The State Bank of Pakistan on Wednesday announced to raise the mark-up rate by 0.5 percent for Export Finance Scheme (EFS) following IMF condition to eliminate subsidies on loans. SBP has notified that the rate of refinance under the EFS, applicable from January 1, 2010 and onward till further instructions, will be 7.5 percent per annum as compared to present 7 percent per annum.
According to Circular (SMEFD Circular No 20) issued on Wednesday by SBP, the commercial banks shall ensure that where financing facilities are extended by them to exporters for availing refinance facilities under EFS, their maximum margin/spread does not exceed 1 percent per annum.
Now exporters can borrow loans for export purpose at 8.5 percent per annum mark-up from calendar year 2010 against present 8 percent. Reimbursement of mark-up rate benefit to exporters, on excess performance under Part-II of the Scheme, as specified in the SMEFD Circular No 15 dated October 31, 2009, will be adjusted accordingly, keeping in view the revised mark-up rates, the Circular said.
Sources said that the central bank would phase out the subsidies on mark-up for export-oriented units as the government has assured the International Monetary Fund (IMF) in its last negotiations. IMF, enhancing Pakistan's stand-by loan programme by 4 billion dollars to 11.3 billion dollars for current account payments, has imposed some new conditions including removal of subsidies on export-oriented loans, Sources said. Therefore, the central bank is gradually increasing EFS mark-up rate.