Pakistan’s Economic Renaissance -

By Junaid Qaiser
For much of the past two years, Pakistan’s economy has been operating in emergency mode. Inflation was spiralling, foreign exchange reserves were dangerously thin, state institutions were under strain, and global confidence in the economy had eroded. Against this backdrop, Prime Minister Shehbaz Sharif’s declaration that Pakistan has moved beyond “economic firefighting” marks a defining moment—one that signals not just relief from crisis, but the early contours of an economic renaissance grounded in stability and reform.
When the government stepped in at the start of 2024, they faced a tough situation with little room to maneuver. Inflation was approaching 30 percent, reserves were just over $9 billion, fiscal imbalances were significant, and Pakistan was mostly excluded from meaningful global economic discussions. Given these circumstances, the options were clear: either lean into politically safe populism or make tough, often unpopular choices to stabilize the economy. The government chose the latter path.
The results, though still a bit shaky, are quite impressive. Inflation has dropped significantly to 4.5 percent, foreign exchange reserves have surpassed $21 billion, and the current account has flipped from a $3.3 billion deficit to a $1.9 billion surplus. This shift from a primary deficit to a primary surplus shows a level of fiscal discipline that’s rarely been maintained in Pakistan’s economic history. These gains weren’t achieved through superficial fixes; they came from rationalizing subsidies, implementing stricter fiscal controls, enhancing public financial management, and making long-overdue structural changes.
Equally significant is the focus on reforming institutions. The expansion of the e-procurement platform, ePADS, to over a thousand federal agencies—working alongside FBR, Nadra, and SECP—signals a serious commitment to transparency and accountability. The privatization of Pakistan International Airlines and First Women Bank represents a bold move away from years of hesitation regarding state-owned enterprises that have wasted public resources without delivering much value. International credit rating agencies and development partners have taken notice, acknowledging the renewed drive for reform.
What distinguishes this phase is not only stabilisation, but a clear transition towards growth and institution-building. The government’s reform agenda spans 142 actions, including priority and complementary measures to be implemented by 58 institutions within defined timelines. Taxation, energy, SOEs, pensions, tariff rationalisation, regulatory simplification, rightsizing of government and digital governance form the backbone of this programme. By describing the agenda as “home-grown” and “irreversible,” the prime minister has set expectations that reforms will outlast political cycles.
However, stabilisation is only the foundation. As economist Dr Shafqat Munir observes, economic stability is a prerequisite for both domestic and foreign investment, and Pakistan is only now beginning to reap its dividends. The next challenge lies in enhancing manufacturing capacity, boosting exports and easing the path for investors. Persistent issues—ranging from bureaucratic hurdles to inadequate facilitation for exporters—must be addressed if growth is to be broad-based and sustainable. Foreign investment remains a central pillar of the government’s strategy. According to Dr Sherdil Ismail, consistent policies, targeted incentives and initiatives under the Special Investment Facilitation Council are gradually improving Pakistan’s investment outlook.
Reforms in the energy sector further reinforce the broader economic narrative. The prime minister’s directive to digitise the oil and gas supply chain aims to curb smuggling and improve revenue collection. New discoveries, such as the oil and gas reserves in the Nashpa Block of Kohat—expected to produce around 4,100 barrels per day—may not be transformative on their own, but they contribute to reducing reliance on costly imports. Improved gas supply during the current winter, progress on RLNG connections and new pipeline projects reflect incremental yet meaningful progress.
Pakistan’s economic renaissance is still in its early stages. Growth remains vulnerable, social pressures persist, and the political cost of reform is never fully paid upfront. Yet, for the first time in years, the national trajectory appears to be shifting—from crisis containment to stability, and from short-term fixes to long-term institution-building.