The federal cabinet’s Economic Coordination Committee (ECC) is expected to approve the transfer of the State Bank of Pakistan’s (SBP) Long Term Financing Facility (LTFF) portfolio worth Rs330 billion to the Export-Import (EXIM) Bank of Pakistan, Business Recorder reported this citing sources.
The move is in line with Pakistan’s commitments under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF).
The EXIM Bank, established under the Export-Import Bank of Pakistan Act, 2022, is mandated to promote exports and import substitution. The Ministry of Finance stated that, historically, the SBP has offered refinancing facilities to exporters through the Export Finance Scheme (EFS) and LTFF in both conventional and Islamic modes since 2007.
Under the IMF programme, Pakistan agreed to phase out SBP’s operational role in such schemes and transfer responsibility to EXIM Bank. A similar transition of the EFS portfolio is already underway, following a Term Sheet approved by the ECC and Cabinet in 2023.
The current phase now involves the handover of the Rs330 billion LTFF portfolio, with an additional Rs210 billion in fresh LTFF financing also to be managed by EXIM Bank.
The finance minister has requested ECC approval for two key measures: transferring the SBP’s Rs330 billion LTFF portfolio to EXIM Bank and allocating Rs1.001 billion through a Technical Supplementary Grant (TSG) to meet subsidy requirements for the fresh portfolio in FY2025.
According to the news report, the refinance schemes are designed to promote exports, especially in the value-added sector. The EFS has been available since 1973, while LTFF has catered to long-term financing needs of exporters. To enhance the transmission of monetary policy and fulfil IMF conditionalities under the Standby Arrangement (SBA), Pakistan has committed to fully exit SBP-managed refinancing schemes by 2028.
To oversee this transition, a Working Group comprising representatives from the Ministry of Finance, Ministry of Commerce, Securities and Exchange Commission of Pakistan (SECP), SBP, and EXIM Bank was formed. The group’s phase-out plan was shared with and approved by the IMF.
Under the proposed structure, EXIM Bank will act as the disbursing agent on behalf of the government, processing and releasing subsidy payments to Participating Financial Institutions (PFIs) and Participating Islamic Banking Institutions (PIBIs).
The total cost to the government for covering subsidy claims on both the existing and new LTFF portfolios is estimated at Rs91.47 billion.
