Changes

====Foreign Trade and Aid====

====Foreign Trade and Aid====

Weak world demand for its exports and domestic political uncertainty have contributed to Pakistan's high trade deficit. In 2004, growth rebounded to approximately 6% with substantial improvement in public and external debt indicators and remained robust with 7.8% growth in 2005. Foreign reserves are at an all-time high of $11.5 billion. Pakistan's exports, which grew by 14.4% in 2005/2006, continue to be dominated by cotton textiles and apparel, despite government diversification efforts. Major imports include petroleum and petroleum products, edible oil, wheat, chemicals, fertilizer, capital goods, industrial raw materials, and consumer products, rising to 38.8% to $25.6 billion. External imbalance has left Pakistan with a growing foreign debt burden. The fiscal imbalance is reflected in a high level of total net public debt, which reached an estimated 92.6% of GDP in 2000-01, more than half involving external liabilities, but decreased to 72.7% in 2003. The fiscal deficit widened from 5.6% of GDP in 1994-95 to 7.7% in 1997-98 before declining to 4.5% in 2006. Despite a rise in tax collection, defense and development expenditure along with transfers to the provinces all rose in the 2006 budget, widening the deficit. Support for loss-making, state-owned enterprises and a weak domestic tax base are critical elements in the recurring fiscal deficits. The Pakistan Telecommunications Company Ltd. (PTCL) represented the largest of Pakistan’s privatization programs for 2005. Despite its economic and political difficulties, Pakistan has taken steps to liberalize its trade and investment regimes, either unilaterally or in the context of commitments made with the World Trade Organization (WTO), IMF, and the World Bank. In 2004-2005, efforts in several crucial areas seemingly intensified, resulting in Pakistan becoming a more open and secure market for its trading partners.  

Weak world demand for its exports and domestic political uncertainty have contributed to Pakistan's high trade deficit. In 2004, growth rebounded to approximately 6% with substantial improvement in public and external debt indicators and remained robust with 7.8% growth in 2005. Foreign reserves are at an all-time high of $11.5 billion. Pakistan's exports, which grew by 14.4% in 2005/2006, continue to be dominated by cotton textiles and apparel, despite government diversification efforts. Major imports include petroleum and petroleum products, edible oil, wheat, chemicals, fertilizer, capital goods, industrial raw materials, and consumer products, rising to 38.8% to $25.6 billion. External imbalance has left Pakistan with a growing foreign debt burden. The fiscal imbalance is reflected in a high level of total net public debt, which reached an estimated 92.6% of GDP in 2000-01, more than half involving external liabilities, but decreased to 72.7% in 2003. The fiscal deficit widened from 5.6% of GDP in 1994-95 to 7.7% in 1997-98 before declining to 4.5% in 2006. Despite a rise in tax collection, defense and development expenditure along with transfers to the provinces all rose in the 2006 budget, widening the deficit. Support for loss-making, state-owned enterprises and a weak domestic tax base are critical elements in the recurring fiscal deficits. The Pakistan Telecommunications Company Ltd. (PTCL) represented the largest of Pakistan’s privatization programs for 2005. Despite its economic and political difficulties, Pakistan has taken steps to liberalize its trade and investment regimes, either unilaterally or in the context of commitments made with the World Trade Organization (WTO), IMF, and the World Bank. In 2004-2005, efforts in several crucial areas seemingly intensified, resulting in Pakistan becoming a more open and secure market for its trading partners.