KARACHI, July 22 - Pakistan hopes to start using an equity market stabilisation fund worth 20 billion rupees , finance minister Naveed Qamar said, in the wake of 30 percent fall on the benchmark index <.KSE> since April.
Speaking at the Karachi Stock Exchange on Tuesday, he said the National Investment Trust will manage the fund.
"We intend to move through NIT and give a substantial amount of boost to the stock market through the NIT, I think we can start with 20 billion rupees and hopefully start in this week," Qamar said.
The fund was proposed earlier this month by the Karachi Stock Exchange and the Securities and Exchange Commission of Pakistan . The KSE index fell to 10,036.14 last week from a life-time high of 15,739.25 points on April 21.
Qamar, the privatisation minister who also took charge of the finance portfolio after a coalition partner pulled out of the cabinet in May, said the three-and-a-half-month-old government was focussed on the macroeconomic challenges facing Pakistan.
Inflation running at over 21 percent is at its highest in three decades, the fiscal and current account deficits are unsustainable, and foreign exchange reserves barely cover three months imports.
Qamar said Pakistan was in talks with Saudi Arabia to defer payments for crude oil sales during the current fiscal year.
"There will be an announcement soon from Saudi Arabia, which will have a very positive affect on our current account position," he said.
Earlier this month the Financial Times newspaper reported that Saudi Arabia had agreed in principle to defer payments for crude oil sales to Pakistan expected to be worth about $5.9 billion during the current 2008/09 fiscal year .
Qamar said there were hopes that Prime Minister Yousaf Raza Gilani's visit to the United States later this month will help raise prospects for non-military aid.
Last week, two U.S. senators unveiled a $7.5 billion, 5-year aid bill for Pakistan aimed at boosting civilian ties.
The government also plans on bringing its net borrowing from the central bank to zero percent to reduce pressure on the bank to maintain a tight monetary stance.
As of June 28, with two days left until the end of the 2007/08 fiscal year, the government's incremental borrowing from the State Bank was 633 billion rupees .
The State Bank Governor Shamshad Akhtar had her first visit to the KSE on Monday and dealers said she reinforced expectations that interest rates will be increased.
Qamar said the KSE's demutualisation was passed in the Finance Bill and the SECP chairman Razi-ur-Rahman said it should be completed in the next 3 months.
By Sahar Ahmed
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