IMF for hike in interest rate to control inflation

WASHINGTON: Pakistan needs to take immediate measures to stabilize growing budget pressures and to raise interest rates to contain rising inflation, the International Monetary Fund said on Monday.

The IMF projected a widening of Pakistan's budget deficit in fiscal 2011/12 to 7 percent of gross domestic product, much higher than the government's revised budget target of 4.7 percent. It said central bank financing of the budget needs to be curtailed.

"Unless there are measures taken to rein in the fiscal deficit and the monetary policy tightening that is probably needed right now, pressures on the rupee could continue," IMF mission chief to Pakistan Adnan Mazarei told a conference call.