SBP slashes mark-up rate under the TERF investments to 5pc

KARACHI: The State Bank of Pakistan (SBP) has announced to reduce mark-up rate on investment under SBP’s Temporary Economic Refinance Facility (TERF) to 5 percent from the previous 7 percent.
In a statement, the SBP said that it has also reduced the mark-up rate on Long Term Financing Facility for the non-textile sector to 5 percent from 6 percent to extend the benefit of the recent reductions in the policy rate.
Furthermore, the central bank has also allowed the TERF facility in cases where LCs/Inland LCs were opened prior but retiring after the introduction of scheme on 17 Mar 2020. It may be mentioned here that the TERF facility was introduced to provide a time-bound incentive for investment in all sectors.
It must be noted that the State Bank of Pakistan (SBP) in May reduced the policy rate by 100 basis points to eight per cent, the fourth cut by the central bank since COVID-19 outbreak emerged in the country two months ago.
This decision reflected the MPC’s view that the inflation outlook has improved further in light of the recent cut in domestic fuel prices. As a result, inflation could fall closer to the lower end of the previously announced ranges of 11-12 percent this fiscal year and 7-9 percent next fiscal year, read the statement. – TLTP