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The country’s export industry has described the State Bank of Pakistan’s (SBP) increase in the Export Finance Scheme (EFS) and Long-Term Financing Facility (LTFF) by two percent to thirteen percent as a disaster for the industry.
Shahid Sattar, Executive Director of All Pakistan Textile Mills Association (APTMA), said the textile sector will send a formal response to the SBP’s action next week.
“We have one word for this illogical decision, ‘disaster’,” Shahid Sattar was quoted as saying in Business Recorder.
The difference between the policy rate and the EFS and LTFF rates used to be around 5%; however, the State Bank has now decided to narrow the difference by another 2%. According to the SBP circular, “it has now been agreed to narrow the difference between policy rate and EFS & LTFF rates from existing 5 percent to 3 percent.”
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.
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.
