ISLAMABAD, April 21: Finance Minister Ishaq Dar on Monday said the State Bank had projected the GDP growth rate at 6-6.5 per cent for 2007-08 against a target of 7.2 per cent.

Briefing the National Assembly on the second quarterly report (2007-08) of the SBP’s Central Board of Directors on the state of the economy, the minister said the projected inflation rate was 8-9 per cent as against a target of 6.5 per cent.

He said monetary assets (M2) were projected at 15.5 to 17.5 per cent as against a target of 13.7 per cent. The report said that prospects of achieving 4.8 per cent target in the agriculture sector for 2007-08 remained dim.

“Institutional credit disbursement to the agriculture sector increased significantly by Rs2.8 billion to Rs104.8 billion during July-Jan 2008. The increase was due to aggressive lending by commercial banks,” Mr Dar said.

The inflationary pressure, he said, had continued to mount throughout July-February 2008. The CPI inflation rose to 11.3 per cent in February from seven per cent in July last year.

“This reflects not only the stimulus from an expansionary fiscal policy, but also the unanticipated strength of international commodity prices,” he said.

The SBP report said that food inflation had started to increase since September last year and was recorded at 19 per cent in February, the highest level since 1995.

Rising international commodity prices, coupled with domestic supply constraints of some key commodities, resulted in a 21.9 per cent rise in the import growth during July-Feb 2008, which outpaced 7.9 per cent growth in exports during this period.

As a result of this, the report noted, trade deficit recorded a sharp $3.5 billion increase during the period.

Mr Dar said the government was taking steps to streamline the economy. “The government will give some more incentives to the agriculture sector,” he added.—APP