Revival of Exim Bank, key priority for Pakistan’s economic growth, says Aurangzeb

ISLAMABAD: The revival of the Export and Import (Exim) Bank is a primary focus of the government, said the Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, highlighting its essential role in promoting export-led economic growth.

He made this statement during a briefing to the Senate Standing Committee on Finance, adding that the Exim Bank is poised to significantly boost the nation’s exports over the next two to three years.

Aurangzeb was of the view that the country was on a trajectory toward economic stability due to the government’s sound policies, citing a recent reduction in the policy rate by 9 basis points and a decrease in the Kibor rate—now below 12 percent—resulting in lower borrowing costs. He noted that the impacts of these changes would soon be evident in the coming months.

The finance minister also advocated for a consensus on a charter of economy to ensure progress. Addressing concerns over rising commodity prices, he acknowledged the need for administrative measures and enforcement to counteract middlemen exploiting the situation, especially given the drop in international commodity transportation and oil prices.

The Committee has decided to monitor the progress of the Exim Bank on a quarterly basis. Senator Salim Mandviwalla, Chairman of the Standing Committee, highlighted that the bank has not appointed a chief executive officer for the past two to three years, and its board was only recently constituted after a two-year hiatus. He remarked on the “fragile” state of the Exim Bank.

Aurangzeb reiterated Pakistan’s commitment to adhere to the IMF loan programme, arguing that growth under this framework promotes structured and robust economic development. He explained that, unlike three years ago when rapid growth was pursued without caution, the government will now refrain from aggressively stimulating growth, regardless of pressure.

A representative from the Exim Bank informed the committee that, as per the Stand-By Arrangement (SBA) with the IMF, the State Bank of Pakistan’s refinance scheme was set to phase out over the next five years (fiscal years 2024-2028).

The Exim Bank has met the IMF’s structural benchmark for transitioning the export refinance facility from the State Bank to the Exim Bank, surpassing the first-year target by 168 percent.

Currently, the bank is managing a total export finance scheme limit of Rs421 billion, including a recent enhancement scheme of Rs230 billion, which allocates 40 percent to small and medium-sized enterprises (SMEs) and 60 percent to corporate entities.