Pakistan growth to stall

By Farhan Sharif  |   2008-12-8  |     NEWSPAPER EDITION

PAKISTAN'S central bank said the nation's economy may miss growth targets and inflation may rise as high as 22 percent.

The State Bank of Pakistan, in an annual report, said the economic growth rate during the fiscal year that is about to end is expected to be around 3.5 percent to 4.5 percent compared with a target of 5.8 percent, Bloomberg News reported.

Pakistan's economy may expand as little as 3 percent this fiscal year in response to a "tightening" of economic policies and slowing growth among the nation's trading partners, the International Monetary Fund said.

That would be the slowest pace since 2000, when South Asia's second-largest economy grew 2 percent.

In order to secure an IMF loan, Pakistan's government and central bank have agreed to eliminate electricity subsidies by the end of June 2009 and to continue to adjust fuel prices to reflect international prices. That should cut the budget deficit as a proportion of GDP to 3.3 percent by 2009-10, the IMF said.