August 31, 2002	Saturday	Karachi, Jamadi-us-Saani 21, 1423

KARACHI, Aug 30: Exporters will continue to get export finance at 8 per cent markup for the sixth consecutive month in September 2002 as the State Bank has left unchanged at 6.5 per cent the rate of export refinance.

The SBP announced this decision through a circular (BPD no 22) issued to all the banks on Friday.

The SBP had last changed the export refinance rate in April.

The circular said the export refinance rate of 6.5 per cent and export finance rate of 8 per cent are also applicable on financing facilities under part B of export finance scheme. This means that the exporters obtaining export finance in relation to last year’s exports will also get export financing from banks at 8 per cent.

The circular said financing and refinancing under the scheme for locally manufactured machinery will also be made at 8 per cent and 6.5 per cent.

The rate of export finance is the maximum rate at which the banks lend money to exporters under export finance schemes part I&II and also under LMM: Export refinance rate is the rate at which the State Bank make reimbursement against such financing.

Since the export refinance rate is 6.5 per cent and export finance rate is 8 per cent the banks earn a spread of 1.5 per cent on export financing.

The reason why the State Bank has kept the export finance rate unchanged for the sixth consecutive month is that the treasury bills rate (that provide benchmark for export finance rate) has been remained stable during this time.