Substitution of contracts allowed within six months for pre-shipment loans

KARACHI (February 04 2003) : To promote export trade, Pakistan government has taken special steps to provide pre-shipment loans for facilitating exporters of all commodities.

As a first step, it has been decided that substitution of the contracts and the letters of credit (LCs) will be allowed up to a maximum period of six months from the date of disbursement of the loan. According to official sources, the settlement, or the execution of the last substituted contract or LC, should not extend beyond six months from the date of disbursement of loan.

Commercial banks will have to ensure strict observation of these instructions.

In case an exporter fails to fulfil the obligations under the final contract, or LC, the export order will be cancelled.

He will, however, be able to approach the State Bank, through the commercial bank, with valid reasons and documentary evidence.

He will request to allow the purchase of the outstanding loan amount, for settlement purposes from the interbank market.

The Federal Government is now busy preparing a plan to make exports truly zero-rated, with special emphasis on special incentives to be provided to exporters to boost the export trade.

The Government is hopeful to achieve the export target for the current fiscal year amounting to 10 billion dollars.

During the first half of the year, the exports have touched the 5.2 billion dollars mark, according to official figures.

There are also reports in Government circles that Pakistan's exports may go beyond the figure of 10 billion dollars during the current fiscal year.

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