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Govt designates officials to make EXIM Bank operational

By Erum Zaidi
October 22, 2016

KARACHI: The government has designated top officials to expedite the establishment of EXIM Bank of Pakistan to promote foreign trade, which has been awaited for the last more than two years. 

“The initial board of directors, CEO (chief executive officer), and company secretary have been designated, while the process of appointments of permanent chief executive officer and company secretary is in progress,” Abid Qamar, chief spokesman at the State Bank of Pakistan (SBP) said.    

Sources said the central bank has already deputed its five officers to the upcoming bank. The officers will be responsible for the spadework in relation to the bank’s operation within the agreed timeline.

The senate standing committee on commerce had instructed the ministry of commerce and other stakeholders to make the EXIM Bank operational before November 30 this year. Usually, EXIM Bank, owned by either government or semi-government agency, extends loans to traders and provides export credit guarantees, insurance to exporters against the losses from non-payment by the importers and pre-shipment advances.

It also provides long-term credit facilities for project expansion or establishing new export-oriented businesses. Qamar said the pricing of the EXIM Bank’s loans will be as per the refinance schemes of the SBP. “Pricing will be market-based and financing will be provided from EXIM Bank’s own resources,” he added.  

The EXIM Bank of Pakistan was incorporated as a public company limited in June 2015. Initially, the government allocated Rs10 billion for the establishment of the bank; Of that, seven billion rupees have already been released as equity funds.

Analysts said there is an urgent need to make such a specialised institution operational in the wake of falling exports.   Exports dropped to $4.676 billion in the first quarter of the current fiscal year of 2016/17 from $5.143 billion during the same quarter of the last fiscal year. 

Business leaders said the formation is imperative for promotion and development of the exports sector. All regional countries, including India, Bangladesh and China have EXIM banks.

Shamim Firpo, president of the Karachi Chamber of Commerce and Industry (KCCI) said the EXIM Bank’s board of directors should also include representatives from the chamber in the interest of the business and industrial community.

Firpo said exporters desperately need trade financing support as they are facing liquidity constraints, high cost of doing business, limited availability of financing for export or investment in export-oriented manufacturing, very little credit risk coverage and meager incentives for importers.

The business leader said the bank’s paid-up capital should be increased to Rs20 billion. “Increased paid-up capital will enhance the capacity to provide funds for the development and financing of export sector and for leasing of capital goods at low interest rates.”