KARACHI (January 30 2004): The State Bank on Thursday terminated the facility of Foreign Currency Export Finance (FCEF) with immediate effect, as the scheme could not attract exporters because of a number of reasons.
The FCEF scheme, which was started after negotiating a loan from the Asian Development Bank, could not produce the required results and the government decided to pay back the amount acquired for the purpose.
The government had negotiated a loan of 150 million dollars with the ADB to meet the financing requirements of exporters in foreign currency for import of inputs required by them for manufacturing the goods for export.
“It has been observed that the scheme did not attract exporters as its utilisation has remained at a very nominal level because of a number of reasons,” said a circular issued by the SBP.
“Efforts by the State Bank in enhancing the utilisation of the scheme have also not been successful,” said the SBP. It said that lack of interests by the exporters and under-utilisation of the scheme has reduced its economic usefulness. “The Federal Government has decided to repay the loan availed from the ADB for the purpose ahead of the its scheduled repayment,” said the SBP.
However, exporters said the dollars under the scheme was available at a higher rate compared to other sources.
They said even banks were providing cheaper dollars. They further maintained that the complicated procedure to avail the scheme was another reason for its failure.
“All the authorised dealers are informed that the aforesaid FCEF stands terminated with effect from the date of issuance of this circular,” said the circular. They have been further advised not to entertain any fresh request from exporters for financing under FCEF, the SBP concluded.