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Govt urged to cut export refinance mark-up to 6 pc

KHALID ABBAS SAIF

FAISALABAD: Slashing export refinance mark-up rate to 6 percent would greatly help boost exports of the country and provide necessary incentive to textile exporters to achieve the target of $9.2 billion. This was stated by Naeem Omer, Chairman, All Pakistan Cloth Exporters Association (Apcea) while talking to newsmen here on Friday.

The mark-up rate of export refinance was raised with the increase in inflation rate which had rose to 13 percent plus, as per official calculations few years ago, while unofficially the inflation was quoted as high as 19 percent by exporters. In consonance with this rising trend the rate of export refinance was raised from three to six percent, then 8 percent and finally to 12 percent.

This high mark-up rate could hold, in view of the prevailing bank credit rate ranging between 22 and 24 percent, he said. With the reduction in general inflation rate from 13 percent to 10 percent the bank credit rates were lowered to 19 percent and export credit rate was brought down to 8 percent, he said. Now, that the inflation has been further brought under control to 6 percent and the banking credit mark-up has been revised downward to 16 percent it was but natural that the export refinance rate should be reduced further.

"Reduction in export refinance rate is all the more imperative," the Apcea chairman argued," as the exports are lifeline of national economy and major source of foreign exchange earning." It was further important in order to boost the national exports which had remained stagnant around $8 billion for the last many years.

Naeem has urged the finance minister and the State Bank officials to bring down the export refinance rate to 6 percent to make it more realistic and pragmatic under the present circumstances as well as in the larger national interest.