ISLAMABAD: The State Bank of Pakistan (SBP) has instructed banks to ensure that all proceeds from sugar exports to Afghanistan are received in advance through official banking channels.
“This measure aims to improve transparency and ensure the timely collection of export payments, especially in trade with Afghanistan,” as per a business media report.
The government committee in charge of economic decisions (ECC) has agreed to allow the export of an extra 100,000 metric tons of sugar under certain terms and conditions.
The ECC decision has been approved by the Federal Cabinet, and the Ministry of Industries and Production has consequently issued a Memorandum (O.M) dated September 25, 2024, allowing the export of sugar.
In July, the federal government granted permission to mills to export 150,000 metric tons of sugar. However, at the request of the sugar mills, the government has allowed additional sugar exports to offload stocks before the new crushing season.
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SBP advised banks to process requests from eligible applicants for the “Export of Further 100,000 MT of Sugar,” subject to the submission and fulfillment of certain conditions.
Authorized Dealers (banks) must obtain proof of quota allocation from the respective Provincial Cane Commissioner to process sugar export requests and retain a copy for their records.
ADs will also obtain an undertaking from exporters that the consignment will be shipped within 60 days of quota allocation by the respective Cane Commissioner.
Previously, exporters were required to obtain 100 percent of export proceeds in advance from foreign buyers through standard banking channels before shipment.
However, according to new directives for exports to Afghanistan, banks are now specifically responsible for ensuring the receipt of these proceeds in advance through official banking channels. For exports to other countries, sugar can be shipped using a Letter of Credit (payable upon presentation), which offers more flexibility in how payments are made.
Reports say banks will submit updates on sugar export transactions and shipments to the Director, FEOD, SBP-BSC on a weekly basis, following the prescribed reporting format, by every Friday.
