KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb this week stressed on the importance of small and medium enterprises (SMEs) for the country’s economy, highlighting his government’s policy to increase their lending portfolio to enhance their contributions to employment, exports and the national GDP.
Pakistan’s finance czar was speaking at a high-level panel discussion titled “Scaling up SME Finance” on Wednesday, hosted at the International Business Forum on the sidelines of the Fourth International Conference on Financing for Development (FfD4) in Sevilla, Spain.
The minister underscored the importance of SMEs to Pakistan’s economy, noting that these enterprises account for approximately 40 percent of the country’s GDP, 25 percent of exports and nearly 78 percent of non-agricultural employment.
However, Aurangzeb noted that despite their contributions, SMEs access to formal finance remains “disproportionately low,” with a small percentage of private-sector lending currently directed toward them, the finance ministry said. He said the government is actively working through the central bank to encourage commercial banks to expand their SME lending portfolios.
“This expansion is expected to enhance the contribution of SMEs to GDP, exports, employment, youth and women’s digital empowerment, and overall financial inclusion, laying the foundation for sustained and inclusive economic growth,” the finance ministry said.
The minister said the government’s parallel efforts are underway to strengthen the institutional capacity of the Small and Medium Enterprises Development Authority (SMEDA) so it can extend market linkages, provide regulatory relief, enhance advisory services and lead capacity-building initiatives.
“Deregulation efforts, such as reducing reliance on NOCs and increasing e-inspections, are also being introduced to reduce compliance burdens for SMEs,” the finance ministry added.
Aurangzeb expressed his desire to learn from successful models across other emerging markets and fostering partnerships that promote technology-driven, climate-compliant, and socially inclusive SME development.
Pakistan’s government has increasingly spoken about achieving sustainable economic growth and moving the country away from his usual “boom and bust” cycle.
The government has attempted to pursue this through financial reforms, signing trade and business agreements with regional allies worth billions of dollars and enhancing its exports.
