ADB praises Pakistan's economic progress, backs shift towards private-sector-led growth

The Asian Development Bank (ADB) praised Pakistan’s progress in macroeconomic stabilisation and said it was ready to expand support for private-sector development, small and medium enterprises (SMEs) and export-led growth, the Ministry of Finance said on Wednesday.

According to a statement, ADB Vice President for South, Central and West Asia Yingming Yang congratulated Finance Minister Muhammad Aurangzeb and the government on Pakistan’s “progress in macroeconomic stabilisation” and commended improvements in “fiscal management, the external account and overall economic stability”.

During a meeting with Yang, Aurangzeb said the government’s focus was shifting “from macroeconomic stabilisation towards sustainable and inclusive growth”, with greater emphasis on “investment, exports, employment generation and private-sector participation”.

He welcomed ADB’s “expanding engagement beyond sovereign financing”, including support for “private-sector operations and public-private partnerships”.

The meeting discussed access to finance for SMEs, which the minister said was an important part of Pakistan’s “growth and export strategy”.

The finance minister highlighted efforts to “expand financing for SMEs” and strengthen their capacity to contribute to “employment, investment and exports”.

The two sides also underscored the importance of integrating SMEs into “global value chains” and improving their competitiveness.

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Yang reaffirmed the ADB’s “commitment to supporting Pakistan’s development priorities” and said there was “strong alignment” between the bank’s strategic priorities and the government’s reform agenda.

He expressed readiness to provide further support for “private-sector development, SME value chain financing” and other priority areas.

The ADB vice president also commended positive developments in Pakistan’s sovereign credit ratings, describing them as evidence of the country’s “continued reform efforts and improved economic fundamentals”.

The ADB vice president, however, stressed the importance of maintaining “fiscal prudence” as Pakistan transitioned towards sustainable growth.

Aurangzeb, meanwhile, stressed the need to “institutionalise reforms” in domestic resource mobilisation, public finance, energy, insurance and pensions to establish a “sustainable growth trajectory”.

The meeting also reviewed the government’s insurance transformation programme, public-private partnership initiatives and efforts to improve “project readiness and implementation capacity”.

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The finance minister called for greater mobilisation of “domestic and private capital”, including through “innovative financing structures, co-financing” and stronger participation by international development and financial institutions.

He also highlighted opportunities to expand cooperation in “infrastructure, transport, clean energy, water resource management, climate resilience” and other priority sectors.

The two sides also discussed pension reforms, institutional strengthening and ongoing and pipeline policy-based operations, recognising their role in supporting “key structural reforms and long-term economic transformation”.

Aurangzeb said future ADB support should align with the government’s priorities of “private-sector-led growth, export competitiveness, access to finance, infrastructure development, climate resilience and social protection”.

The meeting came days after Pakistan strengthened its export financing framework through two agreements aimed at improving access to finance and insurance for exporters and SMEs.

On Aug 31, the Export-Import Bank of Pakistan (Pak EXIM) and the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) signed a reinsurance partnership, while the Export Development Fund (EDF) and Pak EXIM established an approximately Rs3 billion SME Risk Pool to expand SMEs’ access to export credit insurance against non-payment risks.