ISLAMABAD, Jan 1: The annual rate of return on national saving schemes is reduced by half a per cent with immediate effect, says Federal Finance Minister Shaukat Aziz. He told participants of a news conference it was part of the ongoing restructuring process of the saving schemes.

This would, however, result in a drop of between 6.1 and 7.9 per cent in the take home profit of the three popular schemes (defence savings, regular income and special savings certificates) by comparison with the existing profit rates.

The minister said the national savings schemes' restructuring was approved by the prime minister on Wednesday night in the light of the prevailing interest rate environment in the country. Under the revised structure, the rate of return on 10-year defence savings certificates has been reduced to 7.96 per cent from 8.5 per cent.

Similarly, the return on five-year regular income and three- year special savings certificates and accounts has been brought down to 7.08 per cent and 7.27 per cent, respectively from existing rates of 7.6 per cent and 7.7 per cent, respectively.

Rates of the Behbood Savings Scheme for widows and pensioners' benefit scheme have, however, remain unchanged at 10.08 per cent. Persons with a minimum age of 60 years would now be treated as senior citizens and they would now be eligible to invest in the Behbood Savings Certificates, getting 10.08 per cent return.

The minister said the cut in return on national savings has been kept comparatively low to avoid heavy withdrawals from these schemes. The government was already paying out around Rs70-80 billion per year in profits on these schemes while new savings are coming down and hardly meeting these profit payouts.

HBL PRIVATISATION: The finance minister said a meeting of the cabinet committee on privatisation held earlier in the day approved the 51 per cent strategic sale along with the handing over of the management control of the Habib Bank Limited to the Aga Khan Fund for Economic Development.

He insisted that the AKFED's bid of Rs22.409 billion was higher than the reference price, adding that a transparent and successful privatisation of the HBL would significantly encourage foreign direct investment, boost economic activities besides having a positive impact on the privatisation of other companies.

ECONOMIC INDICATORS: The minister said that the provisional tax collection during the first half of the current fiscal year amounted to Rs224 billion, about 11 per cent higher than the previous year and around Rs6 billion higher than the Rs218 billion target.

Mr Aziz said the actual revenue collection for the first six months would further rise to Rs226 billion with the arrival of final figures. He said the collection of sales tax improved by nine per cent, customs duty by 45 per cent and direct taxes by 3.5 per cent by comparison with the same period last year.

As such, the 44 per cent of annual revenue collection target has been achieved, suggesting that revenue momentum was intact and reflected an increase in economic activities to support the overall GDP growth rate.

He said the stock market index has increased by 67.7 per cent during the first six months of the current fiscal while market capitalisation has improved by 63.8 per cent at year-on- year basis.

Pakistan would, thus, emerge as one of the best performing markets during the year. The foreign exchange reserves continue to rise, touching $12.14 billion mark as of Dec 31, 2004.

NATIONAL FINANCE COMMISSION: Shaukat Aziz said that a meeting, presided over by Prime Minister Zafarullah Khan Jamali, agreed to settle the Wapda-NWFP dispute over net hydel profits through arbitration. He said the meeting had decided that Wapda, the NWFP and the federal government would propose three-member panels in this regard.