KARACHI, Dec 5: The State Bank on Tuesday raised serious questions about declining trend of exports despite huge supply of subsidised loans to the sector and termed the situation as disappointing.
The export refinance amounting to Rs137.91 billion were released to the banks during the period July 1, 2006 to November 18, 2006 as against Rs120 billion released during the same period last year, which is 15 per cent higher, said the SBP.
Though, the central bank did not comment on the use of subsidised loans, the figures provided by it created doubts that the subsidised loans had been misused by the exporters.
The textile sector, the largest exporter, is already facing allegations that they are manipulating export earnings for speculative real estate business.
The exporters are involved in exploiting the threat of huge trade deficit looming over the country, which compels the government for further pampering the export sector. The negative export growth during the current fiscal year turned into a demand for more subsidized loans and incentives to the exporters.
Exports depicted a negative growth of 13.7 per cent in July, positive 4.7 per cent in August, positive 0.5 per cent in September and negative 7.4 per cent in October of the current fiscal.
The State Bank said that the refinance under EFS was being offered at 6.5 per cent i.e. 4-4.5 per cent below 6-month Kibor (Karachi Inter Bank Offered Rate).
Pursuant to the announcement of the debt-swap option under ‘Long Term Finance Scheme for Export Oriented Projects’ (LTF-EOP), the SBP has provided refinance of about Rs13.86 billion through commercial banks against 107 cases to the value-added textile industry, in particular and six sub-sectors of the spinning sector in general.
Over and above this, the industry has availed Rs8.40 billion under the scheme for new projects. In aggregate so far, more than Rs22 billion refinance has been released under this scheme to commercial banks, since its inception to December 2, 2006, said the SBP.
Under Research and Development Support (R&D) scheme, all offices of the SBP-BSC across the country have cumulatively released Rs8.8 billion and cleared about 79,000 cases since July 2005. During July-October 2006 alone they processed 20,170 cases involving release of about Rs2.7 billion.
“It is disappointing to note that exports of the sector have shown negative growth for the current fiscal year (Jul-Oct 2006) as compared to an increase of 30 per cent during the corresponding period last year,” said the SBP.
The US data on Pakistan exports shows that the exports increased by 16 per cent during the four months. Analysts said the sudden jump of 20 per cent in remittances has strengthened the suspicion that the exporters were using non-banking channels to bring the money into the country.
The State Bank’s figures of supply of huge subsidized loans also reveal that the exporters have consumed refinance more than last year but the output is negative. It again supported the doubt that the real export growth is being deliberately hidden to get more subsidized loans.
