Karachi, October 1, 2024 – The State Bank of Pakistan (SBP) issued a comprehensive directive on Tuesday, instructing banks and authorized dealers (ADs) to adhere to new regulations concerning the export of an additional 100,000 metric tons (MT) of sugar.
This move follows a decision by the Economic Coordination Committee (ECC) of the Cabinet, which has been ratified by the Federal Cabinet, allowing for the expanded export of sugar under specific terms and conditions.
The SBP circular detailed the meticulous procedures banks must follow to process applications for the additional sugar export quota. The directive emphasizes that banks are to process export requests for eligible applicants only upon strict adherence to the outlined conditions.
One of the key stipulations is that banks must secure proof of quota allocation from the Provincial Cane Commissioner. This document serves as a critical prerequisite for any export transaction and must be meticulously maintained in the banks’ records. This requirement ensures transparency and adherence to provincial allocations, preventing any potential manipulation of quotas.
Furthermore, exporters are required to provide a binding undertaking that their sugar consignments will be shipped within 60 days of receiving the allocation from the respective Cane Commissioner. This clause underscores the urgency and time-sensitive nature of the export process, ensuring that the export quotas are swiftly utilized without unnecessary delays.
For sugar exports to Afghanistan, the SBP has mandated that banks ensure the receipt of 100% advance payment through proper banking channels. This stringent requirement seeks to mitigate the risks associated with cross-border trade and guarantees full payment before the consignment is shipped. In contrast, for exports to other destinations, the sugar can be exported against a sight Letter of Credit, a more flexible arrangement that still secures payment upon shipment.
Additionally, banks are required to submit detailed reports on sugar export transactions and shipment progress to the SBP’s Foreign Exchange Operations Department (FEOD) on a weekly basis. The reporting, to be conducted via the prescribed format, must be submitted every Friday by 1700 hours, ensuring regular oversight and monitoring of export activities.
The SBP has also directed banks to promptly inform their constituents of these new regulations and to ensure full compliance with the stipulated guidelines. This directive comes at a crucial time when Pakistan’s sugar industry is navigating both local demand and export opportunities, making regulatory compliance vital for the smooth functioning of trade.
The SBP’s intervention underscores the importance of ensuring that sugar exports are conducted in a structured, transparent, and efficient manner, safeguarding both economic interests and market stability.
