KARACHI, Jan 10: The State Bank of Pakistan on Thursday disclosed that despite doling out much higher amount of cheap money under the Export Finance Scheme (EFS), the exporters had been unsuccessful in boosting export earnings since the beginning of the current fiscal year.

The exporters have been complaining that under the modified export finance scheme the flow of financing has been restricted during the last five and half months.

As per the latest data up to December 15, 2007, the export refinance facilities extended by commercial banks to the exporters at 7.5pc (including those granted by these banks from their own resources) stood at Rs138.45 billion as against Rs126.85 billion extended over the corresponding period last fiscal year, showing a growth of 9.15 per cent.

The SBP introduced modifications in the export finance scheme which resulted in enhancement of availability of working capital facilities to the exporters; especially exporters of value-added textile sector, at 7.5pc per annum.

“Reports regarding the reduction in the availability of working capital facilities to the exporters are incorrect, baseless and misleading,” the SBP said in statement.

There have been reports of gross misuse of the export finance scheme which offers money at 7.5pc as against the prevailing market rate of 12 to 20pc. This is also important that the bulk of the cheap money is being provided to the textile sector which has been showing a declining trend in exports sine July 2007.

In the first quarter (July-September) of the current fiscal year, the banks provided about Rs83.4 billion to the textile sector as compared to Rs71.5 billion the same period last year, showing an increase of about 17 per cent.

The SBP said the banks had provided significant financing about Rs38 billion through their own resources since the start of the modified procedure at a rate of 7.5 per cent and the rest was funded by the central bank.

The SBP reported that the export refinancing had grown at a faster rate than the export earnings.

“Textile exports are continuously declining from July 2007 when textile exports were $952 million which declined to $938 million, $922m and $837m during August, September and October 2007, respectively,” the SBP said.

According to SBP as per June 30, 2007 a sum of Rs134 billion was outstanding as refinance granted by different banks under the EFS.

However, due to monetary policy implications of the refinance granted under EFS and LTF-EOP Scheme especially the debt swap under the modified scheme, the commercial banks were directed to provide 30 per cent of export finance from their own resources at 7.5pc.

The SBP said this step was accompanied by instructions to the banks to ensure adequate availability of export finance. Several consultations with exporters and commercial banks as well as joint meetings had been arranged for the better understanding of the mechanism of the financing facility, it added.