A trade financing package worth Rs200 billion has been revealed by the State Bank of Pakistan (SBP). The aim of this package is to help the export industries to overcome the challenges faced by a slowing economy.
SBP governor Reza Baqir announced new measures for the export sector. Concessional financing is increased for the exporter. Rs200 billion loans have been extended by SBP for export-oriented sectors under concessionary Long Term Financing Facility (LTTF) and Export Financing Scheme (EFS).
Baqir said, “Rs100 billion at concessionary rate had been allocated for LTTF for all exporting sectors. The existing rate of refinancing under LTTF is 6 percent for the end-user. The maximum limit of borrowing for the industry has been increased from Rs2.5 billion to Rs5 billion.”
Previously, Baqir stressed that the country needs to shift to an export-based economy in order to achieve high and sustainable growth.
In the last fiscal year of 2019, the economy expanded by 3.3%. This is the weakest annual pace in over 9 years as a key growth driver declined due to the high cost of doing business and a strong rupee.
The government has estimated economic development to fall to 2.4%, the slowest pace in over a decade.
Governor Baqir said, “The business community is facing hardship due to changes in advance import payment… Considering their problems, advance payment restriction is eased and the central bank allowed 50 percent advance payment. In the latest decision, the SBP allowed 100 percent advance import payment.”
Also, the SBP governor has made the announcement to include commercial importers in this regime. SBP received different representations from commercial importers to allow open account facility.
The limit for LTFF per project has been increased by 100% to Rs5 billion to overcome the impact of rupee devaluation.