THE remarks of Finance Minister Muhammad Aurangzeb that Pakistan is no longer seeking aid-based support and is shifting its focus to trade and investment-led engagement for sustainable growth and mutually beneficial partnerships, particularly with Gulf Cooperation Council (GCC) nations surely reflect ground realities.
In an interview with CNN Business Arabia, Aurangzeb said the strategic shift, which he said has been clearly articulated by Prime Minister Shehbaz Sharif, reflects Pakistan’s renewed economic confidence and reform momentum, aimed at long-term economic sustainability.
The comments of the Finance Minister are backed by the policy approaches and their impact on the national economy, which has improved significantly during the last one and a half year despite serious challenges and odds. Pakistan was facing super inflation but the prudent policies of the Government have eased the situation and it is now in a single digit, providing meaningful relief to masses for whom inflation had become a number one problem. As has also been pointed out by the Minister, a current account deficit well within targeted limits, a stabilized exchange rate and foreign exchange reserves improving to around 2.5 months of import cover, reflected strengthening external buffers. The macroeconomic stabilization has been achieved through a coordinated approach combining disciplined monetary and fiscal policies with an ambitious structural reform agenda. These reforms are being pursued across taxation, energy, state-owned enterprises, public financial management and privatization to consolidate stability and lay the foundations for sustainable growth. It is because of a combination of these strategies that the revenue collection has improved significantly with tax-to-GDP ratio improving from 8.8% to 10.3%. This is not a mean achievement if seen in the backdrop of negligible success in the past in efforts to increase the tax-to-GDP ratio. In fact, there is still much scope for increasing the tax collection to minimize reliance on foreign debt, which comes at a huge cost. Pakistan’s successes on the economic front are not only acknowledged by internal watchers and analysts but also by the global partners and evaluators. It may be pointed out that all three international credit rating agencies have upgraded Pakistan’s ratings and outlook this year, the country has completed the second review under the International Monetary Fund (IMF) Extended Fund Facility (EFF), with the IMF Executive Board granting its approval earlier this week and continued positive assessments by the World Bank and the Asian Development Bank, which means growing international confidence in Pakistan’s economic management and reform trajectory. That Pakistan is not seeking aid but trade with other countries is proved by a number of agreements the country has signed for investment in different sectors of the national economy.
Apart from China, Pakistan is engaging GCC partners to attract investment in priority sectors including energy, oil and gas, minerals and mining, artificial intelligence, digital infrastructure, pharmaceuticals and agriculture whereas discussions are in advance stage for a Free Trade Agreement with the GCC. For the first time in many years, substantive investment deals are being concluded with the United States as well, especially in the mining sector and the country is at the verge of exploiting the mineral wealth potential of Reko Diq. There are surely bright prospects for attracting investment because of the hard work of the Special Investment Facilitation Council (SIFC). However, much needs to be done to streamline domestic production to create necessary surplus for exports. It is regrettable that despite tall claims made by almost all successive governments, the challenges and issues scuttling progress on industrialization, value addition and research and development remain there as before. The cost of doing business is still high and the ongoing war against terror needs to be taken to its logical conclusion at the earliest so as to create a congenial atmosphere for investment.
