Says 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 on Wednesday said Pakistan was moving forward with a renewed sense of “achievement and progress”, while underscoring the need to pursue export-led growth to ensure sustainable economic development.
Speaking to members of the Pakistani community and business leaders on the sidelines of the World Economic Forum, the prime minister said recent economic indicators reflected improving stability.
“Our macroeconomic indicators are reassuring,” he said, noting that inflation had declined 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 multiple challenges and social indicators still required improvement through sustained collective efforts.
The prime minister said the direction ahead was “clear”, stressing 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 digitised. He added that the tax-to-GDP ratio had risen to 10.5p% from 9% a couple of years ago, calling it a significant achievement.
The prime minister said agricultural exports had shown promising growth and that Pakistan had entered the mines and minerals sector in a “big way”. He said agreements and memoranda 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.
PM Shehbaz said the government had decided to move ahead “at lightning speed” and was also making rapid progress in emerging sectors such as cryptocurrency, artificial intelligence and information technology.
“Our IT exports have shown remarkable progress in recent years and now stand at $3 billion annually officialy,” he said, adding that several policy instruments had been introduced to facilitate growth in the sector.
Referring to Pakistan’s large youth population, the prime minister said it posed both a challenge and a significant opportunity. He added that the federal and provincial governments had launched several initiatives to empower young people through vocational training and skills development programmes.
Regarding China, he said: “We have strong economic connections and now we have built relations with United states and as is said earlier that in the field on mines and minerals, there is great hope that we have to cooperate with each other in big way.”
He also said that Pakistan would cooperate with both countries in counter-terrorism efforts, along with IT and artificial intelligence.
“I think Pakistan is at a point of time where we are going to take off rapidly in agriculture, in industry, in mining industry, AI and IT and I think our future is very progressing, I have no doubts about it.”
The premier added that his government was moving forward with “complete transparency”. He pointed out that Pakistan International Airlines, a national asset, was recently privatised.
“Unfortunately, over the last few decades it had suffered setbacks, and it has now been bought by the private sector in Pakistan.
“Its privatisation 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 ahead with further privatisation measures, including the outsourcing of airports and the privatisation of the power sector, distribution companies and transmission lines, noting that these steps were taken under a stringent IMF programme 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 have to move forward toward growth.”
Referring to the closure of state-run entities such as Utility Stores, the Pakistan Works Department and the Pakistan Agricultural Storage and Services Corporation, he said these institutions were shut down to save billions of rupees of the country’s poor, as they had been bleeding the national economy.
“Utility stores, which were offered sub standard goods to the common man, has been completely shutdown and this bleeding is over forever and just saved billions of rupees to the exchequer,” he said.
The prime minister said the government remained unwavering in its resolve, stressing 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 sound 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 poised for take-off. “we are a country with 240 million people, country with a youth bulch, which is a great challenge as well as opportunity and we are absolutely committed to convert this into an opportunity by providing them all those opportunities and tools which will make our country great,” he concluded.
Aurangzeb hails reform gains, calls privatisation ‘huge air vent’
Earlier, speaking at the Pakistan Pavilion, Finance Minister Muhammad Aurangzeb said Pakistan had made significant progress in stabilising its economy over the past year, describing privatisation as a “huge air vent” 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.
Terming these developments the result of structural reforms, the finance minister said there was often debate over 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 under execution.
While acknowledging that some headway had been made, Aurangzeb stressed that much remained to be done. “Our tax-to-GDP is now in double digits, but we still have a long way to go before declaring fiscal sustainability,” he said.
Emphasising the need to expand the tax base, he said economic sustainability depended on bringing previously untaxed sectors into the net. He added that the government was focusing on widening 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 improvements introduced. However, inefficiencies in SOEs continued to cost the country close to a trillion rupees annually.
He said 24 SOEs had been handed over to the Privatisation Commission and noted that, after decades, Pakistan had succeeded in privatising its national airline. The move, he added, would serve as a catalyst for other privatisation processes.
The finance minister said that before attracting foreign direct investment, the government needed to provide 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 bond. “This is the first time Pakistan is going to 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 take the country forward, saying “the ball is in our court”.
Also speaking at the forum, Deputy Prime Minister Ishaq Dar said Pakistan’s economic path was now firmly geared towards growth. He argued that a country with a population growth rate of 2.5 per cent could not sustain itself on economic growth of 2.5 or 3 per cent.
“Prime Minister and finance team are actively pursuing this goal, and I am sure this is not unachievable, as the country has shown its resilience,” he said.
Recalling past performance, Dar said Pakistan had achieved 6.3 per cent growth in 2017, recorded its highest foreign exchange reserves and maintained low inflation at 3.59 per cent, demonstrating the country’s capacity to reach those targets again.
He said Pakistan, which had been diplomatically isolated three years ago, was now fully integrated into the international system. “In 2021, we won UN Security Council elections with just one vote; this time we have 182 votes versus five,” he said, calling it a reflection of growing global confidence in Pakistan.
Dar said the country was passing through a transformative phase and was engaging proactively at regional and global levels to contribute to peace and stability. “We are engaged with our neighbour partners, we are engaged globally, and we are engaged with international forums. I am sure you will have much good news in due course,” he added.
