KARACHI: The State Bank of Pakistan (SBP) on Thursday enhanced the interest rates under export refinancing and long term refinancing to 10 per cent.
The SBP in a circular said that as mentioned in the above-referred circular, the rates of Export Finance Scheme (EFS) and Long Term Financing Facility (LTFF) have now been linked with the central bank’s policy rate by keeping these rates currently 5 per cent below policy rate.
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Accordingly, with effect from July 08, 2022:
— Mark up rate for financing under EFS (Part-I & Part-II) is increased from 7.5 per cent p.a. to 10 per cent p.a.; and
— Mark up rate for financing under LTFF is increased from 7 per cent p.a. to 10 per cent p.a.
Accordingly, with any change in the Policy Rate, markup rates for EFS and LTFF will be revised automatically so that the gap between Policy Rate and EFS and LTFF rates is maintained at 5 per cent. However, this gap is subject to revisions in view of future economic activity, the SBP added.
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The SBP in its monetary policy announced today (July 07, 2022) mentioned that in the last monetary policy statement, the interest rates on EFS and LTFF loans are now being linked to the policy rate to strengthen monetary policy transmission, while continuing to incentivize exports by presently offering a discount of 500 basis points relative to the policy rate.
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This combined action continues the monetary tightening underway since last September, which is aimed at ensuring a soft landing of the economy amid an exceptionally challenging and uncertain global environment.
It should help cool economic activity, prevent a de-anchoring of inflation expectations and provide support to the Rupee in the wake of multi-year high inflation and record imports.
