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From stability to prosperity, the march is on

Pakistan is enjoying a run of good news, and making all the right moves to advance its economy further

Optimism is running high among the people and policy makers in Pakistan. The resilient economy is moving to a trajectory of high growth and is expected to notch 4.7 per cent this year - its fastest pace in eight years. Interestingly, there are a number of factors fuelling this growth story; foremost being low international crude oil prices and progressive policies of its government.

Continuity of the democratic regime at the centre has played a fair share in the improving economic state of the country. Since Pakistan's independence, it was the first time in 2013 when one civilian government successfully transferred power to the other. Internationally, investors view this change as green shoots and have poured in money with greater confidence. Subsequently, the foreign exchange reserves have since doubled to $18.7 billion (as on July 3, 2015).
The IMF has acknowledged that Pakistan averted a balance of payments crisis in 2013 and managed to stabilise its foreign reserves. Credit rating agency Standard & Poor's has raised the outlook from B minus rating from stable to positive. Moody's, too, has shown greater conviction and raised its rating from negative to stable.
The stock market has doubled in dollar terms since the start of 2012, thanks in large part to foreign interest.

On the policymaking front, the government has been making all the right moves. There is a fresh focus on tax collection. The overall federal revenue receipts are expected to go up to Rs5.8 trillion from Rs 5.3 trillion, and tax revenues are expected to rise to Rs3.1 trillion from Rs2.7 trillion. Until now, the Pakistan's Federal Board of Revenue (FBR) collected a mere 9 per cent of Pakistan's GDP as tax - one of the lowest rates of tax collection by a federal government. In fact, out of a total workforce of 58 million less than 2 million are registered taxpayers as per the Sustainable Development Policy Institute in Pakistan. However, this is expected to change as the policymakers make fresh attempts to widen the tax net.
With the rise in confidence, investments and savings are expected to grow as well at 17.7 per cent and 16.8 per cent respectively.
The forward-thinking policy measures are also looking to unlock valuations in government corporations. The government has embarked on a privatisation drive and sold off its stake in Habib Bank, the country's largest lender, for $1 billion.
The Central Bank of Pakistan on its part has been maintaining a delicate balance between growth and inflation. While the country is rapidly looking to reclaim its growth trajectory, it has struck a sensitive balance with inflation as well. The consumer prices rose by 2.5 per cent in the year to March, the smallest increase for more than a decade. Keeping a note of the growth led agenda of the government, the central bank has already lowered its benchmark interest rate twice this year, which is expected to stimulate greater spending in the economy.
For now, Pakistan is the 26^th largest economy in the world in terms of purchasing power parity. If it continues to grow at a steady pace, the country would soon be among the large economies of the 21^st century reigning high on the globe. It is already a part of next 11 Goldman Sachs Global Economics Group - a grouping that further instills confidence in the future of the nation.
On the infrastructure front, there is renewed focus on big investments. Compared to last year, cement sales have risen by 5.5 per cent from July 2014 to March 2015 - signifying an increased activity in construction sector. Car sales too have risen by over 22 per cent during the same period.
The change is amply visible. International visitors have reported positively about the changing economic landscape of the country - a network of good roads and strong business culture. Pakistan is mid-table in the World Bank's ease-of-doing-business rankings, well above its neighbour India. The infrastructure is solid enough to support big fastfood chains. Chains such as McDonald's, KFC, Pizza Hut and Subway have a total of 187 outlets, more than in all of Sub-Saharan Africa's frontier economies combined.
During the current fiscal, exports are expected to grow by 5.5 per cent to total $25.5 billion. The imports are expected to jump six per cent to $43.3 billion. The trade account is projected to reach $17.4 billion and the current account deficit at $2.9 billion.
Low crude oil prices internationally have been working in favour of the country. A draft budget aims to bring the budget deficit below  4 per cent of GDP in 2015-16, from the peak of over 8 per cent.
Overseas Pakistanis too share a credible stake in the growth of the economy. For July-April 2015, the official amount of remittances sent was to the tune of $15 billion.
Remittances sent by overseas Pakistanis from the UAE, Saudi Arabia, other GCC countries, the US and UK is expected to increase substantially and be in the range of $18 to 19 billion or more.
Collectively, there is no denying that green shoots of economic prosperity are clearly visible and the country would be one of the large economic forces of the 21^st century.
suneeti@khaleejtimes.com