Will Pakistan’ Central Bank keep borrowing costs unchanged, maintaining one of the world’s highest benchmark interest rates, in an economy pummeled by inflation, terrorism and falling foreign investment? But this may not happen unless inflation rate goes down. Inflation accelerated to a three-month high of 13.26 percent in April, according to the Federal Bureau of Statistics. Prices rose after
raised domestic gas prices by as much as 5.4 percent on April 1. Pakistan
Constrained by high borrowing costs,
is seeking aid from The Friends of Democratic Pakistan, a group of donors that includes the Pakistan , U.S. , U.K. and Japan , to revive an economy that grew 2 percent in the year ended June 30, the least since 2001. Saudi Arabia
Delays in the release of a $5.3 billion grant pledged by the group in April 2009 have forced the government to tap funds from the central bank, stoking inflation. Government borrowings from the State Bank of
rose 14.5 percent to 365.9 billion rupees ($4.3 billion) in the 10 months to April from a year earlier, according to the central bank. Pakistan
Increase in consumer prices may increase interest payments at major export industries, whose financial costs have already doubled in the two years to June 2009. Higher borrowing costs could undermine
’s $168 billion economy even as Pakistan , from which it was partitioned in 1947 following independence from British rule, grows at the fastest pace after India among the world’s major economies. China ’s $1.2 trillion economy may expand about 8.5 percent in the year to March 31s. India
The South Asian economy needs to grow at an average annual pace of 6 percent to reduce poverty, according to the government.
Foreign direct investment in Pakistan dropped 53 percent to $1.32 billion in the first eight months of the fiscal year that started July 1, central bank data showed, as militants retaliated to the Pakistan army’s offensive against Taliban fighters in the country’s northwestern region.