ECC Approves Transfer of SBP’s Rs330 Billion LTFF to Exim Bank

On Friday, the Economic Coordination Committee (ECC) of the Cabinet, led by Finance Minister Muhammad Aurangzeb, agreed to gradually shift 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). This decision came after the Finance Division proposed the change.

The ECC also approved Rs1.001 billion through a Technical Supplementary Grant to handle subsidies for the LTFF portfolio in fiscal year 2025, according to an official statement.

This move aligns with Pakistan’s promises under the IMF programme to stop the SBP from running refinancing schemes and hand them over to Exim Bank. A similar shift for the Export Finance Scheme (EFS) portfolio is already underway, based on a 2023 plan approved by the ECC and Cabinet.

Exim Bank, set up under the Export-Import Bank of Pakistan Act, 2022, focuses on boosting exports and import substitution. In this phase, it will take over the Rs330 billion LTFF portfolio and manage an extra Rs210 billion in new long-term financing for exporters.

In the past, the SBP ran the EFS and LTFF to help export-focused industries. The IMF’s Standby Arrangement requires Pakistan to phase out these SBP programmes by 2028 to improve monetary policy effectiveness.

A Working Group, including members from the Finance and Commerce Ministries, Securities and Exchange Commission of Pakistan (SECP), SBP, and Exim Bank, created the transition plan, which the IMF reviewed and approved.

Under the new setup, Exim Bank will handle subsidy payments for the government, distributing them to Participating Financial Institutions (PFIs) and Participating Islamic Banking Institutions (PIBIs).

The government expects to spend Rs91.47 billion to cover subsidies for both the existing and new LTFF portfolios. This change is part of a larger effort to update Pakistan’s export financing system to meet global standards.