liquidating short term liabilities. Debt ratio was thus reduced from 100 percent of
GDP to 60 percent in five years time.
Trade policy in Pakistan has been categorized by the World Bank as one
of the least restrictive in S. Asia along with Sri Lanka and this policy has
gradually provided incentives to exporters to increase their market share in the
global markets. Exchange rate policy was pursued to maintain stability in the
foreign exchange markets while at the same time keeping the competitiveness of
Pakistani exports intact. Large accumulation of foreign reserves played an
important role in stabilizing the exchange rate.
Current account has turned around from chronic deficit to a surplus,
mainly due to renewed export growth and resurgence of workers’ remittances.
Inflation rate during the last four years remained below 4 percent. External debt
burden has been reduced in absolute terms from US$38 to US$35 billion and as
a proportion of GDP from 62.5% to 46%. The risk of default on external debt,
which loomed large on the horizon in 1999 and 2000, was mitigated and the
country's capacity to service its restructured debt has considerably improved.
Table II shows the changes in the key economic indicators between October
1999 and October 2004.
Structural Reforms - Privatization, Deregulation, Liberalization:
The Musharraf Government actively pursued an aggressive and
transparent privatization plan whose thrust was sale of assets in the oil and gas
industry as well as in the banking, telecommunications and energy sectors, to
strategic investors, with foreign investors encouraged to participate in the
privatization process. This plan was followed by the elected Government under
Prime Minister Jamali and by the present Prime Minister Shaukat Aziz.
To demonstrate the seriousness of the government in encouraging foreign
investment flows in Pakistan; there has been a major and perceptible
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