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Full Version: ESF: SBP's Export Finance Schemes
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Would like to talk about the Export Finance Schemes of the State Bank of Pakistan. To my mind, it is a dirty subsidy as the credit is supported by printing the notes, which adds to the inflationery pressures. Also, the allocative efficiency of this subsidy, especially to bigger firms---to which more than 50 % of the EFS goes--- is questionnable. This also makes easy profits available to Banks as they are not obliged to use their own funds to lend with prudence. I am not sure but it appears that this system---deduction of the loan amount from Bank's reserves with SBP--also distorts the arrival of export proceeds. There is also a confusion as to when does SBP reflects the arrival of export proceeds when it deducts the loaned amount after the specified date from Bank's reserves or on the date of actual arrival of the foreign exchange receipts with SBP. Somebody please help me know how many export proceeds did not arrive in time and how many penalties were imposed by SBP on the banks? This all, to my mind is a criminal case of inefficient resource management. Would like to be bettre enlightened on the subject, particularly on the percentage contribution of EFS towards the inflationery pressures in Pakistan.
This scheme is the best to promote the export of the country.