WEBDESK: Pakistan has taken another step toward meeting International Monetary Fund (IMF) conditions by phasing out its subsidized export financing schemes. The government is shifting the Long-Term Financing Facility (LTFF) from the State Bank of Pakistan (SBP) to the Export-Import (Exim) Bank of Pakistan. This move aligns with the IMF’s demands to reduce financial subsidies and reform monetary policies.
The decision was made at a meeting of the Economic Coordination Committee (ECC) of the Cabinet, presided over by Finance Minister Muhammad Aurangzeb, and attended by three other ECC members – ministers for petroleum, power, and investment.
On the request of the Ministry of Finance, the “ECC decided that the State Bank of Pakistan’s Long-Term Financing Facility (LTFF) portfolio of Rs330 billion would be phased out to the Exim Bank, with an allocation of Rs1.001bn through a Technical Supplementary Grant to meet the LTFF subsidy requirement for the new portfolio for FY25”, said an official statement.
The LTFF, worth Rs330 billion, will now be handled by the Exim Bank, alongside a new financing portfolio of Rs210 billion. The government will bear a subsidy cost of Rs91.466 billion. These changes are part of Pakistan’s agreement with the IMF to phase out such financing schemes over the next five years.
Previously, the SBP had already begun limiting funding to exporters by reducing banks’ access to these facilities. Other schemes, like the Export Finance Scheme (EFS) and the Islamic Export Refinance Scheme (IERS), are also being phased out as per IMF conditions. The goal is to strengthen monetary policy and ensure a more market-driven financial system.
Pakistan has been working to stabilize its economy and meet IMF requirements after securing a $7 billion bailout. The reforms aim to expand the tax base, remove preferential investment incentives, and promote sustainable economic growth.
By implementing these IMF-backed changes, Pakistan hopes to improve its financial stability and attract more investment. However, businesses that relied on these subsidized loans may face challenges in securing affordable financing. The long-term impact on exports remains to be seen.
With these steps, Pakistan continues to align its financial policies with IMF guidelines, aiming for economic stability and growth in the coming years.
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