Karachi August 21 2022: SBP informed that payments under FX contracts and Letter of Credit will soon be back to normal in a meeting with Pakistan Stock Exchange Shareholders.
This will help to resolve issues facing by Auto Assembers in Pakistan and other businesses that are in the process of importing machinery to set up new units such as textile, cement and others.
SBP imposed restrictions on imports as current account ballooned to $17.4 billion for fiscal year 2022, which runs form July to June, when compared with current account deficit of $2.8 billion in fiscal year 2021.
Earlier on August 18, 2022, Pak Suzuki Motors Limited extend the shut down period by another 5 days as company faces issues with opening of LCs due to restrictions of Central Bank, according to company filing to the exchange. Prior to this Toyota Pakistan shut its plant for 14 days at the start of this month citing similar issues.
Textile manufacturer are also fear to loss billion in exports as State Bank of Pakistan restrict Letter of Credit opening for import of machinery.
“We at Interloop are setting up an Apparel manufacturing plant in Faisalabad. Most of the cost has incurred but SBP is not allowing to open couple of LCs for import of machinery. Our project will not only generate foreign exchange for the country” says Muhammad Maqsood Group Chief Financial Officer Interloop
Earlier on May 20, 2022, SBP decided that Authorized Dealers, with immediate effect, shall seek prior permission from Foreign Exchange Operations Department (FEOD), SBP-BSC before initiating transactions for import of goods listed in the enclosed Annexure which was latter on updated Annexure, subject to following conditions:
- The above requirement shall be applicable for all import transactions initiated by Authorized Dealers through (i) issuance/ amendment of letter of credit; (ii) registration/ amendment of contract; (iii) making advance payment; (iv) authorizing transactions on open account or collections basis;
- The above requirement shall not be applicable on import transactions initiated by the Authorized Dealers on or before the date of issuance of this circular letter;
- Authorized Dealers may approach Director, FEOD, SBP-BSC, Head Office, Karachi, along with appropriate documents and its recommendation on a case to case basis;
- Authorized Dealers shall be required to suitably amend the importer’s bank profile in Pakistan Single Window to ensure that the aforementioned import transaction shall not be initiated on open account basis without prior permission from State Bank.
