KARACHI (December 22 2002) : The State Bank of Pakistan has allowed prepayment of foreign private loans, a move to reduce the burden of expensive commercial loans on the country which amount to about 2 billion dollars.
The central bank on Saturday issued a circular for all authorised dealers informing them that it has been decided to allow prepayment of foreign private loans, other than the Government guaranteed loans, but the decision would be taken on case-to-case basis.
“The State Bank in its further pursuit of liberalising Foreign Exchange regime, to reduce the burden of expensive commercial loans on the country and to align the future debt servicing capacity with debt servicing obligations has decided to allow prepayment of Foreign Private Loans by Pakistani private companies and firms to their creditors,” said the State Bank circular.
The facility can be availed by borrowers who have the rupee counterpart available with them or they have the capacity to generate rupee funds on their own and the remittance formalities have been completed.
“The total outstanding amount of private non-guaranteed debt is approximately 2 billion dollars,” said the State Bank release.
Earlier, the State Bank had repaid expensive external debt and liabilities owed by the Government, the SBP and public sector amounting to 4.3 billion dollars during the last three years.
The pre-payment of those loans is expected to result in further reduction of the country's outstanding external debt and liabilities.