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Markup rates for export financing raised to 13%

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2 years ago

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  • SBP raises export financing markup rates by 200 basis points.
  • Decides to reduce gap between policy rate and EFS, LTFF to 3%.
  • This will come into effect from December 30, 2022. 

KARACHI: The State Bank of Pakistan (SBP) has raised the export financing markup rates by 200 basis points in line with the key policy rate, The News reported Friday.

In a circular issued on Thursday, the central bank decided to reduce the gap between the policy rate and Export Finance Scheme (EFS) and the Long-term Financing Facility (LTFF) from the existing 5% to 3%.

“Accordingly, markup rates for financing under EFS (Part-I & Part-II) and LTFF are increased from the existing 11% per annum to 13% per annum each with effect from December 30, 2022.”

In the future with any change in the SBP policy rate, markup rates for EFS and LTFF would be revised automatically so that the gap between the policy rate and EFS and LTFF rates was maintained at 3%, the central bank added.

With the fresh SBP move, the interest rates on working capital financing and plant machinery have been increased.

The rates on EFS and LTFF schemes were fixed at 3-5% until March 2022. On July 7, 2022, the SBP linked the rates of EFS and LTFF with its policy rate.

The SBP hiked the policy rate by 100 basis points to 16% last month to prudently strike a balance between maintaining growth post-floods and managing inflation. The central bank is set to announce the upcoming interest rate decision on January 23.

Analysts expect the SBP to maintain a tight monetary stance in the second half of this fiscal year as inflation remains elevated. The policy rate is likely to be raised by 100 bps to 17% in the first quarter of 2023.

The rise in the cost of borrowing is expected to affect exports and the private sector credit growth.

In line with the slowdown in economic activity, private sector credit continued to moderate, increasing only by Rs86.2 billion during the first quarter compared to Rs226.4 billion during the same period last year, the SBP said in its last monetary policy statement.

This deceleration was mainly due to a significant decline in working capital loans to wholesale and retail trade services as well as to the textile sector in the wake of lower domestic cotton output, and a slowdown in consumer finance, it added.

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Business

In interbank trade, the Pakistani rupee beats the US dollar.

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6 days ago

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In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.

The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.

In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.

Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.

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Business

Phase II of CPEC: China-Pakistan Partnership Enters a New Era

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1 week ago

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The cornerstone of economic cooperation between the two brothers and all-weather friends is still the China-Pakistan Economic Corridor, the initiative’s flagship project.

In contrast to reports of a slowdown, recent events indicate a renewed vigour and strategic emphasis on pushing the second phase of CPEC, known as CPEC Phase-2, according to the Ministry of Planning, Development, and Special Initiatives.

According to the statement, this crucial stage seeks to reshape the foundation of bilateral ties via increased cooperation, cutting-edge technology transfer, and revolutionary socioeconomic initiatives.

Planning Minister Ahsan Iqbal is leading Pakistan’s participation in a number of high-profile gatherings in China, such as the 3rd Forum on China-Indian Ocean Region Development Cooperation in Kunming and the High-Level Seminar on CPEC-2 in Beijing.

His involvement demonstrates Pakistan’s commitment to reviving CPEC, resolving outstanding concerns, and developing a strong phase-2 roadmap that considers both countries’ long-term prosperity.

At the core of these interactions is China’s steadfast determination to turn CPEC into a strategic alliance that promotes development, progress, and connectivity.

Instead of being marginalised, CPEC is developing into a multifaceted framework with five main thematic corridors: the Opening-Up/Regional Connectivity Corridor, the Innovation Corridor, the Green Corridor, the Growth Corridor, and the Livelihood-Enhancing Corridor.

With the help of projects like these, the two countries will fortify their partnership, and CPEC phase-2 will become a model of global economic integration and collaboration that benefits not just China and Pakistan but the entire region.

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Business

The inflation rate in Pakistan dropped to its lowest level.

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1 week ago

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On December 2, core inflation as determined by the Consumer Price Index (CPI) significantly slowed, falling to 4.9% in November 2024 from 7.2 percent in October 2024.

The CPI-based inflation rate for the same month last year (November 2023) was 29.2%, according to PBS data.

Compared to a 1.2% gain in the prior month, it increased by 0.5% month over month in November 2024.

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