ISLAMABAD, June 8: The government purchased $15.254 billion in four-and- half years from the open market to build up foreign exchange reserves amounting to $12.5 billion at a cost of Rs25 billion, the National Assembly was told on Monday.
According to statistics placed before the House, the State Bank of Pakistan (SBP) incurred a loss of Rs25 billion in the deal to purchase $15.254 billion from the open market from November 1998 till June 2003.
The information was revealed to the House in response to a question by Pakistan Peoples Party Parliamentarians (PPPP) MNA Naveed Qamar who had asked the finance minister to let the house know the total amount of dollars brought by the State Bank of Pakistan (SBP) from the market, the agents through which the transactions occurred and the annual profit or loss accrued.
The information placed before the House revealed that out of the total amount of $15.254 billion purchased from the open market, SBP bought $4.546 billion in 2002-03, $3.930 billion in 2001-02, $2.888 billion in 2000-01, $2.500 billion in 1999-2000 and $1.390 billion in 1998-99.
The parliamentary secretary for finance, Umer Ayub, responding on behalf of the finance minister, informed the House that local purchases played an important role in increasing the foreign exchange reserves and it was a holistic approach.
In the written response, the government told the House that purchases were made directly from various banks to mop up liquidity from the banking system as well as to build up foreign exchange reserves for meeting debt and international obligations.
The annual transaction loss occurring on account of purchase of dollars from the open market was highest during 2000-01 when it stood at Rs9.817 billion. The figures placed before the House showed that the national exchequer suffered losses on account of purchase of dollars amounting to Rs4.6 billion during 1998-99, Rs6.2 billion in 1999- 2000, Rs9.81 billion in 2000-01, Rs2.59 billion in 2001-02 and Rs1.73 billion in 2002-03.
In overall terms, the response by the finance minister said, the SBP's net profit for the period 1998-99/2002-03 totalled Rs115.6 billion out of which Rs90.1 billion were transferred to the federal government as per statutory requirements.
In response to another question by MNA Asif Tauheed, the House was told that a number of proposals were under consideration of the government in the ongoing budget exercise which aim to provide relief to the farmers.
A number of parliamentarians questioned the discriminatory loan policy of the government which gave loans to farmers at interest rates of up to 14 per cent while the industrialists got the same at almost 5 per cent mark-up.
Explaining the disparity, the parliamentary secretary for finance said the ZTBL (Zarai Taraqqiati Bank) was charging 14 per cent interest rate if the loan was not paid in time.
Moreover, he said the bank was running in losses, the risks of the portfolio were more and the government injected Rs16 billion into the bank, which, according to Mr Umer, somehow explained the disparity in interest rates charged from the farmers and the industrialists.