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FIVE YEARS HAVE GONE BY SINCE PAKISTAN INITIATED ITS ECONOMIC REFORM PROCESS. NOW IT IS TIME FOR THE COUNTRY TO SHOWCASE ITS ACHIEVEMENTS TO THE WORLD. PRESIDENT PERVEZ MUSHARRAF GIVES A COMPREHENSIVE INSIGHT INTO THE FACTORS THAT SHAPE PAKISTAN'S REVITALIZED ECONOMY.
AN INTRODUCTION BY PRESIDENT MUSHARRAF

The regional economic hub

President Musharraf assures that Pakistan is already a thriving economy with competitive labor costs and a 150 million-consumer market that is now booming.

Pakistan is a growing economy and all set to play its rightful role in the international community. The country’s main accomplishment in the last five years has been the strengthening of its macroeconomic base, which has enabled it to put in place the right processes for full integration and participation in international economic activity. Pakistan’s economy is growing at around 7% and heading towards a growth of 8% in the coming years. Its economic policies are consistent and transparent; the confidence of the private sector is restored, which is reflected in the sharp pick-up in bank credit to the private sector and high double-digit growth in industrial production.

Expatriate Pakistanis are bringing their capital back in, the current account balance has been in surplus for three years in a row, foreign exchange reserves are approaching $12.5 billion, the rupee is stable, the interest rate environment has never been so investment friendly, the budget deficit has been lowered, and the country’s debt burden has declined sharply. Exports, imports, and tax collection are growing at double-digit levels; and Pakistan has $1.6 billion high-cost external debt pre-paid.

Exports, which were estimated to be $7.8 billion in 1999, will reach $14 billion this year. Pakistan’s credit rating has been upgraded by both Moody’s and S&P. It has exited from the IMF program and is now relying on domestic as well as international capital markets to meet its financing needs for development projects. All these indic-ators are positive and prove that Pakistan‘s economy is progressing in leaps and bounds. Pakistan offers 100% equity to foreign investment with the facility of repatriation of capital and profit on investment.

The country has replaced the antiquated financial system with a stronger and more robust one. Liquidity in banks has now increased. The new financial system represents a shift to market-based monetary and credit management. It comprises privatization of public sector commercial banks and a freedom for private and foreign banks to operate in Pakistan. Strong corporate governance, consumer and mortgage financing, ATMs and e-banking have all been introduced. The foreign exchange regime has been liberalized and legal difficulties in loan recovery have been removed. The government has strengthened the central bank’s capacity for supervision and prudential regulations.

It believes in promoting transparency and accountability, observing international standards, and strengthening the financial system through better supervision. The strengthening of the legal framework is also on the cards. The government’s role will be confined to creating an appropriate regulatory framework and incentive regime. Its ultimate objective is to have fewer but strong, adequately capitalized, and well-managed private banks that can compete in modern day banking.
Given the right environment the country has the ability to achieve any goal. Through its economic policies, it has managed to reach a stage where it can achieve fairly high rates of economic growth and look forward to doubling our national output every decade.

Pakistan is already a thriving market with competitive labor costs, both skilled and unskilled, a favorable climate for IT, textiles, oil and gas, and corporate farming. It has an abundance of raw materials and the right infrastructure for investment projects. The existence of over 600 multinationals proves that the nation has stable economic policies in place and that the federation is unified, despite the diversity of cultures and norms. Pakistan has a 150 million-consumer market that is not only booming but is also supporting other consumer markets in the region. With these advantages to its credit, we feel that Pakistan’s vision of becoming a vibrant and modern Islamic state where people have a myriad of opportunities can be easily accomplished.