ECC approves transfer of Rs330bn SBP financing facility to Exim Bank

The Economic Coordination Committee (ECC) of the Cabinet on Friday approved the phased transfer of the State Bank of Pakistan’s (SBP) Long-Term Financing Facility (LTFF) portfolio worth Rs330 billion to the Export-Import Bank of Pakistan (Exim Bank).

The decision was taken at a meeting chaired by Finance Minister Muhammad Aurangzeb, following a summary submitted by the Finance Division on transitioning the financing scheme.

According to an official statement, the ECC also approved an allocation of Rs1.001 billion through a Technical Supplementary Grant to cover the subsidy requirements of the new LTFF portfolio for fiscal year 2025.

This transition is part of Pakistan’s commitment under the International Monetary Fund (IMF) programme to phase out the SBP’s operational role in refinancing schemes and shift responsibility to the Exim Bank. 

A similar transition of the Export Finance Scheme (EFS) portfolio is already in progress, based on a Term Sheet approved by the ECC and Cabinet in 2023.

Exim Bank, established under the Export-Import Bank of Pakistan Act, 2022, is mandated to promote exports and import substitution. Under the current phase, the bank will assume control of the Rs330 billion LTFF portfolio and manage an additional Rs210 billion in new long-term financing for exporters.

Historically, the SBP has managed EFS and LTFF schemes to support the value-added export sector. The IMF-backed Standby Arrangement requires Pakistan to exit SBP-managed refinancing programmes by 2028 to enhance monetary policy transmission.

A Working Group comprising representatives from the Finance and Commerce Ministries, Securities and Exchange Commission of Pakistan (SECP), SBP, and Exim Bank developed the phase-out plan, which was shared with and approved by the IMF.

Under the new structure, Exim Bank will serve as the disbursing agent on behalf of the government, processing subsidy payments to Participating Financial Institutions (PFIs) and Participating Islamic Banking Institutions (PIBIs).

The total estimated cost to the government for covering subsidy claims on both the existing and new LTFF portfolios stands at Rs91.47 billion. The move reflects a broader policy shift to reform and modernise Pakistan’s export financing framework in line with international standards.