KARACHI, Dec 15: The persisting negative trend in export financing has suggested that the subsidised loans are not being utilised for boosting exports, which are significant for the country’s external account.

The State Bank of Pakistan, in its recent Monetary Policy Compendium for October 2012, noted that the export financing had been negative Rs19 billion in 2011-12 and the trend had yet not changed.

It could be depressing for the economic managers that in the first two months (July-August) of 2012-13 the exporters made a net retirement of Rs16.4 billion instead of making fresh borrowings.

The export finance is provided at subsidised rate to help exporters explore new markets and buyers to earn better profits and fetch precious foreign exchange, but the negative trend in securing loans under Export Financing Scheme (EFS) showed that they were not fully utilising this cheap source of financing.

In the first two months of this fiscal year the credit off-take for the working capital remained minus Rs49.4 billion, which was minus Rs66.9 billion in the same period last year.

Exports during the five months increased slightly but the main reason was the higher international prices of exportable products.

Exporters say since the economy has not been growing at a reasonable rate, the growth in exports also suffered.

It also reflected from the credit off-take by the largest textile sector, which accounts for 60 per cent of export earnings for the country. During the first two months of the current fiscal year the manufacturing sector retired Rs48.3 billion while the textile sector itself retired a debt of Rs25 billion.

The textile sector made a net retirement of Rs23.7 billion in 2011-12 reflecting the poor performance of the economic growth.

A textile exporter said the recent increase in the textile export earnings was due to higher prices on the international market.

He was hopeful to fetch better prices in coming months as well.

The entire manufacturing sector had made a total borrowing of Rs4.5 billion in FY12 while the total stocks of loan for the same sector were Rs1,390 billion for fiscal year.