State Bank flies in to ease liquidity crunch

Published March 21, 2020
The SBP already offers two lending programmes worth Rs660 billion — EFS and LTFF — to banks. — APP/File
The SBP already offers two lending programmes worth Rs660 billion — EFS and LTFF — to banks. — APP/File

KARACHI: In the wake of slowdown in global demand due to the novel coronavirus, the State Bank of Pakistan (SBP) on Friday introduced relaxations for exporters to help alleviate the current crisis.

The SBP already offers two lending programmes — Export Finance Schemes (EFS) and Long-Term Financing Facility (LTFF) — to banks worth Rs660 billion for extending cheap credit lines to exporters and in the latest statement, it has eased the conditions under these.

Those availing the EFS are now required to export one-and-a-half-times of the borrowed funds effective for FY20 and FY21, down from two times as was previously the case. Similarly, the time period to meet export performance was also extended from end of June to Dec 31.

Moreover, exporters benefitting from EFS can now ship their goods within 12 months of availing credit, from the previous half-year timeframe. No penalties will be imposed either for breach of this during January-June period.

To avail credit through LTFF, the SBP reduced the eligibility condition to exports 40 per cent or $4 million of the total sales for all the borrowings between Jan 1 and Sept 30, from 50pc, or $5m. “Moreover, under the requirement of annual projected exports performance for four years to avail LTFF for new or BMR projects has been extended by another one year. Now the projected exports performance will be measured in 5 years.”

The SBP has also allowed banks to enhance the time period for realisation of exports proceeds from existing requirement of 180 days to 270 days on a case-by-case basis where the delay is related to COVID-19.

“Likewise, to facilitate importers, SBP has extended the time period for import of goods into Pakistan against advance payment from existing requirement of 120 days to 210 days,” continued the statement.

“The SBP stands ready to take additional measures as the situation related to COVID-19 and its impact on the economy evolves,” it concluded.

Published in Dawn, March 21st, 2020

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