State Bank of Pakistan cut in development funds may spur extremism

Posted on June 5, 2009

KARACHI: The State Bank of Pakistan lowered on Thursday its gross domestic product (GDP) growth forecast for the 2008/09 (July-June) fiscal year to between 2.0-3.0 percent from its previous estimate of 2.5-3.5 percent. Pakistan achieved GDP growth of 5.8 percent in the 2007/08 fiscal year, and the government had originally set a growth target of 5.5 percent for the current year. In a quarterly report, the State Bank of Pakistan also raised its 2008/09 average inflation forecast to between 20.5-21.5 percent from an earlier forecast of between 19.5-20.5 percent. The State Bank also fears that the reduction in the uplift fund may trigger a new lease of extremism in Pakistan. The report said slash in the development expenditure may lead to the sense of deprivation in the people, as it would lead to extremism and terrorism.

Tags: average inflation forecast, growth forecast, new lease of extremism, Pakistan achieved GDP growth, SBP lowers GDP