Prime Minister Shehbaz Sharif on 5 November ordered the removal of the rule that a small or medium enterprise must export at least 80 percent of its output to qualify for long-term financing, and warned banks not to deviate from the concessional schemes. The decision came at a meeting in Islamabad attended by federal ministers and State Bank Governor Jameel Ahmad. But it is announced, not yet in force: as of 7 November no State Bank circular had been published, so the gate is open in words and still standing in the rulebook.
What the 80% rule actually blocked
The rule was a cliff edge, not a slope. A firm exporting 79 percent of its output was treated the same as one exporting nothing: no long-term finance. That money buys machinery and expands capacity, so the rule punished the firms the government says it wants to grow. Removing it widens the door, but applicants must still meet the facility’s remaining conditions and the bank’s credit assessment. The warning matters because concessional money is often announced in Islamabad and rationed at the branch.
10,000 applications in five days
The route is the State Bank’s SMEConnect portal, live since 1 November at smeconnect.sbp.org.pk. Every SME loan application must now go through it, on a one-page form, with live tracking and a stated reason for rejection. More than 10,000 applications arrived in the first five days, about 2,000 a day. Against roughly 17,000 export-linked SMEs, that is already about 59 percent of the whole universe. The bottleneck is now processing: how fast banks clear a queue that grew by 2,000 files a day before the rule was lifted. Finance Minister Muhammad Aurangzeb made the same point on 5 November, directing lenders to expand and speed up SME lending, especially to exporters.
Rs650bn against a Rs1.11trn stock
Rs300 billion is allocated under the Export Finance Scheme for SMEs and new exporters, and Rs350 billion is earmarked this year for the Long-Term Financing Facility. Together, Rs650 billion is about 59 percent of all outstanding SME financing, Rs1,110 billion in June 2026. An allocation is not a disbursement, and no money has reached a borrower yet. The long-term leg is the new 10-year facility The Express Tribune reported in July: 2 percent for two years, then a fixed 5 percent for eight. The government picks up interest cost of up to 11.5 percent: Rs196 billion in subsidies over Rs350 billion of loans, Rs25 billion this year. The short-term leg is the Export Finance Scheme, its limit raised from Rs1 trillion to Rs1.5 trillion, offering six-month working capital at 8.5 percent with the government picking up 5 percent, a Rs58 billion subsidy this year. With a performance rebate on incremental exports at Rs15 billion a year, 1 percent for growth up to 10 percent and 2 percent above that, this year’s subsidy bill reaches Rs98 billion. That bill lands on a government that already owes $135bn in external debt, so the test is whether the credit produces exports that pay for it.
The definition got wider too
It sits on a quieter widening the State Bank governor set out in Lahore on 30 October. A small enterprise is now one with turnover up to Rs400 million, up from Rs150 million; a medium one up to Rs2 billion, up from Rs800 million. Loans without collateral now run to Rs50 million, five times the old Rs10 million. Outstanding SME financing rose from Rs491 billion in June 2024 to Rs1,110 billion in June 2026, up 126 percent in two years and 61 percent in the last year. Borrowers rose 84 percent to about 325,000, and the average loan grew 23 percent to about Rs3.42 million. The direction is clear; the question is whether the smallest firms share the growth.
Three tests that will decide whether this works
First, the circular. Until the State Bank issues the instructions removing the 80% condition, the order is a promise, not a procedure. Second, the queue. The portal shows rejection reasons, so approval rates and decision times will be visible. Third, the money. Rs650 billion must turn into disbursements, and the test is whether a firm exporting half its output, or a new exporter with no track record, gets a loan at the concessional rate. The stakes are set by trade: exports fell 6 percent last fiscal year, The Express Tribune reported, and the four-month trade gap reached $14.6 billion, with October imports of $6.8bn against exports of $2.9bn. Cheap export credit is the government’s answer, and every billion of it is bought with rupees, so the USD to PKR exchange rate today sets the real cost. The numbers to watch now are the circular, the approval rate and the first disbursements. More business and economy news from Pakistan
