Pakistan’s banking sector has approved more than Rs. 400 billion in affordable housing finance. However, only around Rs. 76 billion has reached first-time homebuyers.
Finance Minister Muhammad Aurangzeb shared these figures on October 7. He spoke virtually at the 10th annual microfinance conference of the Pakistan Microfinance Network.
Aurangzeb said expanding financial access remains one of the government’s six key priorities. Other priorities include economic stability, sustainable growth, reforms, trade, investment, and the new economy.
The minister highlighted progress made toward economic stability during the past two and a half years. Pakistan’s combined fiscal and current account deficits have declined significantly.
The twin deficits fell from around 12.5 percent of GDP to 2.6 percent. This figure was recorded at the end of the previous fiscal year.
Foreign exchange reserves have also improved. The country’s reserves reached $21.4 billion, providing coverage for nearly three months of imports.
Aurangzeb said Pakistan’s sovereign credit rating improved three times since April 2025. The country also successfully issued a $3 billion Eurobond.
He said the issuance represented Pakistan’s return to international capital markets. Investors from Asia, the Middle East, Europe, and the United States have shown interest.
The finance minister also discussed Pakistan’s economic growth. The economy contracted three years ago but expanded by 3.7 percent last fiscal year.
Growth above four percent is expected during the current fiscal year. Aurangzeb stressed the importance of sustainable and responsible economic expansion.
He said the government wants to avoid growth driven mainly by consumption. Taxation, energy, state-owned enterprises, privatization, and public finances remain reform priorities.
The government also wants to increase private sector participation. Aurangzeb pointed to private investor interest in Pakistan International Airlines.
Two major domestic investor groups jointly submitted a bid worth around $1.2 billion. He described the interest as a sign of growing private sector confidence.
International companies have also shown interest in power distribution privatization. Three Turkish companies have expressed interest in the first distribution company offered.
The minister said Pakistan is gradually shifting from aid toward trade and investment. Stronger economic ties with international partners will remain important.
He also highlighted the need to prepare for emerging technologies. Artificial intelligence, blockchain, and Web3 were among the areas mentioned.
Pakistani freelancers earned $1.6 billion through IT services exports during the last fiscal year. Aurangzeb said better skills could help workers enter higher-value digital services.
The minister also discussed financial inclusion and small-farmer financing. Around Rs. 6 billion was approved under a digital collateral-free lending scheme.
More than Rs. 2 billion had been disbursed under the scheme. The financing was provided during the previous seven to eight months.
Aurangzeb called for stronger cooperation between commercial banks and microfinance institutions. He said this could expand financing for SMEs, agriculture, and affordable housing.
He urged microfinance institutions to improve digital lending and customer services. Effective credit-scoring systems should also become a greater priority.
According to the minister, lending decisions should use alternative data and digital credit systems. Banks should assess repayment ability, seasonal factors, and affordability.
The minister said Govt Loans should not be measured only by total lending volumes. Their economic and social impact should also be considered.
He highlighted first-time borrowers, business growth, job creation, and women’s economic participation. These areas could help measure the effectiveness of financial inclusion programs.
Aurangzeb also announced an increase in the export refinance limit. The limit has been raised from Rs. 1 trillion to Rs. 1.5 trillion.
Twenty percent of the increased limit has been reserved for small and medium-sized enterprises. Businesses connected to major exporters can access financing at 4.5 percent.
The minister also stressed the importance of women entrepreneurs. Greater participation could support financial inclusion and sustainable livelihoods.
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The government’s focus on Govt Loans and financial access forms part of its broader economic strategy. The conference also explored ways to expand financial services nationwide.
