Aurangzeb targets Rs1.5tr export expansion, announces Rs350bn SME financing support

Finance Minister Muhammad Aurangzeb said Pakistan must take its exports from Rs1 trillion to Rs1.5 trillion while expanding financial support to small and medium-sized enterprises (SMEs) that form part of the export supply chain.

“We have to take it from 1 trillion to 1.5 trillion,” Aurangzeb said, stressing that Pakistan would need to diversify its export base across products, services and market segments while maintaining the performance of traditional export sectors.

Addressing an event, he said around Rs350 billion had been specifically allocated for SMEs under the long-term financing facility (LTFF), arguing that export support should benefit businesses across the entire value chain rather than only the final exporter.

“While the end exporter gets this subsidised financing, you have to look at an entire value chain and supply chain,” he said. “Why wouldn’t they get subsidised financing as well?”

Aurangzeb said SMEs and medium-sized enterprises were feeding into the country’s major exporting companies and should therefore receive similar financing support.

“This time around we have ensured that whatever is being channelled through Pak EXIM through the commercial banks actually gets to the SMEs,” he said.

The finance minister said Pakistan’s future growth needed to be “export-led” and “private-sector led”, adding that the country’s main challenge was no longer growth itself but “the sustainability of that growth”.

“We also have to diversify our export base in terms of products and services and also with respect to the segments,” he said.

Aurangzeb said the government was focused on using the fiscal and external-account space currently available to support export-led expansion.

“In the last budget … we have provided a very clear direction of travel in terms of how we wish to support the export-led growth,” he said, pointing to measures including reducing the super tax to zero for companies with more than 80 per cent of their business coming from exports and doing away with advance tax.

He also said exporters were being provided financing at 4.5 per cent despite the recent increase in the policy rate, which he attributed partly to imported inflation resulting from the conflict.

“Irrespective of where the policy rate is, the financing is now being made available at four and a half percent,” Aurangzeb said.

He described Pakistan EXIM Bank as a “very, very critical enabler” in supporting export growth through export refinance and the LTFF.

Aurangzeb said the government also wanted to make energy more competitive and create an environment in which the private sector could realise its full export potential.