State Bank of Pakistan (SBP) has further tightened the monetary policy stance to 15 percent, it also revised the rates of specialized financing schemes to double-digit at 10 percent.
According to the circular issued by the SBP, the mark-up rate for financing under Export Finance Scheme (EFS) is increased from 7.5 percent per annum to 10 percent per annum and the mark-up rate for financing under Long Term Financing Facility (LTFF) is increased from 7 percent per annum to 10 percent per annum.
The revised rates will be effective from 8 July 2022 read the notification.
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The rates of EFS and LTFF have now been linked with SBP Policy Rate by keeping these rates currently 5 percent below Policy Rate.
With any change in the Policy Rate, markup rates for EFS and LTFF will be revised automatically so that the gap between Policy Rate and EFS and LTFF rates is maintained at 5 percent. However, this gap is subject to revisions in view of future economic activity.
“As foreshadowed in the last monetary policy statement, the interest rates on EFS and LTFF loans are now being linked to the policy rate to strengthen monetary policy transmission, while continuing to incentivize exports by presently offering a discount of 500 basis points relative to the policy rate,” the MPC statement read.
This combined action continues the monetary tightening underway since last September, which is aimed at ensuring a soft landing of the economy amid an exceptionally challenging and uncertain global environment, it added.
Higher financing rates will take a toll on the cost of doing business for exporters and manufacturers who are already feeling the pinch of the high inflationary pressure in tandem with the record push in energy costs.
Exporters of various goods and services may face a tough time offering a competitive price of their products to their buyers and supplier in the international markets.
