Govt introduces Rs3bn SME Risk Pool to power export-led growth

August 31, 2026 (MLN): The government has introduced new risk-sharing and reinsurance initiatives aimed at expanding Pakistan’s export base, improving financing access for small and medium enterprises (SMEs) and creating a more sustainable, private-sector-led growth model.

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said the launch of the Export Development Fund’s (EDF) SME Risk Pool and a reinsurance agreement between the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and Pakistan’s Export-Import Bank (EXIM Bank) marked a major step toward implementing the country’s export-led growth strategy.

Addressing the signing ceremony organized under the aegis of EXIM Bank, the minister said Pakistan had successfully moved from economic stabilization toward growth, but maintaining that growth remained the central challenge, according to APP.

He noted that the economy expanded by around 3.7% during the last fiscal year, while the government was targeting growth above 4% in the current fiscal year.

Muhammad Aurangzeb stressed that Pakistan needed to move away from recurring boom-and-bust cycles driven by import dependence and balance-of-payments pressures. He said future economic expansion must increasingly be powered by exports and private-sector investment.

According to the minister, the government’s responsibility was to create an enabling environment by using available fiscal and external-account space to strengthen export competitiveness.

He highlighted measures introduced through the recently approved federal budget, including a reduction in super tax, with the rate brought down to zero for companies exporting more than 80% of their output. The government has also abolished advance tax and is working to improve the competitiveness of energy costs for businesses.

Muhammad Aurangzeb said exporters could now access financing at a rate of 4.5%, addressing concerns over the competitiveness of export financing compared with regional markets.

He emphasized the role of EXIM Bank in providing export refinance and long-term financing facilities and called for concessional financing to reach SMEs that form an important part of export supply chains.

The minister said a dedicated allocation had been made for SMEs so that businesses supplying larger exporters could also access subsidized financing. He termed broader SME participation essential for increasing production capacity and bringing more Pakistani businesses into international markets.

Muhammad Aurangzeb also called for diversification of the country’s exports across products, services and destinations, saying Pakistan could not rely indefinitely on traditional export sectors.

Speaking about the ICIEC reinsurance partnership, he said the arrangement would provide EXIM Bank with international expertise in credit and political-risk mitigation. The partnership, he added, would strengthen the bank’s institutional capacity and improve confidence in its export financing operations.

He said Pakistan should adopt international best practices instead of developing systems from scratch, with international partnerships helping accelerate institutional development in export finance and risk management.

The minister said the EDF’s shared risk pool would enhance domestic risk-sharing capacity and particularly benefit SMEs by enabling the fund to more effectively support the expansion of the country’s export base.

He described the initiatives as an important development because they focused on practical mechanisms for delivering export-led growth rather than simply identifying it as an economic objective.

Muhammad Aurangzeb stressed that achieving the required transformation would require coordinated efforts among exporters, commercial banks, the EDF, EXIM Bank, the State Bank of Pakistan and the federal government.

He said Pakistan’s IT exports had already reached around $4.6 billion, while freelancers were contributing approximately $1.7 billion. However, he emphasized that a significantly larger expansion in merchandise exports was necessary to meet the country’s economic needs.

The minister said sustainable export growth would depend not only on increasing volumes but also on developing new products, entering new markets and expanding the range of services offered internationally.

He assured exporters, banks and other stakeholders that the Ministry of Finance would continue providing policy support to strengthen the export ecosystem.

Muhammad Aurangzeb expressed confidence that the newly launched initiatives would enable EXIM Bank and its partner institutions to play a stronger role in export financing, risk management and the broader transition toward sustainable economic growth.

During the ceremony, the minister witnessed the signing of two agreements: a reinsurance agreement between ICIEC and Pak EXIM Bank, and a Rs3 billion SME Risk Pool Agreement between Pak EXIM Bank and the Export Development Fund.

President and CEO Pak EXIM Bank Shahbaz H. Syed, EDF Chairman Omar Saeed, ICIEC CEO Dr Khalid Khalafalla and Secretary Economic Affairs Muhammad Humair Karim also addressed the ceremony and highlighted the significance of the agreements for strengthening Pakistan’s export-led growth framework.

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