KARACHI: The State Bank of Pakistan (SBP) has extended the scope of Long Term Financing Facility (LTFF) to cover all permissible export-oriented sectors.
The additional concessional financing of Rs 200 billion to banks includes Rs 100 billion under LTFF and Rs 100 billion under Export Refinance Scheme (EFS), to be utilised by June 30, 2020. The stimulus package was announced in conjunction with the policy rate announcement on Tuesday at the State Bank in Karachi. The SBP has maintained the policy rate at 13.25 percent for the next two months in a bid to curtail inflation that remains unchanged at 11-12 percent for the financial year 2020-21.
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The stimulus is aimed at setting up diverse export-oriented projects in Pakistan and to boost exports in multiple sectors. “The latest measures, taken today, are in continuation of facilitating export-oriented industries and manufacturing concerns in the backdrop of ease of doing business and promoting exports’ growth,” a statement released by the SBP said.
In addition, the maximum limit of Rs 2.5 billion has been enhanced to Rs 5 billion per project under the LTFF, to accommodate enhanced financing requirements for exporters.
The exact allocation and mechanism of the LTFF and EFS to SME exporters is likely to be announced in March 2020, the state bank said. The SBP has also allowed banks to make advance payment up to $10,000 or equivalent thereof, per invoice on behalf of commercial importers for import of raw material, spare parts and machinery. The SBP has also allowed banks to make payments on behalf of commercial importers for imports of raw materials and spare parts on open account.
Additionally, the SBP has also enhanced the existing limit of 50 percent advance payment to 100 percent which are allowed to manufacturing concerns, for import of plant, machinery, spare parts and raw materials etc. against letter of credit. The SBP has previously allowed the advance payment of up to 50 percent of the value of imports in December 2019.