Government Approves Rs98 Billion Export Support Package
ISLAMABAD: The government on Monday approved a Rs98 billion subsidy to provide highly cheaper loans to exporters, including 10-year financing at a fixed 5% rate, in a fresh bid to reverse a 6% drop in exports during the last fiscal year.
Three Schemes Cleared By ECC
Performance Rebate And Long-Term Facility Launched
The Economic Coordination Committee, chaired by Finance Minister Muhammad Aurangzeb, endorsed three schemes recommended by the central bank for the current fiscal year and beyond.
Under the enhanced Exim-administered Export Finance Scheme, exporters will access six-month working capital loans at 8.5%. The government will pick the remaining 5% interest cost, requiring a Rs58 billion subsidy this year.
The scheme’s portfolio has been raised from Rs1 trillion to Rs1.5 trillion to expand access. Some ECC members sought caps on maximum limits to ensure wider distribution of cheaper funds.
New Long-Term Financing Facility For Export Growth
A new Long-Term Export Growth Financing Facility will offer loans at 2% for the first two years and a fixed 5% for the subsequent eight years. It targets new export-oriented projects and balancing, modernisation and replacement of existing units.
Loans of Rs350 billion are projected under the facility, with a total subsidy impact of around Rs196 billion over time as the government absorbs interest costs up to 11.5%. This year’s estimated cost is Rs25 billion.
The existing long-term facility with variable rates had drawn limited interest due to rate risk. The fixed-rate structure is designed to remove that uncertainty for businesses planning capacity expansion.
Performance-Based Rebates To Reward Export Growth
The third measure is a performance-based rebate on incremental exports, effective from July 1, 2026, at an annual cost of Rs15 billion. Exporters achieving up to 10% growth over the previous year will receive a 1% rebate on the incremental value.
Those recording growth above 10% will qualify for a 2% rebate. The finance ministry said the total estimated subsidy impact of the export schemes over 10 years stands at Rs270 billion at current interest rates.
The government last month withdrew a Rs76 billion subsidy on foreign remittance transfer costs, signalling a clear preference for export promotion. Exports trailed remittances by $11.5 billion in the last fiscal year.
The ECC directed that a six-month performance report on the new schemes be presented to assess their impact. Officials noted that earlier incentives had failed to prevent the 6% export decline.
Focus Shifts Towards SMEs And Sustainable Export Expansion
The package places emphasis on fixed low-rate financing and greater inclusion of small and medium enterprises.