drop-off in the rate of demand destruction, the market will have a hard time establishing a floor,” Jonathan Kornafel, Asia Director of Hudson Capital Energy, said.

“From a credibility standpoint, OPEC has no choice but to bite the bullet for the next few months.”

Oil has continued to drop despite pledges by the Organization of the Petroleum Exporting Countries (OPEC) this week to remove 2.2 million barrels per day from its supply, which will be the largest ever reduction by the producer group.

OPEC kingpin Saudi Arabia’s Oil Minister Ali al-Naimi, speaking in London, said on Friday the kingdom would be pumping less oil in January and would be at its new output target in line with the group’s latest cut.

Other key markets were also falling on Friday. The dollar looked set for its biggest weekly decline since 1985 and world stocks fell as concerns about the U.S. economy worried investors in the last full trading week of 2008.

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Pentagon Awards $ 4 Bln Contract to Small Group

ARLINGTON, USA: Pentagon announced it has awarded a maximum 4.4-billion-dollar contract over ten years to SupplyCore, a small American logistics company.

SupplyCore, based in Rockford, Illinois, was provided an “indefinite quantity contract for support of tactical and non-tactical wheeled vehicle fleets” for the Army, Navy, Air Force and Marine Corps, a Pentagon statement said Thursday.

Three companies bid for the contract, it added.

The vehicles include the Humvee, Bradley, and M939 Series trucks. The 110-employee company will be tasked with providing parts and supply chain management services at Department of Defense facilities, SupplyCore said.

The contract “is one of the largest small business set-asides ever awarded by the Department of Defense,” SupplyCore said in a press release.

“SupplyCore was required to show they were competitive with the large businesses that competed for the contract in both price and delivery capability.

“As a leader within the small business community, SupplyCore is able to manage an extensive supply chain that includes many highly capable small manufacturers.”

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GM Refutes New Chrysler Merger Rumours

DETROIT, USA: General Motors said Thursday it had not renewed merger talks with Chrysler, as the automakers struggled to find survival options and a possible government rescue.

“There are no merger talks between GM and Chrysler,” said Tony Cervone, a GM spokesman.

“We stated in November that we tabled any discussion and are focused on our liquidity situation, and that position has not changed.”

The Wall Street Journal reported earlier that Chrysler was seeking to restart discussions on a merger to show the administration of President George W. Bush, currently considering a 14-billion-dollar rescue plan for the industry, that it wants to cooperate in restructuring the industry.

Citing people familiar with the discussions, the newspaper said Chrysler’s owner, Cerberus Capital Management LP, “is eager to make concessions in order to arrange a combination of Chrysler’s finance arm with that of GM.”

On Wednesday Chrysler said it was temporarily halting its manufacturing for at least a month, beginning Friday, in response to the credit crisis and ongoing debate on a rescue for the sector.

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DFID To Provide £ 50 Million For Micro Financing Banking

KARACHI: A UK-based Department for International Development (DFID) would provide assistance of 50 million pounds for the development of micro financing sector.

Governor State Bank of Pakistan Dr. Shamshad Akhtar said this while talking to media in a function organized for the issuance of fund for micro financing development.

Speaking at this occasion, Director DFID David Taylor said the assistance would be expanded to 480 million pounds within next three years.

Governor State Bank said efforts would be made to boost private and local investment whereas training would be given to those working in micro financing sector.

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Sensex in early trade reaches at 83 pts

Mumbai: After yesterday’s fall, the benchmark Sensex recovered by almost 83 points in the opening trade on Thursday on fresh buying by funds in software exporters and some other heavyweight stocks.

The Bombay Stock Exchange barometer, which had lost 261.69 points in a choppy session yesterday, moved up by 82.87 points to 9,798.16, with Banking, IT, Teck, Auto and PSU sector stocks trading in the positive zone.

The wide-based National Stock Exchange’s Nifty rose by 19.40 points to 2,973.75 points.

Stock brokers said reports that foreign funds, who have been major sellers during the year, made sizeable buying on the bourses this month, influenced the trading sentiments.

They said overnight gains up to 50 percent in Indian companies’ ADRs, led by Satyam Computers, even in a weak US market yesterday also had its positive impact.

Satyam Computers, which witnessed all-round selling yesterday, recovered by Rs 9.25, or 5.85 percent to Rs 167.30 after the company called off acquisition plan of two infrastructure businesses.

Other gainers in the Information Technology sector were Infosys Technologies, up Rs 16.15, or 1.42 per cent to Rs 1,155.95, Tata Consultancy Services by Rs 6.10, or 1.28 per cent to Rs 483.20 and Wipro by Rs 4.25, or 1.75 per cent to Rs 247.25, lifting the IT sector index by 2.20 per cent at 2,303.63 points.

Some other major shares trading firm on the bourses were largest domestic lender State Bank of India up by Rs 18.45, or 1.54 per cent to Rs 1,219.70, ICICI Bank Rs 7.780, or 1.78 per cent to Rs 439.50, HDFC Bank by Rs 18.95, or 1.89 per cent to Rs 1,021 and HDFC Ltd by Rs 11.05, or 0.72 per cent to Rs 1,544. Also in the green zone were Sterlite Industries, Tata Motors, Tata Power and BHEL.

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Most Asia Markets Climb After US Rate Cut

HONG KONG: Most Asian markets rose Wednesday after the U.S. Federal Reserve slashed its key interest rate to historic lows in an effort to pull the world’s largest economy out of recession.

Regional benchmarks opened higher after the central bank lowered its target rate for overnight loans between banks to a range of zero to 0.25 percent and promised to use “all available tools” to heal the U.S. economy.

Many analysts had expected the Fed would cut the rate to 0.5 percent from 1 percent.

In Japan, the Nikkei 225 stock average was down 0.2 percent, or 15.17 points, at 8,552.85 after initially rising 1.1 percent and South Korea’s Kospi also gave up early gains to fall 0.3 percent to 1,157.65.

Hong Kong’s Hang Seng Index rose 0.7 percent to 15,235.57 while benchmarks in mainland China, Singapore, Thailand and Indonesia added about 1 percent or more. Crude prices gained and the dollar swooned against the euro.

“Every central bank is pumping loads of liquidity into the markets and this is very positive for the markets,” said John Mar, co-head of sales trading, Daiwa Securities in Hong Kong.

Investors also were heartened by Wall Street’s reaction to the central bank’s announcement. The Dow rose 359.61, or 4.2 percent, to 8,924.14 and the broader Standard & Poor’s 500 index advanced 44.61, or 5.1 percent, to 913.18.

Wall Street futures fell modestly, suggesting a lower opening Wednesday in the U.S.

Hong Kong’s de facto central bank followed the Fed’s move by cutting its base rate by a full percentage point to 0.5 percent. Because the territory’s currency is pegged to the dollar, the Hong Kong Monetary Authority’s actions usually follow the Fed’s.

In currencies, the dollar was little changed at 89.92 yen, and the euro strengthened further to 1.4085.

Oil prices rose, with light, sweet crude for January delivery up 56 cents to $44.16 a barrel in Asian trade. The contract fell 91 cents to settle at $43.60 a barrel overnight.

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US Federal Reserve Reduced interest Rates

WASHINGTON: The dollar slid to 13-year lows against the yen in Asian trade Wednesday after the US Federal Reserve slashed interest rates to near zero as it struggles to curb an accelerating economic downturn.

The Fed lowered its target federal funds rate from 1.0 percent to a range of zero to 0.25 percent after a raft of bad data, including a historic plunge in housing starts.

The Federal Open Market Committee in a statement said it expected to keep the federal funds rate “exceptionally low” for some time because of markedly declining inflationary pressures.

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Asian Shares Down on Continued Economic woes

HONG KONG: Asian stock markets were mostly down Tuesday, tracking a drop on Wall Street as a tumble in Japanese business confidence and new signs of a China slowdown underlined worries in the region.

Those concerns deepened on news that HSBC, Europe’s biggest bank, and other major lenders faced heavy exposure to the alleged US$50 billion pyramid scheme said to have been run by one of the biggest names in US investing.

Tokyo was down 0.65 per cent, while Hong Kong was off 0.9 per cent and Sydney lost 1.3 per cent in early trade. Taiwan’s main index was 1.3 per cent lower, while New Zealand bucked the trend, up 0.65 per cent.

While some dealers thought the pre-Christmas lull was kicking in, sentiment was affected by the seemingly endless string of bad news coming out of the United States.

HSBC said it had exposure of about US$1 billion, while Europe’s second-biggest bank Santander said it had a US$3 billion exposure to Madoff Invest Securities.

Fortis Bank Netherlands said it could lose US$1 billion from the alleged scam, even though it had no direct exposure to Madoff’s company.

European shares dropped Monday on the news, with the CAC 40 in France off 0.87 per cent and the Dax in Frankfurt down 0.18 per cent. London’s FTSE 100 was flat, off 0.07 per cent.

In the United States, the Dow Jones Industrial Average lost 0.75 per cent while the Nasdaq tumbled 2.1 per cent.

The woes mounted Monday as Japan’s central bank said business confidence had suffered its sharpest drop in three decades.

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Reserve Bank of India Sells $20.6 Bns in October

The Reserve Bank of India is taking various measures to control further depreciation of rupee. The bank sold $20.6 billion in October as per the recently released bulletin of the bank. Rupee witnessed a record fall in October and is currently varying at 49-50.50 to a US dollar.

This huge decline in rupee value forced the apex bank to intervene. India’s foreign reserve also witnessed a record fall following the heavy sale of the dollar. The director and Principal economist at the rating agency, Crisil, Dr D. K. Joshi said that the sale of the dollars was necessary under the given circumstances. Variations in crude oil prices and flight of capital forced the apex bank to intervene.

RBI purchased $5.68 billion and sold $34 billion in the current fiscal leading to the liquidity crunch in the monetary system. However, the situation was eased following the various measures announced by the apex bank.

The bank had not sold dollars in the market in 2006-07. It added about $100 billion in India’s foreign reserve kitty in the financial years 2006 to 2008.

Country’s foreign reserve includes Euro, US dollar, Yen, UK Pound, Hong Kong dollar and Renminbi Yuan besides SDR and gold.

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$1.3 Billion Paid By Siemens For Fine

Washington: German corporate giant Siemens AG has pleaded guilty in a US court to a massive global corruption scandal that won it contracts around the globe from Argentina and Venezuela to Bangladesh, Iraq and Turkey.

The company Monday agreed to pay fines of USD 1.3 billion in two countries.

The multinational, which makes turbines, trams, telephone exchanges and other electrical products, admitted in the District Court in Washington that its executives paid kickbacks to win contracts using secret funds.

“Today’s filings make clear that for much of its operations across the globe, bribery was nothing less than standard operating procedure for Siemens,” US acting Assistant Attorney General Matthew Friedrich said.

The court-approved US penalty of USD 800 million is nearly 20 times more than any other foreign company has faced in the United States for corruption and comprises USD 450 million in criminal damages under the Foreign Corrupt Practices Act (FCPA) and USD 350 million in civil damages for violating stock exchange rules.

Siemens has also accepted a fine in Germany of USD 530 million (euros 395 million) so that parallel cases do not go to trial.

US officials said that Siemens employees had transported masses of money in suitcases across international lines, set up slush funds and used post-it notes on documents for executive signatures so they could be removed afterwards to erase the trail.

Three Siemens subsidiaries in Argentina, Bangladesh and Venezuela each also agreed to pay USD 500,000 fines.

Siemens was charged with bribing Argentine officials to get a contract for a USD 1-billion identity card project, Venezuelan officials in connection with two major mass transit projects and Bangladesh officials for a mobile telephone contract.

During Iraq’s oil-for-food programme managed by the United Nations before Saddam Hussein was deposed, Siemens AG or one of its subsidiaries also paid USD 1.7 million in kickbacks to the Iraqi government for contracts which netted them USD 38 million in profits, US officials charged.

All told, from the time Siemens was listed on the New York Stock Exchange in March 2001 through 2007, Siemens made payments of USD 1.36 billion to business consultants for unknown purposes, and underhand payments to foreign officials, US officials charged.

That conduct violated rules under the US Securities and Exchange Commission that forbid falsification of corporate books and insist on internal controls, said Linda Chatman Thomsen, director of enforcement at the SEC.

Friedrich did not rule out prosecution of Siemens executives who were connected to the scandal, but refused to give details.

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Oil Rises Above $47 On OPEC Cut Consensus

TOKYO: Oil bounced back $1 to trade above $47 a barrel on Monday on signs that OPEC members are set to make a deep supply cut when the oil cartel meets later this week, in an effort to prop up prices.

Rising equities and a weaker dollar also lent support to oil, which has lost $100 since its record high of over $147 in mid-July on growing fears of slowing world appetite for energy amid a mounting global financial crisis.

U.S. light crude for for January delivery rose $1.04 to $47.32 a barrel by 0207 GMT, having risen earlier to $47.41. The contract closed $1.70 lower on Friday after the U.S. Senate failed to pass a bailout for automakers and Goldman Sachs predicted oil could fall to $30.

London Brent crude gained 69 cents to $47.10.

“OPEC’s bullish comments on supply cuts, such as 2 million barrels per day, is supporting the price,” said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge in Tokyo.

“It’s also getting support from the dollar’s weakness against the euro and the yen at the start of the week.”

OPEC ministers are in agreement on the need to cut output when they meet on Wednesday in Algeria to prop up sagging prices, OPEC President Chakib Khelil said on Saturday, but declined to say by how much the organisation would cut.

Iran will propose that OPEC cuts its oil output by between 1.5 and 2 million bpd, Iran’s oil minister was quoted as saying on Sunday.

In two meetings since early September, the Organization of the Petroleum Exporting Countries (OPEC) has agreed to reduce supply by a total of two million barrels per day (bpd) but prices have continued falling.

“With global oil demand expected to continue falling through much of 2009, the pressure is on the cartel as well as non-OPEC producers such as Russia to remove excess production from the market,” said Jonathan Kornafel, Asia director of Hudson Capital Energy in a note.

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Sensex at Higher levels @ 12:59 Hrs

The market, which opened positive today, pared most of its earlier gains and come off from its day’s high due to some profit booking.

Metal, realty, consumer durables stocks saw heavy buying interest in today’s session.

BSE Midcap and Smallcap index gained 2.93% and 2.67% respectively.

At 12.59 p.m., the 30-share index Sensex stood at 9.813.00, up 122.93 points, after hitting an intraday high of 9,948.33 and an intraday low of 9,802.39.

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Only Exchange Firms’ Employees can Export Soft Currencies

KARACHI: As part of its ongoing drive to better regulate foreign currency transactions, the State Bank of Pakistan (SBP) on Friday made it mandatory for exchange companies to use only their employees to export soft currencies. The directives have been issued for registered exchange companies, which are allowed to export foreign currencies other than the US dollar, pound sterling, euro and UAE dirham.

It has also been made compulsory for these companies to finalize the deal with overseas entity (buyer) before the shipment of each export consignment. “System generated deal ticket (specifying consignee name, address, contract details, amount, exchange rate, etc) must be accompanied with each request for exporting permissible foreign currencies,” a SBP circular said.

These directives were part of the Central Bank’s “elusive” efforts to strengthen monitoring of foreign exchange dealings, as loopholes in relevant laws did not allow it to take effective measures. In the light of this development, an employee of an exchange company would now have to show his appointment letter at the SBP-custom manned booths at airports before he proceeded on to journey abroad, they said.

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India-Pakistan Trade Talks Postponed

ISLAMABAD: Pakistan India trade talks scheduled in this month have been postponed in the wake of the situation created after terrorist attacks in Mumbai last week, sources here said.

According to the trade ministry sources, India has put on hold all ongoing official initiatives to perk up bilateral trade.

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Devaluation No Longer An Option, Says Latvian Finance Minister

Riga: The Latvian government and the International Monetary Fund (IMF) discussed devaluation of the national currency, the lat, during negotiations on an economic assistance package, finance minister Atis Slakteris told an extraordinary session of the Latvian parliament Thursday.

But while the option had been considered during the still ongoing negotiations, devaluation had been dismissed as a viable method of tackling the economic crisis in the Baltic state, he said.

Slakteris bemoaned the fact that a downturn in Latvia’s economy, which has been booming for more than a decade, had coincided with the global credit crunch to produce a particularly dangerous situation.

“Unfortunately we have seen these falls at the same time. Latvia has never experienced such a fall as this year,” said Slakteris.

Prime minister Ivars Godmanis told parliament that spending cuts would need to be even bigger than previously anticipated, amounting to around 600 million lats (1 billion dollars) rather than the 320 million (570 million dollars) lats planned in November’s budget.

“These are serious numbers,” Godmanis said, adding that revised plans would be put to parliament on December 19.

The prime minister also defended the government’s decision of the previous evening to increase the state’s stake in troubled bank Parex to 84 per cent instead of the 51 per cent previously announced.

“The government’s decision was made to ensure the interests of depositors and enable the lifting of restrictions as soon as possible,” said Godmanis.

Experts from the IMF and European Commission had advised that a larger proportion of state ownership would make it easier to provide financial assistance to the economy of the Baltic state.

Around 60 different creditors including Japan’s Mizuho, Germany’s Commerzbank and Austria’s Raiffeisen need to agree the terms under which they will be repaid 980 million dollars’ worth of loans if Parex is to survive.

Slakteris has been authorised to speak directly to lenders of syndicated loans and attempt to win favourable repayment terms.

Opposition parties accused the government of “bankruptcy” and Solvita Aboltina, leader of the opposition New Era party made an emotional appeal for the formation of a government of national unity to win back public trust. (dpa)

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Bigwigs Involved In Financial Scam

ISLAMABAD: Advisor to Prime Minister for Interior Rehman Malik said the dollars are being smuggled to Afghanistan, adding there are important names involved in financial scam, which he could not reveal forthwith.

Addressing a press conference here, he said the investigations found a transaction of Rs104 billion from a computer of Kalia Brothers.

Only three serves could have been de-coded by now, he said.

Rehman Malik said that the stabler is Pakistani currency, the better, as it would help make the economy stronger.

he added, ‘When the action was taken the dollar stood at Rs89 in open market, now we have taekn down to Rs77.”

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Gold Steady As UK Slashes Interest Rates to 57-Year Low

The loss in confidence and accompanied fear is weighing heavily on commodities.”

Following hot-on-the-heels of Wall Street’s 5% drop and a 7% loss in most Asian stock markets overnight, the FTSE100 index of blue-chip UK equities sank 200 points to a five-session low in morning trade.

The Dax index in Frankfurt dropped 230 points to stand 8.5% below this point in Oct.

Crude oil fell back towards $64 per barrel, while copper and zinc futures both lost 5% from their opening levels in London.

Government bond prices rose sharply worldwide, pushing the yields paid to investors lower.

“Gold’s failure yesterday created a double top in the Dec. Gold Futures contract at the $770 area,” says today’s technical note from Mitsui, the precious metals dealer in London.

“The move below $750 has increased the physical off-take [for jewelry, industrial and physical Gold Investment use], and this should support the market in the short term. Look for minor support at the $733 area followed by major support at $720.”

On the data front this morning, UK house prices were reported 14.9% lower in Oct. from 12 months before – a record rate of collapse – while car sales fell at their fastest pace in 17 years.

Over in Germany – the world’s third largest economy – new factory orders sank 8% in Sept. from Aug. the official data agency said this morning, wildly outpacing analyst forecasts.

Late last month, truck-maker Volvo reported European sales of just 115 units for the third quarter, down from almost 42,000 trucks sold between July and Oct. 2007.

“The risks to inflation have shifted decisively to the downside,” said the Bank of England as its slashed UK interest rates by 1.5% this morning – the deepest one-day cut in 24 years.

Now costing just 3.0% per year from the Bank of England, the British Pound is now cheaper to borrow than at any time since the post-war low of 1951. Yet ahead of the European Central Bank’s decision due at 12:45 GMT, the British Pound fell only briefly on the forex market, dipping to $1.5750.

That helped the Gold Price in Sterling hold above £466 an ounce. For Eurozone gold investors, the price stuck at €574.

“After the world rally on the day of the US presidential election, investors have now shifted their focus to how fast, and how well the new administration will address the current economic issues,” reckons Yoo Soo-Min, an analyst with Hyundai Securities in Seoul, speaking to Reuters.

President-elect Obama is now rumored to be selecting his administrative team, starting with a Treasury secretary to replace the discredited former Goldman Sachs CEO – and key supporter of the $700 billion banking bail-out – Henry Paulson.

Candidates are said to include Timothy Geithner – president of the New York Fed and a regular supporter of low US interest rates – as well as former Treasury Secretary Lawrence Summers (now a Harvard professor) and even arch-inflation-fighter and former Fed chairman Paul Volcker.

Now in its final 60 days, the Bush administration yesterday moved to push through a $25 billion support package for US auto-makers. House of Representatives speaker Nancy Pelosi wants that package increasing to $61bn “with no strings attached.”

Today in Tokyo, Japan’s Toyota Motor Corp. cut its profit forecast in half, predicting a nine-year low ¥600 billion for the year to end-March vs. a previous forecast of ¥1.6 trillion.

Tokyo stock-brokers had expected to see operating profits of €1.34trn.

Meantime in the Gold Mining sector today, Randgold Resources – the London-listed African gold miner – reported third-quarter output down 12% from April-to-June.

Cash-costs per ounce rose by one-eighth.

Over in Caracas, Venezuela yesterday, the socialist government of Hugo Chavez announced that it’s seizing control of the giant Las Cristinas project belonging to Canadian Gold Miner Stock Crystallex.

After seizing control of steel, energy and cement-producing assets deemed to be “strategic”, mining minister Rodolfo Sanz told a radio interviewer that the 16-million-ouunce mine “will be recovered and will be operated under state administration.”

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Oil Falls to 3-Year Low Below $46

SINGAPORE: Oil prices sank to fresh 3-year lows Thursday in Asia as more bleak news from the world’s largest economy signaled that crude could tumble below $40 by the end of the year.

Light, sweet crude for January delivery was down 88 cents to $45.91 a barrel — the lowest since closing at $45.42 on Feb, 10, 2005 — in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell 17 cents overnight to settle at $46.79.

“You could see prices testing $40 by the end of the year because the economic data is really ugly at the moment,” said Christoffer Moltke-Leth, head of sales trading at Saxo Capital Markets in Singapore. “Demand destruction is still very much the concern.”

Oil prices have tumbled about 69 percent since peaking at $147.27 in July.

The Organization of Petroleum Exporting Countries has signaled it plans to lower output quotas at a Dec. 17 meeting, adding to a production cut of 1.5 million barrels a day in October.

Analysts are skeptical that an output reduction by OPEC can reverse the fall in the prices.

“I don’t think it will have a major impact in the near term,” Moltke-Leth said. “However, low prices will increasingly lead drilling and exploration projects to be postponed or canceled, so supply will become a concern in the medium term.”

In other Nymex trading, gasoline futures fell 2.12 cents to $1.02 a gallon. Heating oil dropped 1.65 cents to $1.57 a gallon while natural gas for January delivery slid 2.7 cents to 6.32 per 1,000 cubic feet.

In London, January Brent crude fell $1.24 to $44.20 on the ICE Futures exchange.

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NEPRA Approves Increase in Electricity Tariff

LAHORE: The National Electric Power Regulatory Authority (NEPRA) has allowed the power supply companies to increase their power tariff from Rs 1.18 to Rs 2.13 per unit.

According to A Pakistan News, the increase has been allowed “in respect of the monthly adjustment of power purchase price for the month of October”. A proposal in this regard has been sent to the federal government for approval.

“A summary favoring a gazette notification has been sent in this regard to the government for immediate approval,” said news reports.

The decision follows applications by power supply companies seeking an increase in power prices to adjust for an increase in power purchase prices in October.

NEPRA approved an increase of Rs 1.18 per unit for the Hyderabad Electric Supply Company (HESCO), Rs 1.27 per unit for the Islamabad Electric Supply Company (IESCO), Rs 1.39 per unit for the Multan Electric Supply Company (MESCO), Rs 1.76 for the Faisalabad Electric Supply Company (FESCO), Rs 1.78 for the Gujranwala Electric Supply Company (GESCO), Rs 1.85 for the Quetta Electric Supply Company (QESCO) and an increase of Rs 2.13 per unit for the Peshawar Electric Supply Company (PESCO).

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IMF Makes Pakistan Credit Conditions Public

International Monetary Fund has finally released the strings attached to its Pakistan credit, which binds the government of Pakistan not borrowing any more during the current fiscal year from the State Bank of Pakistan, while the subsidy on electricity would be withdrawn by June 2009. International Monetary Fund (IMF) has made public the binding clauses incorporated in the finalized agreement for $7.6 billion loan extended to Pakistan. IMF 23 months long loan program conditions spread over a document containing 24 pages said that Pakistan would have to raise its national growth rate to 7 percent and bring down the inflation rate to 5 percent by 2012, while the target of keeping the foreign current account deficit restricted to $10.6 billion i.e. 6.5 percent of the GDP by the end of the current fiscal year has been given. The target for Pakistan’s economic growth for the next fiscal year has been set at 5 percent, while that of inflation at 13 percent.

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