ANNOUNCEMENT 01 Jun 2009
In June 2009, the government of Pakistan announced altered import support.
NUMBER OF INTERVENTIONS
SMEFD Circular Letter No. 07 of 2009
On 8 June 2009, the State Bank of Pakistan (SBP) allowed all export-oriented projects to get financing for imports of generators/captive power plants under the Long Term Financing Facility (LTFF) even though the project might not be eligible under the original LTFF scheme. The following additional conditions apply -
The LTFF was announced in 2007 to provide long term local currency financing for imported and locally manufactured plant & machinery used for certain export oriented projects that have annual exports of at least USD 5 million or at least 50% of the sales, whichever is lower.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries
The Long Term Financing Facility provides subsidized financing of plant and machinery to be used in export-oriented sectors. This facility subsidizes the cost of production of export goods and therefore is likely to affect firms in the international market of these goods.
Under the Long-Term Financing Facility, financial institutions provide subsidized local currency financing for firms to purchase plant and machinery for their export-oriented projects.
By providing financial support for plant and machinery, the state act subsidizes the cost of production in the specified sectors and provides an unfair advantage against similar goods in the domestic and international market.