Pakistan's export sector, stagnant at around $30 billion annually for years, received a significant injection of government support on Monday. The Economic Coordination Committee (ECC) approved over Rs255 billion in subsidies across three separate incentive schemes designed to reverse the persistent trade imbalance. Main Developments The ECC, chaired by Finance Minister Muhammad Aurangzeb, greenlit three dedicated export finance subsidy schemes moved by the finance ministry. These include an enhanced EXIM-administered Export Finance Scheme (E-EFS), a new Long-Term Export Growth Financing Facility (LTEGFF), and a performance-based rebate on incremental exports. Under the E-EFS, exporters will receive working capital loans for six months at an interest rate of 8.5 percent. The government will absorb the remaining 5 percent interest cost, resulting in a Rs58 billion subsidy from the federal budget for the current fiscal year. The scheme's portfolio was also increased by 50 percent to Rs1.5 trillion from the previous Rs1 trillion. Read also: Why Pakistan's Super Tax on Banks Just Withstood a Major Legal Challenge The new LTEGFF offers loans at a negligible 2 percent interest for the first two years, followed by a fixed 5 percent for the subsequent eight years. Designed for new export-oriented projects or the modernization of existing ones, the scheme targets about Rs350 billion in loans and entails a subsidy of roughly Rs195 billion, as the government covers up to 11.5 percent of the interest cost. For the fiscal year 2027, the subsidy is estimated at Rs25 billion. A separate performance-based rebate scheme, effective July 1, will cost an estimated Rs15 billion annually. Exporters achieving annual export growth of up to 10 percent over the previous year will receive a rebate equal to 1 percent of the incremental export value. Those exceeding 10 percent growth will qualify for a 2 percent rebate on the incremental value. Background Pakistan's exports have been stuck at roughly $30 billion per annum for years, even as imports have continued to rise, widening the trade deficit. The existing Long-Term Export Financing Facility (E-LTFF), which carried variable interest rates, failed to attract the business community largely due to interest rate risk, according to the finance ministry's report to the ECC. In a separate but related decision, the ECC approved a special domestic gas supply tariff of Rs2,000 per million British thermal units (mmBtu) for RLNG-based power plants on the SNGPL network for April, May, and June. This rate replaces the over Rs3,500 per mmBtu RLNG import price, which had been disrupted by the US-Iran conflict. The move aims to contain power tariffs during LNG shortages without hurting SNGPL's revenues. Why It Matters These subsidies directly address a critical bottleneck: the inability of Pakistani exporters to compete globally due to high financing costs. By offering low-interest loans and performance-based rebates, the government hopes to incentivize both short-term working capital and long-term investment in export capacity. The decision on RLNG-based power plants is equally significant, as it prevents a spike in electricity tariffs during a period of LNG supply disruption. Stable power costs are essential for export-oriented industries, which are among the largest consumers of electricity. What's Next The finance ministry will now implement the three subsidy schemes, with the performance-based rebate starting from July 1. The LTEGFF's subsidy for FY27 is already budgeted at Rs25 billion, indicating a multi-year commitment. Additionally, the ECC authorized a supplementary grant of Rs4 billion to cover arbitration expenses related to multiple international proceedings initiated by independent power producers and major utility shareholders.