The United States and Pakistan have a strong economic and commercial relationship, with two-way trade reaching approximately $9.15 billion in 2022. The United States is one of Pakistan’s largest trading partners and continues to be one of the country’s leading sources of foreign direct investment. Goods exported from the United States to Pakistan reached $3.15 billion in 2022, a 13 percent decrease from 2021. The United States remained Pakistan’s largest goods export market in 2022 at $6 billion, a 13.5 percent increase from the previous year.
On August 9, 2023, the coalition government of 13 political parties completed its term and announced an interim government. A caretaker government with limited powers is in place until elections are held. The Election Commission of Pakistan announced on September 21, 2023 that a general election will take place in the last week of January 2024.
On the economic front, Pakistan is facing substantial challenges on both macro and micro-economic fronts. In July 2023, Pakistan successfully negotiated a $3 billion Stand-By Arrangement (SBA) with the IMF. The SBA was finalized before the expiration of Pakistan’s $6 billion IMF Extended Fund Facility (EFF) which stalled over IMF concerns regarding external financing gaps, proper functioning of the foreign exchange markets, and reforms not aligned with IMF program parameters. The SBA funding was critical for Pakistan as central bank foreign reserves dropped to levels that could barely cover external debt repayments and essential imports.
American firms have a strong presence in Pakistan in a range of sectors including fast-moving consumer goods, chemicals, agriculture, financial services, franchising, information and communication technology, renewable energy, and health care services. Currently, there are more than 80 wholly-owned or majority-owned U.S. subsidiary firms registered with the American Business Council (ABC) of Pakistan and the American Business Forum (ABF). The U.S.-Pakistan Business Council, an affiliate of the U.S. Chamber of Commerce based in Washington D.C., is another forum for U.S. companies with business and investment interests in Pakistan. Leading U.S. companies doing business in Pakistan include Pepsi-Cola, Coca-Cola, General Electric International, Wabtec, Procter and Gamble, Honeywell, Pfizer, Abbott Laboratories, and DuPont.
The U.S. corporate members of the ABC and ABF play an influential role in Pakistan’s economy by upholding global standards of corporate governance. According to ABC, U.S. companies have invested over $1.5 billion dollars in the Pakistani economy while generating revenues of $3 billion. ABC and ABF members pay direct and indirect taxes annually, contributing significantly to the national treasury. Despite security threats and familiar emerging market concerns over intellectual property rights, contract enforcement, and economic and governance issues, the Pakistan market offers attractive trade and investment opportunities. For more than one year international and local companies in Pakistan have been facing severe challenges trying to repatriate profits outside the country due to Pakistan’s depleting foreign exchange reserves. Nevertheless, some factors are favorable for business in Pakistan, such as the lack of shareholding restrictions (beyond a few sensitive industry sectors), simple work permit rules, no technology transfer requirements, and a large and sophisticated entrepreneurial class.
Pakistan and the United States signed a Trade and Investment Framework Agreement (TIFA) in 2003, which provides a forum for discussion of bilateral trade issues. The most recent TIFA intercessional meeting, chaired by United States Trade Representative Katherine Tai and Pakistan’s Minister for Commerce Syed Naveed Qama, was held in February 2023.
On August 9, 2023, the coalition government of 13 political parties successfully completed its term and announced an interim government. A limited power caretaker government is in place until elections are held. The Election Commission of Pakistan announced on September 21, 2023 that a general election will take place in the last week of January 2024.
For background information on the political and economic environment of the country, please click on the link: https://www.state.gov/u-s-relations-with-pakistan/.