ISLAMABAD: The country’s export sector has termed the increase in Export Finance Scheme (EFS) and Long-Term Financing Facility (LTFF) by two percent to 13 percent by the State Bank of Pakistan (SBP) as a disaster for the export sector.
Talking to Business Recorder, Executive Director, All Pakistan Textile Mills Association (APTMA), Shahid Sattar said the textile sector will send a formal response to the SBP’s action next week.
“We have one word for this illogical decision, ie, disaster,” said Sattar.
Previously, there was some 5 percent gap between the policy rate and EFS and LTFF rates, however, now the State Bank has decided to further reduce the gap by 2 percent. “It has now been decided to reduce the gap between policy rate and EFS & LTFF rates from existing 5 percent to 3 percent,” the SBP circular said.
The government is also conducting audit of textile units to find out those units which are enjoying incentivized electricity and gas for export purposes but are also selling their products in the domestic market.
SBP raises EFS & LTFF rates by 2pc to 13pc
The government recently decided to supply electricity to five export-oriented sectors at Rs 19.99/kWh the cost of which has been estimated to be Rs 110 billion. However, the Power Division has sought Rs 143 billion from The Finance Division which includes the outstanding amount.
The International Monetary Fund (IMF) has urged the government to reverse or compensate with new tax measures the losses of recently introduced measures (agricultural subsidies, export subsidies and power sector subsidies). The IMF does not support the government to introduce new tax concessions or exemptions or other preferential tax treatment or any new tax amnesty.
Jawad Bilwani, an exporter, said that the situation of business in Pakistan is the worst ever these days and international buyers are demanding a guarantee of their orders whereas export industry is very seriously concerned about non-availability of raw material.
He said consignments worth billions of rupees are deteriorating at the ports due to apathy of government decision makers.
“Pakistan is a strange country. On one hand, people don’t have money and on the other consignments of imported goods worth billions of rupees are rotting at the ports. Neither the government nor State Bank of Pakistan is serious about dealing with the current situation,” said JawadBilwani.
Asked if the government or SBP consulted the exporters on increase in EFS and TLFF rates, he said that the industry was not taken on board.
“Neither the Finance Minister, nor Governor SBP have time,” he commented sarcastically, adding that if the economic decision makers had a vision, the condition of Pakistan would not be what it is now. He urged the government to get the consignment stuck at ports cleared.
Copyright Business Recorder, 2022
Comments
Comments are closed.