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Export Finance Scheme provides Rs 273 billion
Textile takes a lion’s share of Rs176 billion
Amanullah Khan
Karachi—The State Bank of Pakistan and commercial banks have provided
a sum of Rs 273 billion under the Export Refinance Scheme (EFS) to all
eligible export-oriented sectors during the first three quarters of
FY08, out of which handsome amount of Rs 176 billion or 65% was
availed by the textile sector at 7.5% - lower than ongoing 6-month
Karachi Inter-Bank Offered Rate (KIBOR) of around 10.32%.
It may be mentioned here that this amount is equivalent to the sum
provided to the Textile Sector during the same period of FY07.
Likewise, textile sector has also availed over Rs 4 billion during the
same period as a long-term financing at 6% to 7%, which is even below
ongoing EFS rates. The SBP has also sanctioned an amount of Rs 8
billion under its newly-announced Long Term Financing Facility (LTFF)
for disbursement to the textile sector during January-June 2008. The
funds so far disbursed under this scheme have been availed by the
textile sector.
It may also be added here that during the period from FY 03 to
December 2007, the State Bank has provided refinance amounting to Rs
897.5 billion to the Textile Sector under EFS at the mark up rates
which were below the ongoing market rates providing sufficient savings
to the sector. Further, Textile Sector has availed refinance amounting
to Rs 54 billion under Long Term Financing for Export Oriented
Projects (LTF-EOP) Scheme since its inception in May 2004 to February
15, 2008 at a fixed rate of mark up of either 6% or 7% for the full
tenure of the loan which can extend up to 7-1/2 years.
The above-referred facts are sufficient to dispel an impression
created by a section of the press, that the SBP Governor while
addressing a meeting of Federation of Pakistan Chambers of Commerce
and Industry (FPCCI) recently has refused provision of financial
assistance with low mark up for textile industry.
It may be pointed out that pursuant to release of the monetary policy
statement for January – June 2008, the State Bank held many focused
discussions with the stakeholders including FPCCI. During these
meetings and discussions SBP explained that the monetary tightening
was carried out to contain macro economic imbalances creating
inflationary pressures in the economy.
As regards provisions of low mark-up financing to the textile
industry, it is reiterated that textile sector has always been one of
the major beneficiaries of the incentives provided by the SBP in the
shape of its various Schemes i.e. EFS, LTF-EOP, LTFF. The value-added
sectors of the Textile Group have remained the major beneficiaries of
the refinance granted under these schemes.
Therefore, it is incorrect to assume that the SBP is not providing
long term financing to the value added textile sector; in fact LTTF is
available to value added sector including Fabrics, Garments, Made up,
Towels, and Art silk & synthetic textiles sub sectors of Textile
Sector.
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