LAHORE, July 19: The federal government has slashed interest rate on the state provident fund by half percentage point to 14.5 per cent for the year 2002-03.

The government, officials said on Saturday, had declared 15 per cent interest on the provident fund during the year 2001-02.

The government declared the reduced interest rate on provident fund in a letter sent to the controller general accounts (CGA) in the first week of this month.

The officials said the government intended to drastically reduce the interest rate paid on the provident fund in view of a general reduction in the interest rates by the banks during the recent months as a consequence of their excessively liquid position. But, they added, some senior bureaucrats had opposed the proposal and got the decision changed.