For Prime Minister Shehbaz Sharif, the path to success is clear, thanks to his ability to prioritise, strategise, and forge ahead. Challenges only fuel his resolve, as he possesses an indomitable fighting spirit.
In just 100 days, his government has made significant strides toward national prosperity. Sworn in on March 4, 2024, amidst financial instability and political division, Shehbaz knew precisely what needed to be done to drive progress across multiple sectors. His firm commitment and strategic vision are setting the stage for a brighter future for Pakistan.
By June 15, the federal government completed its first 100 days. Shehbaz pledged to end the country’s dependency on foreign aid and International Monetary Fund (IMF) bailouts, introducing multiple reforms to revive the economy. He addressed the nation, expressing hope that the current IMF bailout package would be the last in the country’s history.
Foreign investments
The prime minister emphasised his commitment to establishing trade relations during his foreign trips, rather than seeking loans, as a means to break the debt cycle. To promote investment, the prime minister has adopted an open-for-business approach, removing barriers to investment through the Special Investment Facilitation Council (SIFC), which helps navigate bureaucratic hurdles that discourage investors.
In May, the United Arab Emirates (UAE) committed $10 billion to invest in promising economic sectors in the country. During Shehbaz’s visits to Saudi Arabia and UAE, each country committed to investing billions of dollars in Pakistan in various sectors, including mines and minerals, agriculture, defence production, and information technology. The initiative is also part of Pakistan’s new economic revival strategy under the Special Investment Facilitation Council (SIFC).
In April, the Iranian president visited Pakistan and both countries agreed to increase their annual trade volume to $10 billion over the next five years, to deepen relations across all sectors.
Prime Minister Sharif’s visit to China in the first week of June also came as Pakistan is seeking more foreign investment and looking to boost exports. On the visit, the PM was accompanied by over 100 businessmen who had back-to-back meetings and agreements with Chinese firms/companies.
Price control
Inflation in Pakistan remained under control from January to May. It only spiked in June for the first time in six months due to increased energy costs. The Ministry of Finance, in its Monthly Economic Update and Outlook report, attributed this rise to higher prices of perishable items driven by Eid-ul-Azha. However, in May, Pakistan’s consumer price index (CPI) dropped 11.8 per cent from a year earlier, the lowest reading in 30 months and below the finance ministry’s projections. Last year in May, inflation had jumped 38 per cent amid IMF bailout programme reforms.
A report from the second quarter of the Consumer Confidence Survey 2024, which included responses from 1,000 participants nationwide, indicates a significant shift in financial confidence among Pakistanis. The percentage of respondents who reported being able to save and invest rose from 4 per cent to 15 per cent, while those who said they were unable to save and invest decreased from 89 per cent to 85 per cent.
The survey also revealed increased confidence in making big purchases, such as houses or cars. Previously, only 2 per cent of respondents felt confident in making such a purchase; however, this figure has now risen to 7 per cent. Conversely, the percentage of those expressing uncertainty about major purchases has dropped by 5 per cent, now standing at 93 per cent.
Furthermore, the mean reduction in the price of petrol from March 2024 to June 2024 is about Rs 11.39 per litre. The reduction in petrol prices has a positive ripple effect across various sectors, from economic to social. Gasoline prices went down 7.1 per cent in the past month alone.
Remittances
In July-May FY2024, workers’ remittances were recorded at $27.1 billion, an increase of 7.7 per cent compared to $25.1 billion for the same period last year. The share of remittances (July-May) from Saudi Arabia remained the highest at 24.4 per cent ($6.6 billion), followed by UAE and the UK.
Fiscal stability
According to the Finance Government Economic Update June Report 2024, the government’s policy management and administrative measures have restored market confidence, leading to a pickup in economic activity. GDP growth accelerated to 2.4 per cent in FY2024.
During July to April FY2024, net federal revenue grew by 51 per cent to reach Rs5627.5 billion against 3715.3 billion last year. The substantial rise in revenues was primarily driven by a 96 per cent growth in non-tax collection and a 31 per cent rise in tax receipts.
Restructuring of FBR
To improve tax collection, the federal government has tightened the noose around the tax evaders, pressuring the tax authority to perform efficiently. In March, Prime Minister Shehbaz Sharif launched the digitisation and restructuring of the Federal Board of Revenue (FBR), aiming to modernise tax collection, enhance transparency, and boost revenue growth. The reform has been underway for a month and is expected to address long-standing issues in revenue collection.
To improve taxpayers’ compliance with tax measures, the FBR blocked over 230,000 mobile phone SIMs of non-tax filers until 10 July. Consumers could get their SIMs unblocked after filing their tax returns.
Agricultural growth
According to the Finance Government Economic Update June Report 2024, the agriculture sector has emerged as a main driver of economic growth in the current fiscal year, registering growth of 6.3 per cent.
Stock exchange performance
The Pakistan Stock Exchange (PSX) has continued with a bullish trend, setting new records since this government was sworn in. The benchmark of PSX, the KSE-100 index gained 4,097 points in April and closed at 71,103 points as of 30 April 2024. It surged past the 73,000-point milestone, closing at 73,085.5 points after gaining 427 points (0.59 per cent) on 10 May. The May rise was driven by investor optimism that inflation would fall faster than expected, leading to potential lower interest rates. Key analysts cited expectations of reduced inflation and interest rates as reasons for increased investment, particularly in cyclical and leveraged sectors like cement.
Accountability
In pursuit of meritocracy, the prime minister has held individuals responsible for their subpar performance. In April, the federal government took action against top officials of the FBR for their non-compliant attitude just before the budget preparation exercise for the fiscal year 2024-25. A notification stated that the FBR placed 12 officers of grades 22 and 21 from the Inland Revenue Service and Customs under the admin pool. The FBR transferred almost all key members, including the member Inland Revenue (Policy) and member Customs (Operations), to the admin pool of the board.
The FBR said that it will issue more notifications of transfers and postings of BS-20 and BS-19 officers after reshuffling senior officials in grades 22 and 21.
On June 15, PM Shehbaz Sharif promised to abolish all institutions and ministries burdening the national exchequer without serving the public. “One such department is the Public Works Department (PWD) known as the ‘most notorious’ one in terms of corruption,” he added.
GDP growth
A United Nations economic survey released in April this year indicated economic growth for the current year and the next year with real GDP growth of two per cent and 2.3 per cent, respectively. The survey also forecast a decrease in inflation from 26 per cent in 2024 to 12.2 per cent in 2025. It highlighted that an agreement with the IMF in mid-2023 and assistance from China, Saudi Arabia, and the UAE had helped stabilise the economy in 2023. The survey recommended that strengthening tax revenue collection and boosting domestic savings were crucial steps forward.
The actions taken by the federal government over the past four months have been significant, setting the stage for the direction of the coming months and years. While this period is too short to fully assess the government’s performance, the initiatives mentioned above are crucial indicators of their future trajectory.