DLTL/R&DS allocated funds exhausted

The State Bank of Pakistan has stopped payment of drawback of local taxes and levies (DLTL) and research and development subsidy (R&DS) claims as the funds allocated by the Ministry of Finance have been exhausted. Sources told Business Recorder on Saturday that during last fiscal year 2010-11, the SBP had received Rs 15.613 billion worth claims of drawback of local taxes and levies from textile sector.
However, the Ministry of Finance released only 25 percent of total claims for payment of DLTL during the fiscal year 2011. Against total claims received by the State Bank, the Ministry of Finance released only Rs 4 billion for payment of DLTL to exporters. Later, according to sources, this allocation was revised by the Ministry, asking the central bank to disburse Rs 3.815 billion, out of allocated Rs 4 billion, and the remaining amount, Rs 185 billion, should be used for other payments.
Therefore, following the directives of the Ministry, the SBP disbursed Rs 3.813 billion against DLTL claims of Rs 15.613 billion during fiscal year FY11. After this payment some Rs 11.80 billion claims have so far not been paid, and the SBP stopped payment of DLTL claims as funds have been exhausted.
Besides, the SBP has also stopped payment of R&DS claims, as its allocated funds have also exhausted. Allocated budget for the R&DS was Rs 367 million against claims of Rs 492 million, during fiscal year 2011. The State Bank disbursed complete allocation of Rs 376 million, while outstanding amount as on June 30, 2011 stood at Rs 125 million.
Sources said the ministry of textile industry had revised the allocated budget of both schemes by withdrawing Rs 185 million from DLTL and Rs 125 million from R&DS as on 30-6-2011, to be utilised in other schemes.
Cumulatively, some Rs 12 billion worth claims of DLTL and R&DS have not been paid by the SBP due to non-availability of funds from the ministry of finance. "This is not SBP responsibility to make payment of all claims submitted by the textile exporters, and SBP works only as a disburser", sources said. The payment of DLTL will resume when the ministry of finance will provide more funds under this scheme, they added.
However, the SBP cannot make payment from its own resources, as these schemes have been announced by the federal government and SBP is only responsible for the disbursement of the funds allocated by the ministry of finance.
The textile sector was granted Drawback on Taxes and Levies Order, through SRO No 3 (1) TID/09-P-I dated 1st September, 2009, under which the textile exports shipments made from 1st September, 2009 to shipments till 30th June, 2011 were eligible for DLTL and ministry of textile also assured for extension of a further period lasting till the expiry of the Textile Policy 2009-2014 so that the Textile Sector survives in the larger interests of the nation.
As per notification 3 percent of DLTL will be paid to garments, 2 percent to home textile and one percent to cotton cloth. In addition knitted fabrics will also eligible for one percent DLTL.
The subsidy scheme introduced through SRO No 3 (1)TID/09-P-I dated September 1, 2009 has also expired on June 30, 2011 and despite demand of textile sector so far no new SRO for continuity of this scheme has been announced by the federal government.