Sharif made the remarks at the inauguration of a new block of the Foreign Office here named after former Foreign Minister Sahabzada Yaqub Khan.
"In order to realise policy objectives, we have taken important initiatives to improve relations with Afghanistan, resume dialogue with India, strengthen strategic partnership with China, re-build relations with the US on the basis of mutual respect and mutual interest, engagement with Europe, and enhance our solidarity with the Islamic world," he said.
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The diplomatic corps should work for a peaceful and prosperous neighbourhood and focus on trade and not aid, he said. Pakistan also wants to develop a consensus-based approach to counter terrorism, he added.
The government is focussing on a four-point agenda that includes weeding out terrorism, reviving the economy, overcoming the energy crisis and promoting trade at the global level instead of getting aid, Sharif said.
He hoped Pakistan will overcome its challenges with the cooperation of the world community.
However, Sharif said an "aura of elitism" is no longer relevant for the Foreign Service, which has to align itself towards public service.
"The vibrancy of today's Pakistan is further reflected in an independent judiciary, a free media and a dynamic civil society," he said.
Sharif stressed that while strengthening democracy is a matter of pride, the government is "conscious that our nation also confronts formidable foes - the menace of extremism and terrorism and a challenging economic situation".
Thus, the government's priorities in the domestic arena are fighting terrorism, reviving the economy, resolving the energy crisis and improving governance.
Sharif said the world had become a village and Pakistan cannot afford isolation at any level. The diplomats would have to work hard to strengthen relations with the world community and neighbours and to promote trade, he said.