July 07, 2022 (MLN): In line with the increase in policy rate announced in the MPC meeting today, the State Bank of Pakistan (SBP) has moved up the markup rate for financing under Export Finance Scheme (EFS) and Long Term Financing Facility (LTFF) by 2.5% and 3% respectively.
Accordingly, the new rates for EFS and LTFF now stand at 10% each per annum.
“As foreshadowed in the last monetary policy statement, the interest rates on EFS and LTFF loans are now being linked to the policy rate to strengthen monetary policy transmission, while continuing to incentivize exports by presently offering a discount of 500 basis points relative to the policy rate,” the MPC statement read.
This combined action continues the monetary tightening underway since last September, which is aimed at ensuring a soft landing of the economy amid an exceptionally challenging and uncertain global environment, it added.
It should help cool economic activity, prevent a de-anchoring of inflation expectations and provide support to the Rupee in the wake of multi-year high inflation and record imports.
To recall, the SBP had increased the EFF and LTFF rates by 2% on May 23, right after the MPC announcement of a rate hike by 150bps to 13.75%.
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