Can Policy Changes Drive Better Export Performance?
In a decisive move to plug revenue leakages and streamline export processes, the Economic Coordination Committee (ECC) of the Cabinet has approved a series of policy interventions in the Export Facilitation Scheme (EFS) 2021. The measures include reducing the input utilization period and revoking the EFS facility for importers of iron, aimed at strengthening compliance and fiscal discipline.
Chaired by Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, the ECC also expressed concern over rising domestic prices of sugar, vegetables, and edible oil despite falling international prices.
The meeting, which included a review of inflation trends and essential commodity pricing presented by the Finance Division’s Economic Advisor’s Wing, revealed encouraging developments: inflation dropped from 28.8% in the first half of fiscal 2025 to 7.2%, with December 2025 recording the lowest inflation in 80 months at 4.1%.
Focus on Inflation and Essential Commodities
The committee noted a consistent decline in the Sensitive Price Index (SPI) over recent weeks and stressed that lower core and average inflation must translate into real relief for consumers. To address persistent price rises in key food items, the ECC has directed the Ministry of Industries and Production along with the Ministry of National Food Security and Research to collaborate with the National Price Monitoring Committee (NPMC).
They are tasked with developing measures to maintain strategic reserves of wheat, sugar, and pulses, and to optimize supply chains ahead of the upcoming holy month of Ramazan. Provincial Price Control Committees were also urged to enforce price controls rigorously to prevent cartelization and profiteering.
Reforming the Export Facilitation Scheme
In addition to addressing domestic price concerns, the ECC approved a proposal from the Revenue Division outlining vital policy changes to the EFS 2021. The approved interventions include:
- Reducing the input utilization period to better match production realities.
- Input authorization based on production capacity and input-output ratios.
- Replacing insurance guarantees with bank guarantees to secure transactions.
- Implementing vendor facilitation controls and sample draws to ensure imported inputs are used in exported goods.
- Withdrawing the EFS facility from importers of iron and steel scrap to curb misuse.
These reforms are designed to ensure that revenue leakages are minimized without adversely affecting compliant exporters.
Additional Approvals and Fiscal Measures
The ECC also sanctioned several proposals aimed at enhancing operational efficiency and fiscal prudence:
- A technical supplementary grant of Rs2.79 billion for procuring arms and ammunition components, and for engaging Nespak as a design consultant for Digital Enforcement Stations (DES) and check posts.
- A technical supplementary grant of Rs494.56 million for Frontier Corps KP (North) to construct barracks and check posts.
- A proposal from the Ministry of Interior for a grant of Rs1.792 billion for ensuring the smooth conduct of the RekoDiq project activities, subject to further clarity on fund allocation.
- An amendment to a mediation agreement related to tariff differential subsidies for power companies, ensuring that the changes will not lead to any tariff increases.
- Lastly, a proposal for a Rs500 million technical supplementary grant by the Intelligence Bureau Division was approved.
With these measures, the ECC reaffirms the government’s commitment to enhancing revenue generation, stabilizing the economy, and safeguarding consumer interests while ensuring that export facilitation mechanisms work more effectively.
