Pakistan: ECC Approves Transfer of EDF Funds to Commercial Bank Account, Paving Way for Investment in Government Securities

Islamabad — Pakistan's Economic Coordination Committee (ECC) has approved the transfer of Export Development Fund (EDF) balances out of the Public/Treasury Account into a commercial bank account, so that the corpus can be invested in government securities. The approval concludes a process that ran for more than a year and began with the suspension of the Fund's principal revenue line, the Export Development Surcharge (EDS), which was suspended with effect from 1 December 2026. The move followed a Prime Minister's Office working-group recommendation and a direction from the Prime Minister, formalised through Finance and Revenue notification SRO/2335(I)/2026, on the stated rationale of lowering exporters' cost of doing business. The EDF Act was amended, with Presidential assent on 26 January 2026, and new Board members were appointed by Federal Government notification on 17 February 2026. The Commerce Ministry's summary seeking an alternative income stream to maintain the Fund's financial sustainability is dated 6 October 2026 — roughly ten months after the surcharge was withdrawn. The Board raised the matter at its 93rd and 96th meetings and requested facilitation. The Finance Division supported the investment but required Federal Government approval under Section 23(2) of the Public Finance Management Act, 2026, because the money would move from a government account to a commercial bank. The ECC then considered and approved the proposal. Only two investment destinations are permitted: fixed-income government securities, or an interest-bearing National Bank of Pakistan account. The report discloses no figures at all — no corpus size, no revenue forgone, no expected yield, no tenor. Economically, moving public money into a commercial bank to buy government paper means the state borrows back its own funds through an intermediary, so the net gain to the consolidated public sector is well below the headline yield. There is also a live mission-drift risk, since no export-linked condition is imposed on the income earned. Procedurally the compliance chain is sound and unusually well documented, but substantively it is opaque: there is no published investment mandate, no duration or concentration limit, no audit or reporting line. The approval is an enabling permission, not an executed transaction.