Saying macro indicators are reassuring, adds Pakistan must pursue export-led growth for sustainable growth
Prime Minister Shehbaz Sharif addresses the Pakistan pavilion on the sidelines of the 56th annual meeting of the World Economic Forum on Wednesday. Photo: APP
Prime Minister Shehbaz Sharif said on Wednesday that Pakistan was moving forward with a renewed sense of “achievement and progress”, while stressing the need to pursue export-led growth to ensure sustainable economic development.
Addressing members of Pakistani society and business leaders on the sidelines of the World Economic Forum, the prime minister said the latest economic indicators reflected improved stability.
“Our macroeconomic indicators are reassuring,” he said, noting that inflation had fallen from 30% to 5.5%, while the policy rate had been reduced from 22.5% to 10.5%.
He added that Pakistan’s IT exports had shown encouraging progress, although exports continued to face several challenges and social indicators still required improvement through sustained collective efforts.
The prime minister said the way forward was “clear” and stressed that Pakistan must move towards “export-led growth”. He said the government had introduced fundamental structural reforms to strengthen the economy.
Highlighting milestones achieved by his administration, the premier said the revenue collection system had undergone major reforms and was being fully digitized. He added that the tax-to-GDP ratio had risen to 10.5p% from 9% a few years ago, calling it a significant achievement.
The prime minister said agricultural exports had shown promising growth and Pakistan had entered the mining and minerals sector in a “big way”. He said agreements and memorandums of understanding had been signed with American and Chinese companies, adding that Pakistan was endowed with vast natural resources in Gilgit-Baltistan, Azad Jammu and Kashmir, Khyber-Pakhtunkhwa and Balochistan.
Prime Minister Shehbaz said the government had decided to move forward “with lightning speed” and was also making rapid progress in new sectors such as cryptocurrency, artificial intelligence and information technology.
“Our IT exports have shown remarkable progress in recent years and now officially stand at $3 billion annually,” he said, adding that several policy instruments had been put in place to facilitate the growth of the sector.
Referring to Pakistan’s large youth population, the prime minister said it was both a challenge and a significant opportunity. He added that the federal and provincial governments had launched several initiatives to empower youth through vocational training and skill development programmes.
Regarding China, he said: “We have strong economic ties, and now we have built relations with the United States, and as it has been said before, there is a great hope that we have to cooperate with each other in a big way in the field of mines and minerals.”
He also said that Pakistan would cooperate with both countries in fighting terrorism along with IT and artificial intelligence.
“I think Pakistan is at a point where we are going to rise rapidly in agriculture, in industry, in mining, AI and IT, and I think our future is very progressive, I have no doubt about that.”
The prime minister added that his government was moving forward with “complete transparency”. He pointed out that Pakistan International Airlines, a national asset, was recently privatized.
“Unfortunately, over the last few decades it has suffered a setback and has now been bought by the private sector in Pakistan.
“Its privatization has been completely transparent. Every aspect of the process was shown live to the world so everyone could see in real time how transparent this transaction was,” he said, calling it a hallmark of his government.
The prime minister said the government was moving forward with further privatization measures, including outsourcing of airports and privatization of the power sector, distribution companies and transmission lines, noting that these steps were taken under a stringent IMF program implemented “in letter and spirit”.
“That is why the IMF is now cautiously using Pakistan’s success story as a role model for developing countries, and now we need to move forward towards growth.”
Referring to the closure of state-run entities such as Utility Stores, Pakistan Works Department and Pakistan Agricultural Storage and Services Corporation, he said that these institutions were closed to save billions of rupees of the country’s poor as they had bled the national economy.
“Utility shops which were offering substandard goods to the common man have been completely shut down and this bleeding is over forever and has just saved billions of rupees to the exchequer,” he said.
The Prime Minister said the government remained steadfast in its decision and stressed that failure to take such difficult decisions would have been unfair to both itself and the people of Pakistan. “Unless and until we stop this bleeding of our economy through these measures, challenging as they are, our economy will not be on a healthy footing no matter what we do.”
Calling for a sense of ownership and understanding among stakeholders, he said Pakistan was at a critical juncture and ready to take off. “We are a country of 240 million people, a country of a lot of young people, which is a big challenge as well as an opportunity, and we are absolutely committed to converting this into an opportunity by giving them all the opportunities and tools that will make our country great,” he concluded.
Aurangzeb hails reform gains, calls privatization ‘huge vent’
Earlier in a speech at the Pakistan Pavilion, Finance Minister Muhammad Aurangzeb said Pakistan had made significant progress in stabilizing its economy over the past year, describing privatization as a “huge air valve” that would pave the way for further reforms.
Aurangzeb said the country had consolidated its macroeconomic gains and was moving in the right direction. He noted that this progress had been externally validated, with three global rating agencies upgrading Pakistan’s outlook during the period.
Describing these developments as the result of structural reforms, the finance minister said there was often debate about whether reforms were taking place in Pakistan, with some describing them as “elusive”. However, he said the reality was that the country was increasingly receiving external and international recognition for reforms currently underway.
While acknowledging that progress had been made, Aurangzeb emphasized that much remained to be done. “Our tax-to-GDP is now in double digits, but we still have some way to go before we declare fiscal sustainability,” he said.
He stressed the need to broaden the tax base and said economic sustainability depended on bringing previously untaxed sectors online. He added that the government was focusing on broadening the tax base while improving compliance and enforcement through the use of technology.
Calling reforms of state-owned enterprises (SOEs) critical, Aurangzeb said circular debt had been reduced and governance reforms introduced. But inefficiencies in state-owned enterprises continued to cost the country close to a trillion rupees annually.
He said 24 state-owned enterprises had been handed over to the Privatization Commission and noted that after decades, Pakistan had succeeded in privatizing its national airline. The move, he added, would serve as a catalyst for other privatization processes.
The finance minister said that before attracting FDI, the government needed to give the same level of confidence to local investors.
Referring to Pakistan’s inaugural panda bond, Aurangzeb said the focus was on issuing the country’s first such bonds. “This is the first time Pakistan will access the Chinese capital market, which is the second largest and second deepest capital market in the world,” he said.
However, he cautioned against complacency, saying Pakistan still had a long way to go to escape boom-and-bust cycles and must exercise patience to avoid repeating past mistakes.
He added that the necessary pillars were now in place to move the country forward, saying “the ball is in our court”.
Deputy Prime Minister Ishaq Dar also said that Pakistan’s economic path was now heavily geared towards growth. He argued that a country with a population growth of 2.5 percent could not sustain itself on an economic growth of 2.5 or 3 percent.
“The Prime Minister and finance team are actively pursuing this goal and I am confident that this is not unattainable as the country has shown its resilience,” he said.
Recalling previous achievements, Dar said Pakistan had achieved 6.3 percent growth in 2017, recorded its highest foreign exchange reserves and maintained low inflation at 3.59 percent, showing the country’s capacity to achieve these targets again.
He said that Pakistan, which had been diplomatically isolated three years ago, was now fully integrated into the international system. “In 2021, we won the UN Security Council elections by just one vote; this time we have 182 votes to five,” he said, calling it a reflection of growing global confidence in Pakistan.
Dar said the country was undergoing a transformative phase and was proactively engaging at regional and global levels to contribute to peace and stability. “We are engaged with our neighboring partners, we are engaged globally and we are engaged in international forums. I’m sure you will have a lot of good news over time,” he added.
