Yesterday, a federal minister presented an ambitious vision for Pakistan’s economy, aiming for exports to rise beyond $60 billion by 2036. For a country that has been permanently struggling with balance-of-payments crises, IMF bailouts, and currency instability, it was the kind of headline that policymakers and the public alike wanted to hear. Export growth is not optional for Pakistan—it is existential.
Yet almost simultaneously, new data from the State Bank of Pakistan (SBP) revealed a reality that quietly undermines this promise. The figures exposed not merely short-term weakness, but a structural contradiction so severe that it renders such targets largely symbolic. The problem is not just weak factories or high power prices. It is the architecture of Pakistan’s financial system itself.
The obstacles to exports are well rehearsed and overly debated: some of the highest electricity tariffs in the region, volatile fuel costs, poor logistics, regulatory uncertainty, and persistent security risks. These factors certainly matter. But they are symptoms, not the disease. Beneath them lies a deeper constraint—the way Pakistan’s state has come to dominate its own financial system.
As of the latest SBP data, the federal government’s net borrowing from the banking sector has reached roughly Rs 37.16 trillion. To grasp the magnitude of this number, consider that it exceeds the entire deposit base of the country’s commercial banking system, which stands at about Rs 30.66 trillion. In practical terms, for every rupee deposited by Pakistani citizens, the government has absorbed more than a rupee through borrowing.
This is not ordinary “crowding out.” It is a fiscal occupation.
Now compare this with total credit extended to the private sector, every textile mill, exporter, software firm, agribusiness, and SME combined, which stands at about Rs 10.76 trillion. The government is borrowing more than three rupees for every single rupee that goes to the productive economy. That ratio alone explains why Pakistan cannot industrialise, scale up exports, or generate stable growth.
Exports are not produced by speeches. They are built in factories filled with modern machinery, powered by reliable energy, staffed by skilled workers, and above all, financed by long-term, affordable credit. When banks can earn easy, risk-free returns by lending to the government, they have little reason to support exporters who carry commercial risk. But the distortion runs deeper than bank incentives.
If Pakistan is serious about reaching $60 billion in exports, the path is neither mysterious nor easy. It requires a fundamental reordering of priorities
In a modern monetary economy, banks do not merely lend out existing deposits. When a bank issues a loan, it creates new digital money. This process is one of the most powerful economic tools a state possesses. In well-functioning economies, this newly created money flows primarily into productive private investment in manufacturing, technology, logistics, and export industries so that rising demand is matched by rising supply. Growth remains stable, and inflation is contained.
Pakistan has inverted this logic.
Here, most new credit is created not to build factories or supply chains, but to finance government deficits to pay salaries, subsidies, and, increasingly, interest on past debt. This kind of money creation expands demand without expanding output. It pushes up prices, weakens the currency, and erodes export competitiveness. It is the textbook mechanism behind Pakistan’s inflation and repeated exchange-rate crises.
The financial system has effectively become a fiscal life-support machine, keeping the state alive while slowly starving the productive economy.
Every rupee created to roll over government debt or plug a budget hole is a rupee not created to finance an export-oriented enterprise. This trade-off is not theoretical. It is experienced daily by manufacturers who cannot get long-term loans, by SMEs that face prohibitive interest rates, and by exporters who must compete internationally while paying domestic borrowing costs that reflect the government’s appetite for credit.
Occasionally, data show flickers of improvement. Recent weekly figures indicating a rise in private-sector credit and a dip in government borrowing have been welcomed by some as a turning point. But such movements are tiny against the Rs 37 trillion mountain of public debt embedded in the banking system. Decades of fiscal dominance cannot be undone by a few weeks of positive flows.
This is where the contradiction becomes unavoidable. On one hand, the state announces outward-looking export targets and trade-led growth strategies. On the other hand, it maintains a financial system designed primarily to fund government consumption and debt servicing. One vision speaks of global competitiveness. The other quietly guarantees domestic stagnation.
If Pakistan is serious about reaching $60 billion in exports, the path is neither mysterious nor easy. It requires a fundamental reordering of priorities.
First, the fiscal deficit must be brought under control through politically difficult but economically unavoidable measures: widening the tax net, ending the haemorrhaging of state-owned enterprises, and rationalising subsidies. The objective must be to stop treating the banking system as the government’s automatic overdraft.
Second, monetary and credit policy must be reoriented toward growth. This means targeted refinancing for exporters, credit guarantees for SMEs, and incentives for banks to lend to industry rather than hoard government paper. Without this shift, no industrial or trade policy can succeed.
Third, competitiveness must become a national mission, not a slogan. Port delays, costly energy, and regulatory bottlenecks silently tax every Pakistani exporter. These frictions must be removed with the same urgency that the state brings to raising revenue.
The $60 billion export target is not misguided. But without structural reform of Pakistan’s financial system, it is empty.
In the end, the choice is stark. Pakistan can continue to run a banking system that exists primarily to finance the government—or it can build one that finances the future.
It cannot do both.