LAHORE: Facing credit crunch and a lukewarm response from the commercial banks, rice exporters have approached the State Bank of Pakistan governor to seek his help in meeting their working capital requirements.

In a letter written to Dr Reza Baqir this past Monday, Rice Exporters Association of Pakistan chairman Ali Hussam Asghar has drawn the attention of the SBP governor that commercial banks are not increasing REAP members’ Export Refinance Facility limits despite repeated requests. This lukewarm attitude, he says, is hurting the traders’ efforts to take rice exports up to $2.5 billion from the current $2.0bn mark.

“Efforts to enhance rice exports from Pakistan may suffer badly despite a good production as the commercial banks have declined to enhance the Export Refinance Facility limits to the exporters,” cautions Mr Asghar.

Rice exporters are facing trouble in obtaining ERF from their banks which are saying that due to lack of allocations from the State Bank, they are not able to enhance the current credit lines, he says.

He informs the SBP governor that in an earlier communiqué of his at the start of rice season in November (2021), he had requested Advisor to PM for Commerce Abdul Razzak Dawood to arrange a joint meeting of representatives of his ministry, SBP and commercial banks for increasing credit share to the rice export sector but it could not be organised despite the passage of two months.

The REAP chairman says the country has harvested a good rice crop, especially of non-basmati varieties, while Malaysia and China are emerging as new markets for Pakistan’s non-basmati rice provided the exporters are offered enhanced credit facilities.

The letter urges the SBP governor to immediately intervene for the allocation of more financial spread for the commercial banks to increase the ERF to the rice sector.

Unlike the other six export sectors, the rice sector has no incentive other than the export refinance facility, Mr Asghar says, adding that if this facility is denied, rice traders will be rendered uncompetitive in the international market and fail to meet their export targets.

He argues that as per rules the rice sector should be extended ERF worth $1.0bn if last year’s exports stand at $2.0bn. There should also be a 50 per cent increase in ERF to an exporter with the condition that he would export at least double than the extended ERF.

Published in Dawn, January 6th, 2022