IBF hosts panel discussion: Aurangzeb underscores criticality of SMEs to Pakistan's economy
Addressing the session, Finance Minister Aurangzeb 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. Despite their significant contribution, he observed that SME access to formal finance remains disproportionately low, with a small percentage of private-sector lending currently directed towards them.
The Finance Minister highlighted that the Government of Pakistan has adopted a whole-of-government approach to address these challenges and unlock the full potential of the SME sector. As part of its strategic vision, the government aims to raise SME financing to 17 percent of total private-sector credit by 2028. This target is designed to bring Pakistan more in line with comparable South Asian economies such as Bangladesh and India, and with global emerging market benchmarks. He said the Government of Pakistan 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. To support this agenda, a multi-billion credit guarantee facility has been rolled out under the Prime Minister's Youth, Business and Agriculture Loan Scheme. The government has also committed to bearing up to 50 percent of potential credit losses on principal for small businesses.
The Finance minister also highlighted the government's intention to revise and expand the National SME Policy 2021 to set a comprehensive five-year roadmap for sectoral development. 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.
Copyright Business Recorder, 2025
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