November 14, 2001	Wednesday	Shaba’an 27, 1422

KARACHI, Nov 13: The State Bank of Pakistan is releasing the report on economic performance during first quarter of this fiscal (July-September 01) in last week of this month.

Officials put November 26 as the tentative date for public release of this report. Bankers say that an improvement in dollar-rupee parity rate in open currency market during September and a marginal rise in remittances are the positive developments that the Central Bank would like to project in its next report.

“In absence of any visible improvement in the macroeconomic indicators, the sustainability of dollar-rupee parity in kerb remains doubtful,” a banker remarked. He pointed out that Pakistan’s international trade is under tremendous pressure. Never before in history, not even during 1965 and 1971 wars, Pakistan international trade has come under such pressures as it has been.

“Wait for one more month to fully assess the impact of narrowing down of kerb and inter-bank exchange rates on the remittances,” a senior banker in a nationalised bank remarked. He believes that the flow of remittances through banking channels has increased marginally from Middle East after reports of strict monitoring and vigilance. “Let’s see if this trend sustains,” he said.

“Hawala and hundi are now under pressure in the Middle East,” another banker said while explaining the rise in remittances. But then hawala and hundi are the normal channels of money transfer not only in Pakistan but in entire South Asia, bankers say and anticipate the revival of hawala and hundi business in coming months if not weeks.

Another significant development in the first quarter of 01- 02 is the two per cent cut in lending rates. The cut in lending rate has come at appropriate time as cotton and sugarcane season sets in and there is a demand on banks. Bankers expect that the Central Bank will give some indications of credit demands by the various sectors particularly by the textile and sugar.

But the main event of the quarter will be the rise in foreign exchange reserves beyond 3.5 billion dollars mark. Never before in last more than one decade, Pakistan ever boasted of having foreign exchange reserves of this level thanks to the frequent dollars purchase by the Central Bank.

The uncertainty that set in after September 11 collapse of USA’s military-industrial complex symbols became more pronounced after October 7 when the US launched air raids on Afghanistan. Fall of Mazar-e-Sharif and reports of take-over of Kabul by Northern Alliance in Afghanistan is bound to further aggravate the situation triggering a new wave of Afghan refugee influx in Pakistan.

Bankers hope that the State Bank report of July-September 01 will be able to quantify all the promises and pledges made by Pakistan’s new found friends in the West.

The Central Bank in its annual report for 2001-02 released on October 30 has predicted the “medium term prospects for Pakistan, under the heightened uncertainty, following the Sept 11 attacks as highly tentative and mostly speculative.”

The global forecast for next 9 months is likely to be much more severe than earlier projections.