ISLAMABAD, Sept 9: The International Monetary Fund (IMF) on Thursday said it expected Pakistan's economic growth to be maintained at around 6.5 per cent during the current financial year due to strong domestic and external demand.

"Led by a strong domestic and external demand, growth should be maintained at around 6.5 per cent in 2004-05," the fund's Pakistan office said in a statement. The statement comes after an IMF mission concluded discussions with Pakistani authorities on economic reforms and poverty reduction programmes.

"Pakistan's economic performance and prospects are now more favourable than at any time in at least the past decade," the statement said. The restoration of fiscal discipline, a cautious monetary policy, trade liberalization, privatization and other structural reforms in the financial and tax areas have created a sound basis for a lasting recovery, it said.

The IMF mission supported Islamabad's fiscal policy stance for further reduction in public debt burden and a substantial increase in social and development spending to reduce poverty.

It said however the rising trend of inflation was a concern. "The mission noted the risks posed by not passing high international oil prices on to the consumers," it said. -AFP