The State Bank of Pakistan (SBP) has officially suspended the collection of the Export Development Surcharge (EDS) with immediate effect, following a directive from the Federal Government that fully exempts all exported goods from the levy. The move is being hailed as an important step in easing financial pressures on the export sector and improving Pakistan’s trade competitiveness during a period of fluctuating global demand and rising domestic business costs.
The SBP issued the announcement through a circular addressed to all presidents and CEOs of commercial banks, along with authorized dealers in foreign exchange. The directive requires banks to immediately discontinue deducting the surcharge from any export-related transaction, marking a significant regulatory change for exporters who have long advocated for its removal.
The central bank noted that earlier instructions, including EPD Circular Letter No. 02 dated January 22, 2003, and FD Circular Letter No. 03 dated April 20, 2023, had defined the mechanism for collecting the Export Development Surcharge on export proceeds. These guidelines have now been rendered obsolete in light of the federal decision.
The exemption is tied to the Ministry of Finance & Revenue’s recent Notification No. S.R.O. 2335(I)/2025, issued on December 1, 2025, which formally abolishes the levy imposed under Section 11(1) of the Finance Act, 1991. This legal change effectively ends the surcharge framework that had been in place for over three decades, prompting the SBP to withdraw its previous circulars and streamline compliance procedures for the banking sector.
The SBP has instructed all authorized dealers to inform exporters and relevant stakeholders immediately to avoid confusion during ongoing transactions. Banks have also been advised to ensure full regulatory compliance and prevent any misapplication of the discontinued surcharge. The central bank emphasized that swift communication across the financial system is crucial to ensure exporters fully benefit from the policy shift without procedural delays.
Industry analysts believe the abolition of the surcharge will boost liquidity for exporters, reduce transactional friction, and support a more competitive pricing structure for Pakistani goods in international markets. Exporters, who have consistently highlighted the burden of ancillary levies on their cost of doing business, view this development as a much-needed reform during a time when global trade remains challenging.
The removal of the surcharge is also expected to improve financial flows within export-oriented industries, allowing businesses to allocate more resources toward production, innovation, and market expansion. With Pakistan actively seeking to grow its export base and strengthen its external account position, the SBP’s announcement is seen as a constructive measure aligning monetary and fiscal actions with broader economic goals.
As the country continues to navigate inflationary pressures and strives to enhance its global competitiveness, the end of the Export Development Surcharge marks a strategic policy shift aimed at creating a more supportive environment for exporters and promoting long-term trade growth.
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