Pakistan has spent a hefty USD 118 billion since 2002 to combat terrorism which has significantly hampered growth and it is facing "serious challenges" to its economy, according to a new central bank report.
Karachi: Pakistan has spent a hefty USD 118 billion since 2002 to combat terrorism which has significantly hampered growth and it is facing "serious challenges" to its economy, according to a new central bank report.
'The State of Economy 2015-16' report, released by the State Bank of Pakistan (SBP) here, said the country is facing "serious challenges" in the form of low savings and investment levels, falling exports and poor spending in the social sector.
However, the report said despite the crunch, Pakistan had spent USD 118.3 billion on the 'war on terror'.
"The problem is compounded by the stop gap measures adopted to spread the tax net," the report said.
The USD 118.3 billion payment is equivalent to well over one third of its gross domestic product.
The central bank said the amount included direct and indirect losses incurred due to the terrorism and extremism in the country between 2002 and 2016.
The central bank report noted that both economic growth and social sector development have been severely hampered by terrorism-related incidents.
The report said Pakistan had received an annual grant of around USD 1 billion from the Coalition Support Fund (CSF) which was approved by the US to support Pakistan in the 'war on terror' since 2002.
It said Pakistan had had received a total of USD 14 billion under the CSF.
The report said Pakistan had borne heavy losses and human suffering, including displacement of families and loss of lives due to the war on terror.
"It has also hurt Pakistan's growth as a country because the war on terror has discouraged foreign investment, hurt domestic investment and reduced exports," it said.
Since the 9/11 terror attacks in the US, Pakistan has been a major ally of the US and UN in the 'war against terror' with the military carrying out offensive against al-Qaeda and the Taliban in its border tribal regions, the report said.
However, it has seen a drop in terror-related incidents in the last one year, it said.
The central bank praised the government for macro-economic achievements and expressed hope for a better future with a higher economic growth rate.
However, it identified a number of challenges that the economy has been facing.
There are certain challenges that deserve the undivided attention of all stakeholders, the report said.
"Pakistan needs to increase its savings and investment levels. Although public investment is increasing despite resource constraints, investment by the private sector has not increased sufficiently," it said, adding that this has inhibited the country's potential growth.
The report said the country has not been able to spend as much on social sector development as it needs to.
"Be it health or education, Pakistan spends much less as a percentage of GDP than many developing countries," it noted.