Impact of Export Financing Schemes on Export Performance Qualitative Approach
ABSTRACT
Export financing is one of the important tools of export promotion policy in developing economies. In Pakistan, Exports financing schemes are a form of government intervention for industry and in return exports have been thought as a consistent source of foreign exchange earnings. Pakistan tries to do efforts to make its economy more competitive and the country offered certain export financing schemes to support exporting firms and enhance country’s exports. Export financing schemes are offered through FBR, SBP, TDAP, Commercial Banks and EXIM bank. The impact of export financing on exports appears to be minor as reflected by stagnant exports in the country. The study mainly compares the two main export financing schemes, one is offered by SBP through commercial banks and the other by FBR. It further evaluates the performance of the exports of Pakistan, and export financing schemes from the perspective of Commercial banks (as private entity) and exporters (as beneficiary). Both the SBP and FBR financing schemes intend to encourage exports by providing promising incentives. By availing these schemes, large exporters are motivated to enhance their export performance but the lengthy production process and the time lag between production and delivery impede performance of exporting firms. However, the study reveals that the export financing schemes primarily benefit large and some medium-sized exporting firms, while majority medium and small enterprises are not taking advantage of these schemes, possibly due to lack of awareness or concerns about the complexities involved. Unfavorable business environment, delays, legislation fear (due to involvement of money) has created trust deficit issues among commercial banks and exporters. Large firms tend to meet their export targets by utilizing the Export Financing Schemes (EFS) since they are bound by scheme agreements. This study suggests that export financing has a limited impact on Pakistan’s exports and doesn’t guarantee the effectiveness of export promotion policies. The State Bank of Pakistan (SBP) offers affordable financing to certain export segments, helping them stay competitive in global markets. However, export facilitation by the Federal Board of Revenue (FBR) is relatively new and will take time to influence exports. The study found no evidence that large firms are investing in their own upgradation, which also leads to stagnant export growth in the global market.
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