SBP ends export development surcharge after government abolishes levy

The State Bank of Pakistan has halted the collection of the export development surcharge, a move expected to ease financial pressure on the country’s export sector.

In a circular issued Tuesday to presidents and CEOs of commercial banks and authorized foreign-exchange dealers, the central bank ordered the immediate discontinuation of the surcharge on all export-related transactions.

The SBP said earlier guidelines governing the levy — outlined in circulars from 2003 and 2023 — were nullified after the federal government fully exempted all exported goods from the charge. The exemption stems from a Finance Ministry notification issued Dec. 1 that abolishes the levy imposed under Section 11(1) of the Finance Act of 1991.

With the new directive, the SBP withdrew all previous instructions related to the surcharge and directed banks and authorized dealers to inform exporters and other stakeholders promptly. The central bank also urged strict compliance to prevent delays or errors.

Industry analysts say the exemption will improve cash flow for exporters, cut transaction costs and strengthen Pakistan’s competitiveness in global markets.

Exporters have long pushed for the removal of extra levies they argue raise the cost of doing business. The export development surcharge was a 0.25% surcharge on export value, collected when export proceeds were realized and funneled into the Export Development Fund. The fund is a government-backed pool of money, which supports export-promotion projects such as training institutes, trade missions, research, marketing, and infrastructure to boost Pakistan’s export capacity.