Pakistan moves forward with ‘a sense of accomplishment and progress,’ PM Shehbaz tells WEF

Prime Minister Shehbaz Sharif said on Wednesday that Pakistan was moving forward with a renewed sense of “success and progress”, while emphasizing the need to pursue export-led growth to ensure sustainable economic development.

Addressing members of the Pakistani community and business leaders on the sidelines of the World Economic Forum, the Prime Minister said recent economic indicators reflect improving stability.

“Our macroeconomic indicators are reassuring,” he said, noting that inflation had fallen from 30% to 5.5%, while the key rate had been reduced from 22.5% to 10.5%.

He added that Pakistan’s information technology exports had shown encouraging progress, although exports still faced multiple challenges and social indicators still needed to be improved 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 the milestones achieved by his administration, the Prime Minister said the revenue collection system had undergone major reforms and was fully digitalized. He added that the tax-to-GDP ratio had increased from 9% a few years ago to 10.5p%, calling this 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 MoUs had been signed with American and Chinese companies, adding that Pakistan was blessed 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 “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 officially stand at $3 billion annually,” he said, adding that several policy instruments had been introduced to facilitate the growth of the sector.

Referring to Pakistan’s large young population, the Prime Minister said this represented both a challenge and a significant opportunity. He added that the federal and provincial governments had launched several initiatives to empower the youth through vocational training and skill development programs.

Regarding China, he said: “We have strong economic ties and now we have built relations with the United States and as was said earlier, in the area of ​​mines and minerals, there is a great hope that we will have to cooperate in a significant way.”

He also said Pakistan would cooperate with the two countries in counter-terrorism efforts, as well as in the field of IT and artificial intelligence.

“I think Pakistan is at a moment where we are going to take off quickly in agriculture, manufacturing, mining, AI and IT and I think our future is full of progress, I have no doubt about it.”

The Prime Minister added that his government was moving forward with “total transparency”. He pointed out that Pakistan International Airlines, a national asset, was recently privatized.

“Unfortunately, over the past few decades it has suffered setbacks and has now been taken over by the Pakistani private sector.

“Its privatization was 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 other privatization measures, including the outsourcing of airports and the privatization of the electricity sector, distribution companies and transmission lines, noting that these measures were taken under a rigorous IMF program implemented “in letter and spirit.”

“This is why the IMF is now cautiously using Pakistan’s success as a model for developing countries, and we must now move 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 these institutions were closed to save billions of rupees of the country’s poor as they were bleeding the national economy.

“The utility stores, which were offering substandard products to the common man, have been completely shut down and this haemorrhage is over forever and has just saved billions of rupees for the exchequer,” he said.

The Prime Minister said the government remained steadfast in its resolve, stressing that failure to take such difficult decisions would have been unfair both to itself and the people of Pakistan. “Until we stop this hemorrhaging of our economy with these measures, as difficult as they are, our economy will not be on solid 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 for takeoff. “We are a country of 240 million people, a country with a youth population, which is a big challenge as well as an opportunity and we are absolutely determined to turn this into an opportunity by providing them with all these opportunities and all the tools that will make our country great,” he concluded.

Aurangzeb welcomes progress in reform, calls privatization a ‘huge air vent’

Earlier, speaking 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 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 prospects during the period.

Terming these developments as a result of structural reforms, the finance minister said there were often debates over whether reforms were taking place in Pakistan, with some calling them “elusive”. However, he said the reality was that the country was receiving more and more external and international recognition for the reforms currently underway.

While acknowledging that progress has been made, Aurangzeb stressed that much remains to be done. “Our tax-to-GDP ratio is now in double digits, but we still have a long way to go before declaring fiscal sustainability,” he said.

Stressing the need to broaden the tax base, he said economic viability depended on bringing previously untaxed sectors into the net. He added that the government was focused on broadening the tax base while improving compliance and enforcement through the use of technology.

Terming reforms in public enterprises (state-owned enterprises) as essential, Aurangzeb said circular debt had been reduced and improvements in governance had been introduced. However, inefficiencies in state-owned enterprises continue to cost the country nearly 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 successfully privatized its national airline. The move, he added, would serve as a catalyst for further privatization processes.

The Finance Minister said that before attracting foreign direct investment, the government must provide the same level of confidence to local investors.

Referring to Pakistan’s first panda bond, Aurangzeb said the focus was on issuing the country’s first such bond. “This is the first time that Pakistan has accessed the Chinese capital market, which is the second largest capital market in terms of size and depth in the world,” he said.

He, however, cautioned against complacency, saying Pakistan still had a long way to go to escape boom-bust cycles and needed to be patient 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.”

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 percent could not survive with economic growth of 2.5 or 3 percent.

“The Prime Minister and the Finance team are actively pursuing this goal, and I am sure it is not unachievable, as the country has shown its resilience,” he said.

Recalling its past performance, Dar said Pakistan achieved 6.3 percent growth in 2017, recorded its highest foreign exchange reserves and maintained low inflation at 3.59 percent, demonstrating the country’s ability to achieve these targets again.

He said Pakistan, which was diplomatically isolated three years ago, was now fully integrated into the international system. “In 2021, we won the UN Security Council elections with 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 going through a phase of transformation and was proactively engaging regionally and globally 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 am sure you will have lots of good news in due time,” he added.