Obligation Pakistania 7.875% ( USY8793YAL66 ) en USD

Pakistania

90.11 % ▲

Pakistan

USY8793YAL66 ( en USD )

7.875% par an ( paiement semestriel )

31/03/2036

Prospectus brochure de l'obligation Pakistan USY8793YAL66 en USD 7.875%, échéance 31/03/2036

100 000 USD

300 000 000 USD

Y8793YAL6

30/03/2026 ( Dans 106 jours )

Le Pakistan est une république islamique d'Asie du Sud, bordée par l'Afghanistan, l'Iran, l'Inde, la Chine et le golfe d'Oman.

L'Obligation émise par Pakistania ( Pakistan ) , en USD, avec le code ISIN USY8793YAL66, paye un coupon de 7.875% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 31/03/2036

The President of the Islamic Republic of Pakistan
for and on behalf of
the Islamic Republic of Pakistan
U.S.$500,000,000 7.125% Notes due 2016
U.S.$300,000,000 7.875% Notes due 2036
Issue price of 2016 Notes: 100.00%
Issue price of 2036 Notes: 100.00%
The U.S.$500,000,000 7.125% Notes due 2016 (the 2016 Notes) and the U.S.$300,000,000 7.875% Notes due
2036 (the 2036 Notes, and together with the 2016 Notes, the Notes) are issued by The President of the Islamic Republic of
Pakistan for and on behalf of the Islamic Republic of Pakistan (the Issuer) and are direct, unconditional and unsecured
obligations. Interest on the 2016 Notes will be payable semi-annually in arrear on March 30 and September 30 in each year
commencing on September 30, 2006 except that the final interest period will be from and including September 30, 2015 to
but excluding the 2016 Maturity Date (as defined below). Interest on the 2016 Notes will accrue from and including
March 30, 2006 and will be at a rate of 7.125% per annum. The 2016 Notes will mature on March 31, 2016 (the 2016
Maturity Date). Interest on the 2036 Notes will be payable semi-annually in arrear on March 30 and September 30 in each
year commencing on September 30, 2006 except that the final interest period will be from and including September 30,
2035 to but excluding the 2036 Maturity Date (as defined below). Interest on the 2036 Notes will accrue from and including
March 30, 2006 and will be at a rate of 7.875% per annum. The 2036 Notes will mature on March 31, 2036 (the 2036
Maturity Date). Payments on the Notes will be made in U.S. dollars without deduction for or on account of taxes of the
Islamic Republic of Pakistan to the extent described under "Terms and Conditions of the Notes -- Taxation".
Application has been made to admit the Notes to listing on the Official List of the Luxembourg Stock Exchange
and to trading on the Euro MTF market of the Luxembourg Stock Exchange.
Application has been made to have the Notes accepted for trading in the Private Offerings, Resales and Trading
through Automated Linkages System (PORTAL) of the National Association of Securities Dealers, Inc.
An investment in the Notes involves certain risks. For a discussion of these risks see "Risk Factors" beginning
on page 7 of this Offering Circular.
The Notes have not been registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and
are being offered only (1) to qualified institutional buyers (QIBs) under Rule 144A under the Securities Act (Rule 144A)
and (2) outside the United States in compliance with Regulation S under the Securities Act (Regulation S). Prospective
purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A. For a description of certain restrictions on resale or transfer, see "Transfer
Restrictions" and "Plan of Distribution."
The Notes will initially be represented by global certificates in registered form (the Global Certificates). 2016
Notes and 2036 Notes offered and sold in reliance on Rule 144A will be represented by restricted global certificates (the
2016 Restricted Global Certificate and the 2036 Restricted Global Certificate, respectively, and together the Restricted
Global Certificates). 2016 Notes and 2036 Notes offered and sold in reliance on Regulation S will be represented by
unrestricted global certificates (the 2016 Unrestricted Global Certificate and the 2036 Unrestricted Global Certificate,
respectively, and together the Unrestricted Global Certificates). Each Global Certificate will be registered in the name of
Cede & Co., as nominee for DTC. It is expected that delivery of the Global Certificates will be made on March 30, 2006 or
such later date as may be agreed (the Closing Date) by the Issuer and the Managers (as defined under "Plan of
Distribution").
Citigroup
Deutsche Bank Securities
JPMorgan
The date of this Offering Circular is March 23, 2006.

The Issuer, having made all reasonable enquiries, confirms that this Offering Circular contains or
incorporates all information which is material in the context of the Notes, that the information contained or
incorporated in this Offering Circular is true and accurate in all material respects and is not misleading, that the
opinions and intentions expressed in this Offering Circular are honestly held and that there are no other facts the
omission of which would make this Offering Circular or any of such information or the expression of any such
opinions or intentions misleading. The Issuer accepts responsibility accordingly.
No person has been authorized to give any information or to make any representation other than those
contained in this document in connection with the offering of the Notes and, if given or made, such information
or representations must not be relied upon as having been authorized by the Issuer or the Managers. Neither the
delivery of this document nor any sale made hereunder shall, under any circumstances, constitute a
representation or create any implication that there has been no change in the affairs of the Issuer since the date
hereof. This document does not constitute an offer of, or an invitation by, or on behalf of, the Issuer or the
Managers to subscribe for, or purchase, any of the Notes in any jurisdiction in which such offer or invitation is
unlawful. This document does not constitute an offer, and may not be used for the purpose of an offer to, or a
solicitation by, anyone in any jurisdiction or in any circumstances in which such an offer or solicitation is not
authorized or is unlawful.
The Managers have not separately verified the information contained herein. Accordingly, no
representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted
by the Managers or any of them as to the accuracy or completeness of the information contained in this Offering
Circular or any other information provided by the Issuer in connection with the Notes or their distribution.
This Offering Circular is not intended to provide the basis of any credit or other evaluation and should
not be considered as a recommendation by the Issuer or the Managers that any recipient of this Offering Circular
should purchase any of the Notes. Each investor contemplating purchasing Notes should make its own
independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of
the Issuer.
For a description of certain restrictions on the offering and sale of the Notes and on distribution of this
document, see "Plan of Distribution" below.
The Notes are not being offered or sold and may not be offered or sold directly or indirectly in Pakistan,
to residents in Pakistan or to, or for the account or benefit of, such persons.
The Islamic Republic of Pakistan is a foreign sovereign state. Consequently, it may be difficult for
investors to obtain or realize upon judgments of courts in England or their own jurisdiction against Pakistan.
Further, it may be difficult for investors to realize upon judgments of courts in England or their own jurisdiction
against Pakistan in the courts of Pakistan. See "Risk Factors - Enforcement of foreign judgments in Pakistan".
The issue of the Notes by The President of the Islamic Republic of Pakistan for and on behalf of the
Islamic Republic of Pakistan is in accordance with Article 173(3) of the Constitution of the Islamic Republic of
Pakistan which states "All contracts made in the exercise of the executive authority of the Federation or of a
Province shall be expressed to be made in the name of the President or, as the case may be, the Governor of the
Province."
In connection with the issue and distribution of the Notes, the Managers may over-allot Notes or
effect transactions with a view to supporting the market price of the Notes at a level higher than that
which might otherwise prevail. However, there is no assurance that the Managers (or persons acting on
behalf of the Managers) will undertake stabilization action. Any stabilization action may begin on or after
the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun,
may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the
Notes and 60 days after the day of the allotment of the Notes.
The Notes have not been approved or disapproved by the United States Securities and Exchange
Commission or any other securities commission or other regulatory authority in the United States, nor have the
foregoing authorities reviewed or passed upon the accuracy or adequacy of this Offering Circular. Any
representation to the contrary is a criminal offence.
i

This Offering Circular is being submitted on a confidential basis in the United States to a limited
number of QIBs for informational use solely in connection with the consideration of the purchase of the Notes. It
may not be copied or reproduced in whole or in part nor may it be distributed or any of its contents disclosed to
anyone other than the prospective investors to whom it is originally submitted.
Each purchaser or holder of interests in the Notes will be deemed, by its acceptance or purchase of any
such Notes, to have made certain representations and agreements as set out in "Plan of Distribution".
Notwithstanding anything herein to the contrary, from the commencement of discussions with respect to
the transaction contemplated by this offering circular, all persons may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transaction described herein and all materials of
any kind (including opinions and other tax analyses) that are provided to such persons relating to such tax
treatment and tax structure, except to the extent that any such disclosure could reasonably be expected to cause
this transaction not to be in compliance with securities laws. For purposes of this paragraph, the tax treatment of
this transaction is the purported or claimed U.S. federal income tax treatment of this transaction and the tax
structure of this transaction is any fact that may be relevant to understanding the purported or claimed U.S.
federal income tax treatment of this transaction.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED
UNDER CHAPTER 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT
NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A
TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY
PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT
WITH THE PROVISIONS OF THIS PARAGRAPH.
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Certain amounts included in this Offering Circular have been subject to rounding adjustments;
accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which
precede them.
Unless otherwise specified or the context requires, references to dollars, U.S. dollars and U.S.$ are to
United States dollars and references to Rupees and Rs. are to the lawful currency of the Islamic Republic of
Pakistan. Historical amounts translated into Rupees or U.S. dollars have been translated at historical rates of
exchange. Such translation should not be construed as a representation that the amounts in question have been,
could have been or could be converted into U.S. dollars at that or any other rate. The spot mid rate between the
Rupee and the U.S.$ on March 17, 2006 as quoted by the State Bank of Pakistan (SBP) was Rs. 60.1820 to
U.S.$1.00. References to billions are to thousands of millions. References to SDR are to the Special Drawing
Right, a unit of account having the meaning ascribed to it from time to time by the Rules and Regulations of the
International Monetary Fund. References to Pakistan are to the Islamic Republic of Pakistan and references to
the Government are to the Government of Pakistan. References to any individual period as 2000-01 and so on
are references to a fiscal year commencing on 1 July in one year and ending on 30 June in the subsequent year.
References to the Economic Survey 2004-2005 herein are to the Economic Survey 2004-2005 published on
June 4, 2005 by the Government of Pakistan, Finance Division, Economic Advisor's Wing, Islamabad. The
Economic Survey, which is published each year a few days before the presentation of the Federal Budget and
presents a view on the national economy based on provisional data for the first three quarters of the fiscal year, is
followed by the publication of its Statistical Supplement, in which the data series are provisionally updated for
the whole fiscal year. It should be noted that certain historic data set out herein may be subject to minor
amendment as a result of more accurate and updated information becoming available.
ii

FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Offering Circular under "The Islamic Republic of Pakistan"
and "The Pakistan Economy" are forward-looking. These statements are not historical facts, but are based on the
Government's current plans, estimates, assumptions and projections. Future events may differ materially from
those expressed or implied by such forward-looking statements. Therefore, prospective investors should not
place undue reliance on them. Forward-looking statements speak only as of the date they are made, and the Issuer
undertakes no obligation to update any of them in light of new information or future events. Forward-looking
statements involve inherent risks. The Issuer cautions you that many factors could affect the future performance
of the Pakistani economy. These factors include, but are not limited to:
External factors, such as:
·
interest rates in financial markets outside Pakistan;
·
the impact of changes in the credit rating of Pakistan;
·
the impact of changes in the international prices of commodities;
·
economic conditions in Pakistan's major export markets; and
·
the decisions of international financial institutions regarding the terms of their financial assistance to
Pakistan; as well as
Internal factors, such as:
·
general economic and business conditions in Pakistan;
·
present and future exchange rates of the Pakistani currency;
·
foreign currency reserves;
·
natural disasters;
·
the level of domestic debt;
·
domestic inflation;
·
the ability of Pakistan to implement important economic reforms;
·
the levels of foreign direct and portfolio investment; and
·
the levels of Pakistani domestic interest rates.
EXCHANGE RATE INFORMATION
Pakistan moved from a managed floating exchange rate policy to a multiple exchange rate system in
July 1998. The multiple exchange rate was then replaced with a market-based unitary exchange rate system in
May 1999. Under the unitary exchange rate system, the floating inter-bank rate applies to all foreign exchange
receipts and payments both in the public and private sectors. This free-floating exchange system, which was
adopted in July 2000, remains operative. See "The Pakistan Economy-Exchange Rates."
The following table sets forth the average exchange rates for the periods presented, expressed in Rupees
per U.S. dollar and not adjusted for inflation as published by the State Bank of Pakistan. The Federal Reserve
Bank of New York does not report a noon buying rate for Rupees.
Exchange Rates
Period
Average During Period Indicated
2000-01
. . . . . . . . . . . . . . . . . . . . . . . . .
58.4378
2001-02
. . . . . . . . . . . . . . . . . . . . . . . . .
61.4258
2002-03
. . . . . . . . . . . . . . . . . . . . . . . . .
58.4995
2003-04
. . . . . . . . . . . . . . . . . . . . . . . . .
57.9745
2004-05
. . . . . . . . . . . . . . . . . . . . . . . . .
59.3576
July-Dec, 2005
. . . . . . . . . . . . . . . . . . . . . . . . .
59.7201
January, 2006
. . . . . . . . . . . . . . . . . . . . . . . . .
59.8396
February, 2006
. . . . . . . . . . . . . . . . . . . . . . . . .
59.8855
Source: State Bank of Pakistan
Currency conversions contained in this Offering Circular should not be construed as representations that Rupees
have been, could have been, or could be converted into U.S. dollars at the indicated or any other exchange rate.
iii

TABLE OF CONTENTS
Page
Presentation of Financial and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
Exchange Rate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
Offering Circular Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
The Islamic Republic of Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
The Pakistan Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
Terms and Conditions of the 2016 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70
Terms and Conditions of the 2036 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
The Global Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92
Clearing and Settlement Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101
Validity of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104
iv

OFFERING CIRCULAR SUMMARY
The following summary does not purport to be complete and is qualified in its entirety by reference to,
and must be read in conjunction with, the detailed information appearing elsewhere in this Offering Circular and
related documents referred to herein.
References in this summary to a "Condition" are to the numbered condition corresponding thereto set
out in the Conditions of the 2016 Notes or the 2036 Notes, as applicable.
The Islamic Republic of Pakistan
General
Pakistan is a federal republic located in south-central Asia between India, China, Afghanistan, Iran and
the Arabian Sea. Its population based on the Economic Survey 2004-05 was approximately 152.53 million as of
June 30, 2005 with over 96.0% of the population believed to belong to the Muslim religion. The capital of
Pakistan is Islamabad, and English is the official language. Pakistan has a federal parliamentary system, and,
following parliamentary ratification of the Legal Framework Order 2002 on December 31, 2003, President
Pervez Musharraf received a vote of confidence in the Electoral College on January 1, 2004, and was declared
elected to hold the office of President under the Constitution. In recent years the economy has grown steadily,
and in 2004-2005, Pakistan realized a real gross domestic product (GDP) of approximately Rs. 6.5 trillion
(approximately U.S.$110.0 billion), reflecting a real GDP growth rate of 8.4% for the fiscal year ended June 30,
2005.
Economy
In 2001, the Government began to implement a number of measures designed to maintain fiscal
discipline, promote economic growth and advance social development. These measures were taken within the
context of four major economic policy objectives:
Stability. The Government focused on reducing the fiscal and current account deficits and increasing
foreign exchange reserves. In addition, the Government launched a formal Debt Reduction Strategy in 2001,
which aimed to reduce fiscal account deficits, reduce the cost of borrowing and procure financing from
international institutions on concessionary terms.
Reviving Growth. The Government initiated measures intended to increase the tax base, improve tax
collections, control expenditures, liberalize trade, manage the country's debt levels and promote investment.
Poverty Reduction. The Government instituted anti-poverty programs that are intended to raise literacy
rates, train teachers, eliminate gender disparities in education, rehabilitate school buildings and improve health.
Governance. The Government has attached a high priority to improving governance. While initial
actions focused on accountability, especially with respect to loan and tax defaulters, the Government is currently
focused on devolution and decentralization of state power to the local level; downsizing of government offices;
judicial and police reform; and introducing transparency in economic decision-making processes.
Benefiting from these measures, Pakistan's real GDP increased at an average rate of 4.9% per annum
from June 30, 2000 to June 30, 2005. GNP per capita income in dollar terms increased from approximately
U.S.$500 in fiscal year 2000-01 to approximately U.S.$736 in fiscal year 2004-2005. Pakistan's rate of inflation
decreased to an average of 5.1% in the period between June 30, 2001 to June 30, 2005 although it was 9.3% for
2004-2005. On February 28, 2006, the National Economic Council announced that a survey had shown that the
percentage of the population living in poverty had fallen approximately 7 percentage points from 32.0% in
2000-01 to 25.0% in 2004-05. For the same period, urban poverty decreased by 6 percentage points (from 23.0%
in 2000-01 to 17.0% in 2004-05) while rural poverty decreased by 7 percentage points (from 39.0% in 2000-01
to 32.0% in 2004-05).
The fiscal deficit was 3.2% of GDP in 2004-2005 compared with an average of almost 7.0% of GDP
during the 1990s. During the five years from June 30, 2001 to June 30, 2005, tax collection by the Central Board
of Revenue (CBR) increased by 50.1% The revenue deficit narrowed from 2.6% of GDP in 2000-01 to 0.7% of
1

GDP in 2004-2005. However, domestic debt declined from 43.2% of GDP in 2000-01 to 33.0% in 2004-2005.
Domestic debt servicing as a percentage of total revenue declined from 55.9% in 2000-01 to 33.7% in 2004-
2005. External debt and foreign exchange liabilities were U.S.$35.8 billion as of June 30, 2005, down from
approximately U.S.$37.2 billion as of June 30, 2001. With respect to balance of payments, exports f.o.b.
increased by 61.8% from U.S.$8.9 billion in 2000-01 to U.S.$14.4 billion in 2004-2005. Imports f.o.b. increased
by 83.3% from U.S.$10.2 billion in 2000-01 to U.S.$18.7 billion in 2004-2005. Foreign direct investment
increased from U.S.$322.4 million in 2000-01 to U.S.$1,524.0 million in 2004-2005. Workers' remittances
increased from U.S.$1.1 billion in 2000-01 to U.S.$4.2 billion in 2004-2005. Primarily due to substantial
increases in private inflows and assistance from donor agencies, total reserves (excluding gold) increased from
U.S.$3.2 billion as of June 30, 2001 to U.S.$12.4 billion as of June 30, 2005, an increase of 490.0%.
Fiscal Responsibility. To promote continued fiscal discipline, the Fiscal Responsibility and Debt
Limitation Act was adopted by Parliament in June 2005. The law aims, among other things, to: eliminate the
revenue deficit by not later than June 30, 2008 and to thereafter maintain a revenue surplus; reduce the public
debt to 60.0% of estimated GDP by June 30, 2013; and by June 30, 2013, reduce the total public debt by not less
than 2.5% of the estimated GDP in every fiscal year, provided that the social and poverty related expenditures are
not reduced below 4.5% of the estimated GDP and budgetary allocation as a percentage of GDP to education and
health will be doubled from the existing level within ten years. However, the law also provides that the
Government may depart from these goals on grounds of unforeseen demand on the finances of the Government
due to national security or natural calamity, which are required to be determined by the National Assembly. Any
such departure shall be temporary and the Minister for Finance of the Government shall in accordance with the
law specify (i) the reasons for the Government's departure from these goals, (ii) the approach or measures the
Government intends to take to return to these goals; and (iii) the period of time that the Government expects to
take to return to these goals. See "The Pakistan Economy--Reforms--Fiscal Responsibility and Debt Limitation
Act 2005".
Reforms
In addition to the fiscal and governance reforms discussed above, the Government has undertaken
initiatives covering trade, privatization, financial sector reforms and human development and social protections.
Trade Reforms. Pakistan follows a policy of export-led growth and has liberalized its trade and
investment regime in recent years. Recent bilateral and regional trade agreements entered into by Pakistan
include a Trade and Investment Framework Agreement with the United States intended to encourage bilateral
trade and investment, an Economic Cooperation Organization Trade Agreement intended to reduce tariff levels
among the members of the Economic Co-operation Organization (ECO) and a South Asian Free Trade
Agreement (SAFTA) that aims to reduce tariffs to between nil and five percent for all members of the South
Asian Association for Regional Co-operation (SAARC) by 2008.
Privatization. The Government's privatization policy seeks to reduce demand on Government resources,
raise funds for priority sectors and stimulate direct investment through the sale of state-owned enterprises
(SOEs). From January 1991 to December 31, 2005, the Government earned approximately Rs. 357.4 billion from
158 privatization transactions, of which approximately Rs. 43.0 billion was raised from July 2004 to June 30,
2005. In March 2006, the Government sold to United Arab Emirates telecom company Etisalat a 26.0% interest
in Pakistan Telecommunication Company Limited (PTCL) and management control of the company for
U.S.$2.6 billion.
Financial Sector Reforms. The responsibility for supervision and regulation of non-bank financial
companies has been transferred to the Securities and Exchange Commission of Pakistan (the SECP) to enable the
SBP to focus on the supervision of the banking sector. The SBP has revised banking regulations with a view to
providing greater flexibility and authority to banks. To promote consolidation in the banking sector, the SBP has
increased minimum capital requirements and encouraged financial institutions to engage in mergers and
acquisitions. Banks have been permitted to raise funds from the capital markets in the form of rated and listed
subordinated debt securities, which can be included in the banks' supplementary capital. In addition, the
Financial Institutions (Recovery of Finances) Ordinance 2001 was enacted to provide for the expedited recovery
of defaulted loans, including the right of foreclosure and sale of mortgaged property with or without court
intervention.
2

Human Development and Social Protection. Development-related expenditures have increased from
Rs. 89.8 billion, or 2.2% of GDP, in 2000-01 to Rs. 272.0 billion, or 3.6% of projected GDP, in the 2005-2006
budget. The Government has launched a national literacy campaign throughout the country that aims to raise the
literacy rate to 60% by 2006. Approximately 270,000 adult literacy centres are expected to open for this purpose.
Recent public health programs include HIV/AIDS prevention, tuberculosis and malaria control, family planning,
primary healthcare and immunization programs. Other initiatives taken by the Government include the extension
of micro-finance services to the poor and the advancement of gender equality in education.
The policies, initiatives and programs described above were reflected in Pakistan's Poverty Reduction
Strategy Paper, which was supported by an SDR 1.034 billion Poverty Reduction and Growth Facility (PRGF)
from the IMF. Pakistan has undergone all reviews under the PRGF, and has met all quantitative performance
criteria. Pakistan did not request a successor arrangement with the IMF when the PRGF expired in December
2004.
The following table sets out certain major economic indicators from 2000-01 to 2004-05.
Major Economic Indicators
2000-01
2001-02
2002-03
2003-04
2004-05
GDP at Current MP (Rs. million)(1) . . . . . . . .
4,162,654
4,401,699
4,822,842
5,532,663
6,547,590
GNP at Current MP (Rs. million)(1) . . . . . . . .
4,108,172
4,425,364
4,974,654
5,657,141
6,672,814
Population (million)(2) . . . . . . . . . . . . . . . . . . . . .
140.47
145.96
146.75
149.65
152.53
GNP per Capita (Rs.) . . . . . . . . . . . . . . . . . . . . . .
29,246
30,319
33,899
37,802
43,748
Exports f.o.b. (U.S.$ million) . . . . . . . . . . . . . .
8,933
9,140
10,889
12,396
14,401
Imports f.o.b. (U.S.$ million) . . . . . . . . . . . . . .
10,202
9,434
11,333
13,604
18,753
Balance of Trade (U.S.$ mn) . . . . . . . . . . . . . .
(1,269)
(294)
(444)
(1,208)
(4,352)
Total Reserves Minus Gold
(U.S.$ million)(3) . . . . . . . . . . . . . . . . . . . . . . .
3,244
6,398
10,747
12,324
12,421
Overall Budgetary Deficit (as % of
GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3
5.5
3.7
2.4
3.2
GDP Growth (FC) (%)(4) . . . . . . . . . . . . . . . . . .
1.8
3.1
4.8
6.4
8.4
Inflation (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4
3.5
3.1
4.6
9.3
Total Investment (as % of GDP) (MP)(1) . . .
17.2
16.8
16.9
17.3
16.9
National Savings (as % of GDP) . . . . . . . . . . .
16.5
18.6
20.8
17.7
15.7
Current Account (Deficit)/Surplus
excluding official transfers (as
% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.7)
1.9
3.8
1.4
(1.6)
(1) (MP) Market Price.
(2) Ministry of Finance estimate.
(3) Includes both reserves held by the State Bank of Pakistan and by commercial banks.
(4) (FC) Factor Cost.
Source: Ministry of Finance; State Bank of Pakistan.
3

The Offering
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The President of the Islamic Republic of Pakistan for and on behalf of
the Islamic Republic of Pakistan.
Notes being issued . . . . . . . . . . . . . . . . . . . . . 7.125% Notes due 2016 in the aggregate principal amount of
U.S.$500,000,000 and 7.875% Notes due 2036 in the aggregate
principal amount of U.S.$300,000,000.
Issue Price of 2016 Notes . . . . . . . . . . . . . . 100.00% of the principal amount of the 2016 Notes.
Issue Price of 2036 Notes . . . . . . . . . . . . . . 100.00% of the principal amount of the 2036 Notes.
Issue Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 30, 2006.
Maturity and redemption . . . . . . . . . . . . . . The 2016 Notes will mature on March 31, 2016 and will be redeemed
at par on that date. The 2036 Notes will mature on March 31, 2036
and will be redeemed at par on that date. The Notes are not
redeemable prior to maturity.
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The 2016 Notes will bear interest from and including March 30, 2006
to but excluding March 31, 2016 at the rate of 7.125% per annum,
payable semi-annually in arrear on March 30 and September 30 in
each year commencing on September 30, 2006, except that the last
interest payment shall be made on March 31, 2016 in respect of the
period from and including September 30, 2015 to but excluding
March 31, 2016. The 2036 Notes will bear interest from and including
March 30, 2006 to but excluding March 31, 2036 at the rate of
7.875% per annum, payable semi-annually in arrear on March 30 and
September 30 in each year commencing on September 30, 2006,
except that the last interest payment shall be made on March 31, 2036
in respect of the period from and including September 30, 2035 to but
excluding March 31, 2036.
Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The 2016 Notes will be direct, unconditional and (subject to the
provisions of Condition 4) unsecured obligations of the Issuer and
(subject as provided above) will rank pari passu, without any
preference among themselves, with all other present and future
unsecured and unsubordinated External Indebtedness (as defined in
Condition 10) of the Issuer. The 2036 Notes will be direct,
unconditional and (subject to the provisions of Condition 4)
unsecured obligations of the Issuer and (subject as provided above)
will rank pari passu, without any preference among themselves, with
all other present and future unsecured and unsubordinated External
Indebtedness (as defined in Condition 10) of the Issuer. The due and
punctual payment of the Notes and the performance of the obligations
of the Issuer with respect thereto are backed by the full faith and
credit of the Issuer.
Negative Pledge and Cross Default . . . . So long as any of the Notes of a series remains outstanding, the Issuer
has undertaken that it will not secure any of its present or future
Public External Indebtedness (as defined in Condition 4) without, at
the same time or prior thereto, securing the Notes of such series
equally
and
rateably
therewith,
except
in
certain
limited
circumstances as set out in Condition 4.
Condition 10 provides that Noteholders who hold not less than 25%
in aggregate principal amount of the Notes of a series then
outstanding may declare the Notes of such series to be immediately
due and payable at their principal amount if, inter alia, the Issuer is in
default in relation to any External Indebtedness or guarantee thereof
in excess of U.S.$25,000,000, the Issuer declares a moratorium in
4