KARACHI: The government is going to start disbursing money against customs rebate and sales tax refunds on July 10, official sources said on Tuesday.

It will make payments of outstanding refunds of up to Rs1 million initially. Higher amounts will be disbursed after July 15.

The objective is to clear all outstanding refunds by August 14 against Release Payment Orders (RPOs) issued so far. The outstanding payment against issued RPOs is estimated to be around Rs50 billion.

Although exporters claim that outstanding rebate and sales tax refunds are around Rs300bn, the Federal Board of Revenue (FBR) insists the amount is less than Rs150bn.

Analysts say exports decr­eased to $20bn partly because the government held back refunds and deprived exporters of liquidity. Resultantly, the country’s trade deficit ballooned to $30bn in July-May.

The textile sector was worst hit as exports in key segments recorded a drop. Exports of leather products also declined 13.7pc during the first 11 months of the current fiscal year. Even an incentives package of Rs180bn announced by the prime minister has so far failed to stop the fall in exports.

Pakistan Apparel Forum (PAF) Chairman Mohammad Jawed Bilwani said ‘inherent weaknesses’ in the incentives package discouraged exporters from availing it. “Exporters are not ready to take risk for any incentive that will be made available after two years,” he said.

Under the package, payments to exporters against their claims of 2017-18 will be made in 2018-19 on the condition of 10pc growth in exports, he said. It means an exporter achieving less than 10pc growth in exports will not be eligible for the incentives package.

Mr Bilwani urged the government to reduce the cost of doing business for exporters. The cost of utilities like electricity and gas is the highest in the region, he said.

Published in Dawn, July 5th, 2017