Part 571

Flag: green with a vertical white band (symbolizing the role of religious minorities) on the hoist side; a large white crescent and star are centered in the green field; the crescent, star, and color green are traditional symbols of Islam

Economy -------

Economic overview: Pakistan is a poor, highly populated Third World country struggling to make the difficult transition to the modern world of high technology and internationalized markets. Prime Minister Benazir BHUTTO has been under pressure from the IMF and other donors to continue the economic reforms and austerity measures begun by her predecessor, caretaker Prime Minister Moeen QURESHI (July-October 1993). The IMF suspended a $1.5 billion Enhanced Structural Adjustment Facility (ESAF) in mid-1995 because Pakistan slowed the pace of economic reform. Islamabad's most recent budget - announced in June 1995 - reversed some reforms agreed to by the IMF earlier that year, including a slowing of tariff reform. In mid-December 1995, however, the IMF approved a $600 million standby arrangement and urged Pakistan to move forward with economic liberalization. Islamabad has agreed to new economic targets with the IMF, which could lay the basis for a return to an ESAF in 1996. Little progress was made in the privatization of large state-owned units in 1995. The sale of the power plant Kot Addu - scheduled for April 1995 - was stalled by opposition from labor unions. The sale of a 26% share of United Bank Limited and the Pakistan Telecommunications Corporation to strategic investors was due to take place in 1995 but has been pushed back to 1996. On the plus side real GDP grew 4.7% in 1995, up from 3.9% in 1994: GDP should grow even faster in 1996 as a result of an above average cotton crop. Secondly, Islamabad reduced the budget deficit to 5.6% of GDP at the end of FY94/95, down from 8% two years earlier. Thirdly, Pakistan attracted $1.6 billion in foreign direct and portfolio investment in FY94/95, more than double inflows of $650 million in the previous fiscal year; financial agreements were reached on five power projects in 1995, including the 1,300-MW $1.8 billion Hab River project. Despite these improvements, the economy remains vulnerable to crisis. Foreign exchange reserves fell dramatically in 1995, reaching a low of about $1 billion in early December 1995 - only five weeks of import cover - before rising to $1.5 billion by yearend. The trade deficit rose to $2 billion for the first six months of FY94/95, triple the deficit of $600 million during the same period in FY93/94. The government responded to this situation with a package of stabilization reforms on 28 October 1995 which included a 7% devaluation of the rupee, supplementary duties of 10% on many imports, and higher petroleum prices. Islamabad hopes these moves will help make its exports more competitive. For the long run, Pakistan must deal with serious problems of deteriorating infrastructure, low literacy levels, and persistent law and order problems in Karachi.

GDP: purchasing power parity - $274.2 billion (1995 est.)

GDP real growth rate: 4.7% (1995 est.)

GDP per capita: $2,100 (1995 est.)

GDP composition by sector: agriculture: 24% industry: 27% services: 49% (1995 est.)

Inflation rate (consumer prices): 13% (1995 est.)

Labor force: 36 million by occupation: agriculture 46%, mining and manufacturing 18%, services 17%, other 19% note: extensive export of labor

Unemployment rate: NA%

Budget: revenues: $11.9 billion expenditures: $12.4 billion, including capital expenditures of $NA (FY94/95)

Industries: textiles, food processing, beverages, construction materials, clothing, paper products, shrimp

Industrial production growth rate: 5% (1995 est.)

Electricity: capacity: 12,530,000 kW (1995) production: 43.3 billion kWh (1995) consumption per capita: 389 kWh (1993)

Agriculture: cotton, wheat, rice, sugarcane, fruits, vegetables; milk, beef, mutton, eggs

Illicit drugs: major illicit producer of opium and hashish for the international drug trade; remains world's fourth largest opium producer (155 metric tons in 1995); major center for processing Afghan heroin and key transit area for Southwest Asian heroin moving to Western market

Exports: $8.7 billion (1995 est.) commodities: cotton, textiles, clothing, rice, leather, carpets partners: US, Japan, Hong Kong, Germany, UK, UAE, France

Imports: $10.7 billion (1995 est.) commodities: petroleum, petroleum products, machinery, transportation equipment, vegetable oils, animal fats, chemicals partners: Japan, US, Germany, UK, Saudi Arabia, Malaysia, South Korea

External debt: $26 billion (1995 est.)

Economic aid: recipient: ODA, $697 million (1993) note: $2.5 billion (includes bilateral and multilateral aid but no US commitments) (FY93/94); $3 billion (includes bilateral and multilateral aid but no US commitments) (FY94/95)

Currency: 1 Pakistani rupee (PRe) = 100 paisa

Exchange rates: Pakistani rupees (PRs) per US$1 - 34.339 (January 1996), 31.643 (1995), 30.567 (1994), 28.107 (1993), 25.083 (1992), 23.801 (1991)

Fiscal year: 1 July - 30 June

Transportation --------------

Railways: total: 8,163 km broad gauge: 7,718 km 1.676-m gauge (293 km electrified; 1,037 km double track) narrow gauge: 445 km 1.000-m gauge; 661 km less than 1.000-m gauge (1995 est.)

Highways: total: 205,304 km paved: 104,735 km unpaved: 100,569 km (1995 est.)

Pipelines: crude oil 250 km; petroleum products 885 km; natural gas 4,044 km (1987)

Ports: Karachi, Port Muhammad bin Qasim