Following the policy rate hike, the State Bank of Pakistan (SBP) on Monday announced an increase in the markup rate for financing under Export Finance Scheme (EFS) as well, taking it from 5.5% to 7.5%.
On Monday, the central bank raised the policy rate by 150 basis points, taking it to 13.75%,, the highest interest-rate level since 2011 when it stood at 14%.
Following the announcement, the SBP said that it has raised the markup rate for EFS as well, enhancing it from 5.5% per annum to 7.5% per annum with effect from May 24, 2022.
Furthermore, the markup rate for financing under Long Term Financing Facility (LTFF) was also increased from 5% to 7% per annum.
“Further, in future, the rates of EFS and LTFF will be linked with SBP Policy Rate through a formula so that any change in policy rate is automatically reflected in rates of these refinance schemes,” read the circular.
“While doing so, it will be ensured that rates on these SBP refinance facilities are maintained at such level that they continue to provide sufficient incentive to export sector of Pakistan,” it added.
Earlier, Finance Minister Miftah Ismail prior to his departure to Doha to meet the International Monetary Fund (IMF) delegation said that the central bank may increase interest rates, just hours before MPC meetup.
“Due to the 6% growth rate shown earlier, the IMF is now saying that the economy is growing too rapidly, which is creating a current account deficit issue, therefore, the economic growth rate should be slowed down,” he said.
“The IMF formula to decelerate economic growth is to increase the interest rate. Now the SBP would have to hike up the policy rate,” he said then.