SBP increases markup rates for export financing

KARACHI: The State Bank of Pakistan (SBP) has jacked up the export refinancing markup rates by 200 basis points.

In a circular issued on Thursday, the central bank said it had decided to reduce the gap between its policy rate and the Export Finance Scheme (EFS) and Long-Term Financing Facility (LTFF) rates from the existing 5pc to 3pc.

Accordingly, markup rates for financing under EFS (Part-I and Part-II) and LTFF have been increased from the existing 11pc to 13pc a year each with effect from Dec 30 (today), the bank said.

With the change in policy rate in future, the 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.

It also announced at the time that the rates of EFS and LTFF would be linked with the SBP policy rate in future through a formula so that any change in the policy rate was automatically reflected in the rates of these refinance schemes.

“While doing so, it will be ensured that rates on these SBP refinance facilities are maintained at such level that they continue to provide sufficient incentive to the export sector of Pakistan,” it said in that circular.