Islamabad: Depression symptoms were scarring the Pakistan economy long before Sheikh Mujibur Rahman's eastern wing drew blood, but last week there was growing evidence the nation was confronted with an economic crisis of monolithic proportions. The symptoms, in fact, had culminated in a liquidity crisis, compelling the government to end all payments in foreign exchange-both principal and interest-on Pakistan's debts for six months from May 1.

Members of the Aid-Pakistan consortium - the US, Canada, Britain, Sweden, West Germany, the Netherlands; Belgium, France, Italy and Japan - and other donor nations were told of the step only days before it was implemented. Islamabad frankly admitted that Pakistan's reserves would be "wholly exhausted before too long if all foreign exchange commitments, including those of debt service, are to be met in full," but vowed to meet all obligations. With foreign exchange reserves insufficient even to cover necessary imports during the next two months, the country clearly was in no position to continue its debt redemption.

The government blames the economic strife on disturbed conditions-"particularly in East Pakistan"-resulting in an interruption of jute exports from the first week of March. It anticipates that foreign exchange earnings in 1970-71 will be much lower than earlier estimates: officials speak of an expected shortfall of RS 500 million. The government already has moved to reduce strains on its foreign exchange position by imposing new import restrictions. However, this measure is likely to be swallowed by military expenses in the eastern sector and by the upward price trend resulting from such restrictions. Industry faces increasing difficulties in importing raw materials and spare parts.

Small wonder then that Islamabad is relying on the donor nations rather than on its own limited resources in overcoming the crisis. In its aide memoire to the Aid-Pakistan consortium, the government reminded members of a longerterm question for Pakistan's external debt. The memorandum declared: "It is imperative that the whole question of debt service payments be examined before too long in order to maintain a reasonable rate of growth of Pakistan's economy, for it is only such growth which will make it possible for Pakistan to repay its debts."

Thus confronted, the World Bank immediately sent South Asia Director I PM. Cargill to Islamabad for talks with President Yahya Khan and economic adviser M. M. Ahmed. Whether the consortium members will sanction Pakistan's unilateral decision will depend on Cargill's report to his boss, Robert McNamara, and on a special session of the Aid- Pakistan consortium scheduled for Paris next month.

Diplomats in Islamabad who are directly concerned with the matter say consortium members have little choice but to accept. But they foresee considerable difficulties in winning new aid pledges from the donor countries. Each government, these diplomats point out, will have to take into account criticism expressed by their parliaments and public during the civil war in East Pakistan - taking care to avoid any charges of financing a "military adventure", as one Western ambassador put it.