- Manufacturing authorities will be able to import plant, machinery, spare parts and raw material by making payment in advance using this facility.
- The measure is in continuation of SBP’s efforts to reverse the earlier restrictions to facilitate and support ease of doing business, says SBP.
The State Bank of Pakistan (SBP) allowed on Thursday banks to make advance payment up to 50 percent of the value of imports against letter of credit for manufacturing concerns.
Following SBP’s decision, manufacturing authorities will be able to import plant, machinery, spare parts and raw material by making payment in advance using this facility. “Today’s measure is in continuation of SBP’s efforts to reverse the earlier restrictions and facilitate and support ease of doing business in light of the improved foreign exchange and economic outlook,” SBP said in a statement.
Back in July 2018, the country’s central bank withdrew the advance payment facility allowed to importers following pressures in the foreign exchange market and deteriorating balance of payments situation.
Subsequently, some of the restrictions were relaxed to facilitate imports in critical areas i.e. medicines, education and defense while most of the restrictions remained in place.
However, after the implementation of a market based exchange rate system in May 2019, pressures in the foreign exchange market have eased and the balance of payments has witnessed significant improvement informed the SBP, as reflected in the improving current account balance, rising net foreign exchange reserves, and other indicators.
This improvement in the foreign exchange market after the implementation of the exchange rate reforms has allowed to SBP to begin relaxing the restrictions that had been imposed earlier.