ISLAMABAD, Dec 14: Pakistan has decided to back its upcoming Islamic bond 'Sukuk' with some of its non-productive assets as security which will be taken back by the government later, says State Bank Governor Dr Ishrat Husain.
Talking to reporters after the conclusion of a two-day closed-door conference on micro-finance, the central bank chief said he was not fully aware as to which assets had been selected for this purpose. "The list of these assets is with the finance ministry," he added.
He said the Sukuk would be floated next month but it could not be said at this moment whether it would be $500 million or $1 billion because the size of the bond would depend on market response and the pricing.
Dr Ishrat said the inflow of Islamic bond proceeds in January would improve and stabilize foreign exchange position. He said Pakistan had repaid last week $172 million interest on about $600 million worth of Eurobond floated in the late 1990s and its last instalment of $160 million would be repaid next year.
Responding to a question, the State Bank governor said the principal amount of the old Eurobond had already been repaid. "After the repayment of last interest payment of $160 million next year, Pakistan will have to finance the repayments of fresh $500 million Eurobond launched last year."
Dr Ishrat said the net non-operating loans of the banking sector had reduced to Rs60 billion and recovery rate of the new advances since 1997 had gone up to 95 per cent and the quality of loans had improved since then.
He said about 51,000 borrowers had benefited from the central bank's loan resettlement scheme. He said the banking sector had claims worth Rs80 billion against these borrowers but the final figure of the settled amount had not yet been reported to the SBP.
In reply to a question, the SBP governor said there was nothing wrong with the current account deficit because investment in developing countries should be higher than savings.
State Bank's clarification
By Our Staff Reporter
ISLAMABAD, Dec 16: The assets of the government of Pakistan will be sold to Pakistan International Sukuk Company (PISC) which will issue Ijara Sukuk to the investors and lease these assets to the government of Pakistan.
The SBP, clarifying a news item published in Dawn on Wednesday, said that the government would pay the periodical rentals on these Sukuk and purchase the same assets on maturity.
The spokesman said the SBP had repaid last week $172 million as principal and interest on the Eurobond floated in late 1990s. He said the last instalment of the principal and the interest on these bonds amounting to $172 million would be paid in December 2005.
