The Trading Corporation of Pakistan (TCP) has retired over Rs 62 billion, to commercial banks, on account of commodity financing, as subsidies issue has been settled by the federal government. The State Bank of Pakistan''s statistics showed that strong retirement was also witnessed in the overall commodity financing during the initial months of current fiscal year, mainly supported by high payments of commodity advances by the TCP.
The massive retirement in initial five months of current fiscal year was largely driven by the release of price differential subsidies to the procurement agencies by the government, of which they (procurement agencies like TCP, PASSCO) were able to pay back commodity loans obtained from banking sector. The settlement of subsidies among the government entities also helped TCP to retire a huge amount to the commercial banks and minimise its total outstanding on account of commodity financing. TCP retired Rs 62.6 billion to commercial banks during July-November of FY12 as its receivable on account of subsidies was settled by the federal government.
Total TCP''s outstanding amount of commodity financing declined to Rs 45.6 billion from Rs 97 billion in June 2011. However, despite retirement of a healthy retirement of commodity financing by TCP, some deceleration in retirement of wheat borrowing has been witnessed. TCP borrowed billions of rupees during fiscal year 2008 and fiscal year 2009 for import of 3.5 million tons of wheat to fulfil the local demand as that time the country was witnessing a massive shortage of wheat due to unplanned export of wheat.
Although, TCP has sold out all the stocks of wheat to the provinces and private sector, over Rs 13 billion was outstanding till November 2011. Sources said that some 330,000 tons of wheat was not lifted by the provinces and later the commodity was auctioned to the private sector to avoid any loss in case of damage to wheat stocks.
According to SBP''s statistic, the stocks of TCP''s wheat advances mounted to Rs 13.6 billion as on November 2011 compared with Rs 12.6 billion in November 2010, showing an increase of Rs one billion in a year, while the subsidy receivable on account of wheat stood at zero as against Rs 2.7 billion in November 2010.
It may be mentioned here that commodity financing has experienced net retirement of Rs 82.6 billion during Jul-November of fiscal year 2011-2012 (FY12), compared to Rs 35.2 billion over the same period last year, depicting an increase of 134 percent or Rs 47.4 billion.