LAHORE: Pakistan’s government has abolished the 0.25% Export Development Surcharge (EDS), a move widely welcomed by exporters, economists, and industry leaders as a step to lower business costs and enhance export competitiveness.

The decision followed recommendations from the prime minister’s private sector–led working group on the Export Development Fund (EDF), chaired by leading textile exporter Musadaq Zulqarnain.

Prime Minister Shehbaz Sharif has also directed a third-party audit of the EDF to ensure funds are used according to international standards, amid long-standing concerns that allocations were diverted to unrelated projects.

An interim steering committee, led by private sector representatives, will now oversee the utilization of the remaining Rs52 billion ($185.24 million) in the EDF, along with an additional Rs8 billion ($28.51 million) expected during the current fiscal year.

During the working group meeting, exporters highlighted concerns over high taxes and rising energy costs.

The prime minister noted that separate groups were finalizing recommendations on taxation and energy reforms, stressing the government’s commitment to supporting exporters and promoting Pakistani products globally.

EDF allocations have historically funded trade fairs, local expos, and promotional activities, with the Trade Development Authority of Pakistan receiving nearly Rs4 billion ($14.26 million) in the last fiscal year. The prime minister now mandates that EDF resources be exclusively dedicated to research, skill enhancement, and competitiveness, with no funds allocated for infrastructure.

Economists and business leaders praised the move. Economist Dr Ikram ul Haq told Pakistan TV Digital that the abolition of the surcharge and the strategic use of the Rs53 billion ($188.87 million) fund “is indeed a step in the right direction,” while emphasizing that its productive deployment will be the real test.

Kashif Shafi, executive director of the Overseas Investors Chamber of Commerce and Industry, called the decision “a welcome development” that will ease cost pressures on exporters. Brokerage house Topline Securities described the move as a “small but positive step” for Pakistan’s export outlook.

The announcement comes amid a widening trade deficit. Exports in the first four months of FY26 fell 4% year-on-year to $10.45 billion, while imports surged 15% to $23.03 billion. The current account deficit expanded sharply, rising to $733 million from $206 million in the same period last year.

Though October exports grew 4% from September, monthly imports exceeded $6 billion for the first time in nearly three years.

While the surcharge removal provides some relief, exporters caution that comprehensive measures on energy pricing and taxation will be critical for strengthening Pakistan’s position in global markets.

The government’s upcoming policy decisions will determine whether this step becomes part of a broader economic strategy or remains a standalone measure.

Articles tagged with "Export Development Surcharge"

Pakistan scraps export surcharge, boosting exporter confidence