981106

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981106

GOVERNMENT OF PAKISTAN
FINANCE DIVISION
BUDGET WING
(DEBT MANAGEMENT CELL)

Islamabad, the 6th November, 1998

NOTIFICATION

S.R.O.--- (I)/98.- In exercise of the powers conferred by clause (b) of sub-section 2 of section 3 of the Foreign Exchange (Temporary Restrictions) Act, 1998 (IV of 1998) and section 28 of the Public Debt Act, 1944 (XVIII of 1944) the Federal Government is pleased to direct that the following further amendments shall be made in Special U.S. Dollar Bonds, Rules, 1998, namely:-

In the aforesaid Rules---
(i) In the preamble, for the words, brackets, figures and commas "sub-section (1) of section 3 of the Foreign Exchange (Temporary Restrictions) Ordinance, 1998 (VII of 1998)" the words, brackets, figures and commas "clause (b) of sub-section (2) of section 3 of the Foreign Exchange (Temporary Restrictions) Act, 1998 (IV of 1998), and section 28 of the Public Debt Act, 1944 (XVIII) of 1944" shall be substituted.

(ii) In rule 2 for the words "five", "seven" and "ten", the words "three", "five" and "seven" shall respectively be substituted;

(iii) in rule 4 after the word "registered", the words "or bearer" shall be inserted.

(iv) Rule 5 shall be numbered as sub-rule (1) of that rule and after sub-rule (1), numbered as aforesaid, the following new sub-rules shall be added, namely.

"(2) Holders of U.S. Dollar Bearer Certificates issued under the U.S. Dollar Bearer Certificate Rules, 1991, and Five Years Foreign Currency Bearer Certificates issued under the Five Years Foreign Currency Bearer Certificates Rules, 1992 and Three years Foreign Currency Bearer Certificates issued under the Three Year Bearer Certificates Rules, 1998 shall also be entitled to purchase these bonds in exchange for the certificates.

(3) In addition, the bonds may be purchased on payment of the value in U.S. dollars provided the amount so paid does not represent.-

(a) any foreign exchange borrowed under any general or special permission given by the State Bank of Pakistan under sub-section (1) of section 4 of the Foreign Exchange Regulation Act, 1947 (VII of 1947);

(b) any payment from abroad for goods exported from Pakistan;

(c) proceeds of securities sold and issued to non-residents;

(d) any payment received from abroad for services rendered in or from Pakistan;

(e) earnings or profits of the overseas offices or branches of Pakistani firms and companies including banks; and

(f) any foreign exchange purchased from an authorized dealer in Pakistan for any purpose.

(v) (a) In rule 7 in sub-rule (1), for the words and commas "by the original registered holder and, in case of a subsequent registered holder, for the unexpired period of maturity of such bonds" the words "or until maturity of such bonds" shall be substituted;

(b) After sub-rule (3), the following new sub-rules shall be added, namely:-

"(4) The immunities available under the U.S. Dollar Bearer Certificate Rules, 1991, Five Years Foreign Currency Bearer Certificates Rules, 1992 and Three Year Foreign Currency Bearer Certificates Rules, 1998, shall apply to the bonds issued under these rules in exchange for such certificates.

(5) Assets created out of the encashment of bearer bonds shall be exempt from levy of Wealth Tax for a period of six years reckoned from the year in which such bonds were encashed subject to the condition that a certificate of encashment is obtained from the issuing bank in the prescribed form."

(vii) in rule 8,-

(a) the words "from the Foreign Currency Accounts or Foreign Currency deposits by the original registered holders under these rules" shall be omitted; and

(b) the word "registered", occurring for the second time shall be omitted.

(vii) For rule 11, the following shall be substituted, namely:-

"11 (1) Profit shall be payable on these bonds on completion of each period of six months reckoned upto the date of maturity or encashment whichever is earlier. The profit on these bonds shall be payable at the following rates, namely:-

(a) For bonds of 3 years maturity	6 months LIBOR on the day preceding the date of payment. +2%.
(b) For bonds of 5 years maturity	6 months LIBOR on the day preceding the date of payment +3%.
(c) For bonds of 7 years maturity	6 months LIBOR on the day preceding the date of payment +4%.

(2) The profit shall be paid in U.S. dollars."

(3) If a bond is encashed within the period of one year from the date of issue no profit shall be paid to the bond-holder and any profit paid shall be recovered at the time of the encashment of the bond. If a seven year bond is encashed within five years of issue, the rate of return shall be the same as that of five year bond. If a five year bond is encashed within three years of issue, the rate of return shall be the same as that of three year bond and the excess profit, if paid shall be recovered at the time of encashment."

(viii) Rule 11 A shall be omitted;

(ix) Rule 12 shall be numbered as sub-rule (1) of the rule and after sub-rule (1), numbered as aforesaid, the following new sub-rules shall be added, namely:-

"(2) The bonds shall be acceptable as collateral for raising loans in Pak Rupees.

(3) The Privatization Commission shall accept the bonds as payment against the assets being sold or privatized."

Sd/-
(Nazrat Bashir)
Deputy Secretary (DM)
Tel: 9211971

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