ADB backs Pakistan’s shift to private-sector growth

The Asian Development Bank (ADB) has praised Pakistan’s recent economic progress and expressed readiness to increase support for private-sector development, small and medium-sized enterprises (SMEs) and export growth.

The development came during a meeting between Finance Minister Muhammad Aurangzeb and ADB Vice President for South, Central and West Asia Yingming Yang in Islamabad on Wednesday.

According to the Finance Ministry, Yang congratulated the Pakistani government on progress in macroeconomic stabilisation. He also recognised improvements in fiscal management, the country’s external account and overall economic stability.

During the meeting, Aurangzeb said the government was now looking beyond economic stabilisation and focusing on achieving sustainable and inclusive growth. He said investment, exports, employment generation and greater private-sector participation were becoming key priorities.

The minister welcomed the ADB’s expanding involvement beyond traditional sovereign financing. He said greater cooperation in private-sector operations and public-private partnerships could help mobilise investment and support economic expansion.

A major part of the discussion focused on improving access to finance for SMEs. Aurangzeb described small and medium-sized businesses as an important part of Pakistan’s growth and export strategy.

He said the government wanted to increase financing opportunities for SMEs and strengthen their ability to generate employment, attract investment and increase exports. Both sides also discussed integrating Pakistani SMEs into global value chains and improving their international competitiveness.

Yang reaffirmed the ADB’s commitment to supporting Pakistan’s development priorities. He said the bank’s strategic objectives were closely aligned with the government’s reform agenda.

The ADB vice president expressed willingness to provide further assistance for private-sector development and SME value-chain financing. He also welcomed recent improvements in Pakistan’s sovereign credit ratings, saying they reflected continuing reforms and stronger economic fundamentals.

At the same time, Yang stressed the need for Pakistan to maintain fiscal discipline while moving towards long-term and sustainable economic growth.

Aurangzeb emphasised the importance of making economic reforms permanent. He identified domestic resource mobilisation, public finances, energy, insurance and pension systems as areas requiring institutional reforms.

The meeting also reviewed Pakistan’s insurance transformation programme and public-private partnership projects. Discussions covered ways to improve project preparation and strengthen the capacity to implement major development initiatives.

The finance minister called for greater mobilisation of domestic and private capital. He highlighted co-financing and innovative financing models as potential ways to attract additional investment from international development and financial institutions.

Potential cooperation was also discussed in infrastructure, transport, clean energy, water management and climate resilience. Pension reforms, institutional strengthening and policy-based programmes were also part of the talks.

Aurangzeb said future ADB assistance should support Pakistan’s goals of private-sector-led growth, stronger exports, improved access to finance, infrastructure development, climate resilience and social protection.

The talks come shortly after Pakistan took steps to strengthen its export financing system. Two recent agreements were aimed at improving financing and insurance facilities for exporters and SMEs.