The State Bank of Pakistan has unveiled a support package worth Rs200 billion for manufacturers contributing towards the country’s exports.
The central bank runs two schemes to support the export-oriented sectors. The schemes included the Long-Term Financing Facility and Export Refinance Scheme for working capital.
Under the LTFF, large-scale manufacturers will get refinancing on bank loans to the tune of Rs100 billion to import machinery. This refinancing will be given at a discounted interest rate of 5-6% for the export-oriented sectors.
The remaining Rs100 billion refinancing support will be provided to small manufacturers, aiming to export innovative goods.
The SBP has also raised the financing limit from Rs2.5 billion to Rs5 billion.
It has also made two changes in the foreign exchange policy. The central bank will allow importers to make 100% advance payments (previously it was 50%) and raise the limit on advance payments for import of machinery to $10,000.
These steps will help increase exports, create employment, and contribute towards building foreign exchange reserves, SBP Governor Reza Baqir said on the sidelines of the monetary policy announcement.
The SBP decided to keep the interest rate unchanged at 13.25%, projecting inflation at 11-12%. Baqir said they would be able to meet the mid-term inflation target of 5-7%.
Sharing the economic outlook, the SBP governor said they were targeting a growth of 3.3%. He noted that there was a risk of lower-than-expected growth in the agriculture sector.
Baqir, however, stated that other sectors such as cement had shown growth in sales. This indicated that the country had moved past the lowest level of economic activity, he added.