KARACHI, Pakistan—Even before the cyclone and tidal wave devastated parts of East Pakistan late last year, this country was experiencing economic difficulties.

¶Inflation grew as wages increased, while prices rose 20 to 50 per cent.

¶Foreign exchange reserves plummeted to $180‐million in December from $300‐million in January.

¶Pressure built to devalue the rupee, which is pegged at an artificial rate of 4.76 to the dollar instead of a more realistic rate, ranging from 8.8 to 11.5 to the dollar.

¶The trade deficit mounted, from $366‐million in fiscal 1970 to $169‐million in just the first quarter of fiscal 1971.

¶The rising foreign debt repayment liability, which averaged $50‐million a year from 1960 to 1965, went to $150‐million annually by 1970 and will reach an average of $200‐million a year by the end of the next five‐year plan in 1975.

Now the Pakistanis are faced with the additional problem of recovery from the destruction in East Pakistan in November. Hundreds of thousands of people were killed, and damage is estimated at more than $2‐billion.

The World Bank has pro posed a $185‐million reconstruction plan, to be tied to its current three‐year $1.6‐ billion flood control and economic development program.

When the World Bank's consortium on aid to Pakistan met in Paris last July, before the catastrophe, it endorsed Pakistan's foreign‐aid requirement of $570‐million for fiscal 1971, and promised to make firm pledges of assistance following national elections in October.

New Assembly Selected

In the elections, which were delayed until December be cause of the cyclone, a National Assembly was selected to frame a new constitution, paving the way for a successor to President Agha Mohammad Yahya Khan, chief martial law administrator and commander of the army.

Pakistan's burgeoning foreign debt, as well as the question of how to service it without slowing the pace of economic development, is causing much concern.

The debt now exceeds $3.5 ‐ billion, and nearly one‐fifth of the country's total earnings of foreign exchange is consumed in interest payments and loan installments.

Pakistan has not defaulted on her debts yet, but there is a danger that unless the country earns more foreign exchange, she may have to use its annual foreign‐aid money to meet its obligations.

Export prospects are not bright. Last year exports increased less than one percent, compared with 9.4 per cent the previous year, mainly because of a decline in industrial production and a sharp decline in earnings from cotton and jute.

What Pakistan is seeking to avoid is a situation where the country would have to obtain new loans to pay back the interest on the old ones.

Although the indebtedness increases each year, official spokesmen say that it is still within manageable bounds.