The State Bank of Pakistan (SBP) said it was reducing the gap between policy rate and the rates applicable on Export Finance Scheme (EFS) and Long Term Financing Facility (LTFF) from the existing 5% to 3%, according to a circular on Thursday.

“Accordingly, markup rates for financing under EFS (Part-I & Part-II) and LTFF are increased from the existing 11% per annum to 13% per annum each with effect from December 30, 2022,” it said.

“In future, with any change in the SBP policy rate, markup rates for EFS and LTFF will be revised automatically so that the gap between policy rate and EFS & LTFF rates is maintained at 3%. Other instructions on the subject shall remain unchanged.”

On July 7, 2022, the SBP linked the rates of EFS and LTFF with the SBP policy rate. Accordingly, with effect from July 8, 2022, the mark up rate for financing under EFS (Part-I & Part-II) increased from 7.5% per annum to 10% per annum and mark up rate for financing under LTFF increased from 7% per annum to 10% per annum.

On May 24, 2022, the mark up rate for financing under EFS was enhanced from 5.5% per annum to 7.5% per annum and mark up rate for financing under LTFF was raised from 5% per annum to 7% per annum.

On April 7, 2022, the markup rate for financing under Export Finance Scheme (EFS) was raised by 2.5% in line with the increase in policy rate announced in the MPC meeting.