The Prime Minister recalled difficult times in the recent past, which the country passed through, and which had brought its economy on the brink of collapse. But, he added under the dedicated and sincere leadership of President General Pervez Musharraf the economic team worked with honesty and devotion to make Pakistan an economically stronger and politically stable country.
He said reforms introduced during the last five years have started yielding results in terms of improved macroeconomic environment and acceleration in economic growth.
"The confidence of domestic as well as foreign investors is gaining new heights on the back of a stable macroeconomic environment," he said and added the industrial sector was growing in the range of 16 to 18 percent per annum and the economy was likely to grow around 7 percent this year.
Prime Minister Shaukat Aziz declared: "Wide-ranging reforms, prudent macroeconomic policies, financial discipline and consistency and continuity of policies over the last five years have transformed Pakistan into an exciting and resurgent economy."
Tracing difficult and testing times the country had to live through in the recent past, he said the country''s economy was fragile and the balance of payments were highly vulnerable to external shocks.
The debt situation had worsened and Pakistan had almost lost its financial sovereignty with international rating agencies downgrading it to a selective default level.
He described rising debt burden, declining investment and decelerating growth as three major challenges facing the country by the end of the 1990s.
The burgeoning debt burden was almost consuming two-third of the total government''s revenue, forcing the government to curtail public sector investment, he said, adding the private sector investment had also begun to decelerate.
The decline in overall rate of investment started causing deceleration in growth. That in turn weakened employment generation capacity of the economy, resulting in the rise of unemployment, the Prime Minister said.
The government, he said, followed a two-pronged strategy that transformed the fragile economy to a resurgent economy in a short span of five years.
"On the one hand we took measures to improve the country''s macroeconomic environment and on the other hand, we introduced a wide-ranging structural reforms in almost every sector of the economy to improve supply side response by removing impediments to private sector development, removing irritants to improve investment climate and improving the allocation of resources," he added.
The two-pronged strategy resulted in reduction in fiscal and current account deficit, leading to a reduction in the country''s debt burden and improving the macroeconomic environment.
He praised the people of Pakistan for supporting the government''s efforts to turn Pakistan into an economically stable and politically viable country.
"We believe that we have laid the foundation of a stable and strong economy and the stage is now set for the economy to grow more vigorously (8 percent per annum) over the next several years with private sector playing the lead role," he observed.
"The economy is no longer fragile indeed, it is more healthier today than ever before; economic policies are consistent, transparent, and predictable; private sector is buoyant. They have borrowed over $ 10 billion during last 18 months from the banking system," he added.
Prime Minister Aziz said imports of machinery, equipment and raw materials were up by 40 percent, industrial sector was growing in the range of 16 to 18 percent per annum and the economy was likely to grow around 7 percent this year.
"Accordingly, Pakistan will emerge as one of the five fastest growing economies of Asia," he added.
The expatriate Pakistanis, he added, had gained confidence on the economy and bringing their capital back. Stock market and telecom sectors were booming, external balance of payments had never been so comfortable, current account balance was in surplus and foreign exchange reserves were now sufficient to provide cover to nine months of imports. Exchange rate was stable and budget deficit was reduced to below 3 percent of GDP.
He pointed out the country''s debt burden had not only declined sharply but fast approaching to sustainable level.
"We have pre-paid expensive external debt and above all, both S&P and Moody''s had upgraded Pakistan''s several notches during the recent years.
The Prime Minister also referred to Pakistan''s successful return to the international capital market through the floatation of $ 500 million Eurobonds in February 2004 and $ 600 million Islamic bond (Sukuk) in January 2005 on the back of an exit from programme the International Monetary Fund (IMF).
Both the transactions were oversubscribed several fold, reflecting huge vote of confidence of international investors on Pakistan," he added.
Prime Minister Aziz, however, emphasised the need for the country to continue to adjust itself to changing domestic and external environment.
The Prime Minister said that now second-generation reforms were needed to achieve a 7-8 percent growth on a sustained basis.
In the next five years, he said, the government''s reform agenda will concentrate on strengthening institutions, improving competitiveness of our industries, building a robust financial system in an environment of global financial restructuring, further strengthening of tax administration, promoting transparency in economic policy-making and strengthening the country''s physical and human infrastructure.
But, the Prime Minister underlined, Pakistan was still faced with many challenges as to how to translate these gains in improving the living standards of the common man and how to reduce social gap to improve education and health services.
Stressing the importance of human resources, he said the government was fully committed to improve the human capital base, as Pakistan cannot afford another decade of missed opportunities.
In this context, he added a comprehensive human development strategy has been prepared aimed at effective utilisation of available resources through improved institutional mechanism.
The Prime Minister said given the importance of human capital development, the government was also changing the composition of its expenditure.
"We are allocating more resources towards human capital development. Many initiatives in the areas of education, health, water supply, population planning and social safety nets have been launched," he said.
The Prime Minister, underlining the importance of SMEs in the country''s economy, said over the last five years the government has brought SMEs at the center stage of policy-making.
The government has opened two specialised micro-credit banks in Pakistan. The central bank has issued a separate set of prudential regulations with the aim to encourage banks and DFIs to develop new financing techniques and innovative products to meet financial needs of the SMEs.
He also underscored the role of the private sector in placing the country on the path of higher growth. He said the role of the government was not to run the business but to facilitate and create a conducive environment to enable the private sector play its effective role.
"With accelerated pace of privatisation, the role of private sector is further expanding. Pakistan''s banking and financial sector is much stronger today than compared to 10 years ago or in comparison to other countries in the Asian region," he said.
He said due to wide-ranging reforms in the banking and financial sector, today, over 85 percent of the baking sector is in the hands of private sector.
The capital market reforms have been pursed during the past five years with a view to developing a modern and efficient corporate sector and capital market based on sound regulatory principles.
The Prime Minister invited the Saudi businessmen to have a fresh look on Pakistan and benefit from the country''s growing economy.
"Pakistan offers immense investment opportunities. It is a market of 150 million people with a growing middle-class and in the next 5 years, we will be adding another 15 million people," he added.
The Prime Minister also referred the aggressive privatisation programme of the government which offer attractive opportunities to investors.
The Prime Minister noted that South Asian region was moving towards closer political and economic ties. He said relations between Pakistan and India were improving.
On the investment front, he said, the government was pursuing transparent and consistent economic policies.
"Our trade regime is highly liberal and open, the average tariff rate is around 11 percent, there is no exchange control, exchange rate is market determined, over 65 percent of our development projects are concentrated on expanding and strengthening the country''s physical infrastructure," he added.
The Prime Minister said construction of Gwadar seaport has been completed and special economic zones adjacent to the port were also being developed.
"We are also establishing Textile City in Karachi. The demand for cell phone is growing at frenzied pace, there were only 142,000 cell phone in the country some 5 years ago and today it is over 8.5 million, and most importantly, Pakistan''s real estate market and construction industry is booming," said the Prime Minister.
He informed the Saudi businessmen that more than 600 multinationals already operating in Pakistan with average profitability of more than 25 percent.
"All economic sectors are open for foreign investment, we have allowed up to 100 percent foreign equity, remittances of profit, dividends, royalty, and technical fee are allowed and foreign private investment is fully protected."
He identified oil & gas, IT & Telecom, agriculture, Iron end steel sectors, SMEs infrastructure, tourism, participation in privatisation programme, chemical, engineering, leather and leather products as some of the exciting areas of Pakistan''s economy.
The Prime Minister also stressed the need of proactively projecting the true philosophy of Islam which emphasises tolerance, moderation and peace.
"We have to wash out negative perceptions about our religion and challenges like clash of civilisations."
He also underlined the exemplary ties that existed between Pakistan and Saudi Arabia that were characterised by cordiality, brotherly warmth and mutual trust.