THE Asian Development Bank has asked the government to curb rising inflation by rigorously pursuing prudent macroeconomic policies. In its latest economic update on Pakistan, the bank has expressed its apprehension that rising inflation could undermine the stability of the exchange rate, distort the incentive structure that is in place & eventually stall growth.
Earlier in the month, figures released by the federal bureau of statistics showed that inflation in March 2005 rose by 10-25 percent over March 2004. Similarly, in the nine-month period of July-March 2004-05, it increased to over nine percent compared to the corresponding period of the previous fiscal year.
The ADB said in its update that with sound macroeconomic fundamentals and a pick-up in investments, the medium term prospects of the economy looked bright.