ISLAMABAD - Governor State Bank of Pakistan (SBP), Dr Shahid Hafiz Kardar, on Tuesday said that the fiscal deficit can go beyond 6 percent of GDP if the incumbent government continues heavy spending, which could be covered by borrowing more than Rs 1,000 billion. Keeping in view, the budget deficit of 1.5 percent of the GDP during the first quarter (July-September) of current fiscal year 2010-11, we could predict that it will go up to 6 percent at the end of the financial year, the Governor said while giving a presentation to the Senate Standing Committee on Finance and Economic Affairs here. The meeting met under the chair of its Chairman Senator Ahmed Ali on the State of Pakistans economy. The government has to borrow around Rs 1,000 billion from different sources if the fiscal deficit surges to 6 percent of the GDP, he added.He further informed that financing through SBP would be inflationary, financing though banks would be at the cost of growth in private sector credit and external financing could be jeopardized if timely reforms are not taken. The federal governments so far borrowing has reached Rs 374 billion from the State Bank of Pakistan. Meanwhile, the government borrowed Rs 366 billion for commodity financing and Rs 368 billion for public sector enterprises. The governments fiscal position has weakened and the monetisation of the deficit has increased inflationary pressures, while boarding the tax base is imperative at the present, he further informed. Meanwhile, in his presentation, he said, increase in international commodity prices, had enhanced the farm incomes, supported aggregate demand and boosted exports, however, it stoked the inflation in the country. Dr Shahid Hafiz Kardar said that the continued deficit financing has made interest rate increases unavoidable; these would have been higher if all borrowing was from directly commercial banks. He said that Large Scale Manufacturer and agriculture sector showed negative growth in the first quarter of current fiscal year. The Governor said that debt is around 63 percent of the GDP. The revenue is growing by only seven percent while expenditures by 9 percent and power sector subsidy cost Rs 22 million a month. However, financial account remains a source of concern especially if reform programme including fiscal deficit, Reform General Sales Tax and energy sector subsidies not on the track. Later, Secretary Finance Dr Waqar Masud informed the Committee that economy could grow by less than two percent in the current fiscal year, which is revised from the budgetary target of 4.5 percent due to the unprecedented floods in the country.