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Markup rates for export financing raised to 13%

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  • SBP raises export financing markup rates by 200 basis points.
  • Decides to reduce gap between policy rate and EFS, LTFF to 3%.
  • This will come into effect from December 30, 2022. 

KARACHI: The State Bank of Pakistan (SBP) has raised the export financing markup rates by 200 basis points in line with the key policy rate, The News reported Friday.

In a circular issued on Thursday, the central bank decided to reduce the gap between the policy rate and Export Finance Scheme (EFS) and the Long-term Financing Facility (LTFF) from the existing 5% to 3%.

“Accordingly, markup rates for financing under EFS (Part-I & Part-II) and LTFF are increased from the existing 11% per annum to 13% per annum each with effect from December 30, 2022.”

In the future with any change in the SBP policy rate, markup rates for EFS and LTFF would be revised automatically so that the gap between the policy rate and EFS and LTFF rates was maintained at 3%, the central bank added.

With the fresh SBP move, the interest rates on working capital financing and plant machinery have been increased.

The rates on EFS and LTFF schemes were fixed at 3-5% until March 2022. On July 7, 2022, the SBP linked the rates of EFS and LTFF with its policy rate.

The SBP hiked the policy rate by 100 basis points to 16% last month to prudently strike a balance between maintaining growth post-floods and managing inflation. The central bank is set to announce the upcoming interest rate decision on January 23.

Analysts expect the SBP to maintain a tight monetary stance in the second half of this fiscal year as inflation remains elevated. The policy rate is likely to be raised by 100 bps to 17% in the first quarter of 2023.

The rise in the cost of borrowing is expected to affect exports and the private sector credit growth.

In line with the slowdown in economic activity, private sector credit continued to moderate, increasing only by Rs86.2 billion during the first quarter compared to Rs226.4 billion during the same period last year, the SBP said in its last monetary policy statement.

This deceleration was mainly due to a significant decline in working capital loans to wholesale and retail trade services as well as to the textile sector in the wake of lower domestic cotton output, and a slowdown in consumer finance, it added.

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The government is about to unleash another gasoline bomb on citizens beaten by inflation

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governmentThe price of petroleum products is anticipated to rise by the Federal Government starting on July 16. The price of gasoline is anticipated to rise by Rs7.67 per litre, the price of high-speed diesel by Rs3.72 per litre, and the price of kerosene by Rs2.73 per litre.

The people have informed me that a proposal to increase the petroleum levy has been created and is pending final clearance from Prime Minister Shehbaz Sharif.

After speaking with the premier, it is expected that the Ministry of Finance will declare the revised petroleum product prices tonight.

Petroleum product prices have recently surged due to rising global oil prices and Pakitsan’s adjustment of the petroleum levy in response to the International Monetary Fund’s (IMF) adamant demands, which forced the country to raise the petroleum development levy in the Finance Bill to Rs70 per litre.

Noteworthy is the fact that on July 1, the authorities also dropped a gasoline bomb.

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Positive Trend at PSX With a 1361-Point Gain for the KSE 100-Index

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In the first few hours of trading, the Pakistan Stock Exchange sees a bullish trend as the KSE 100-Index rises 1361 points, bringing the stock market to over 81,300 points.

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Significant surge in the price of gold in Pakistan

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On Friday, the price of gold in Pakistan continued to increase.

According to the All-Pakistan Gems and Jewellers Sarafa Association, the price of 24-karat gold per tola has risen by Rs2,200, reaching Rs249,000.

The price of 10-gram 24-karat gold increased by Rs1,886, reaching a total of Rs213,477. On Thursday, the cost of 10 grammes of 22-karat gold was Rs195,687.

The global gold market likewise had a rising trajectory. As per APGJSA, the worldwide rate was $2,404 per ounce, showing a decline of $24 during the course of the trading day.

The local market witnessed constant silver prices at Rs2,900 per tola.

Market observers attribute the increase in gold prices to other variables, such as volatility in the global market, currency exchange rates, and economic conditions. The ongoing surge in gold prices is likely to impact investment choices and consumer behaviour in the near future.

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