Pakistan has warned that the Taliban could spread beyond its borders to neighbouring India and as far as the Persian Gulf, unless it receives international aid to help battle militancy on its soil.

Shah Mahmood Qureshi, the foreign minister, in an interview with the Financial Times, said Pakistan would need up to $2.5bn (€1.8bn, £1.5bn) in emergency relief and for long-term reconstruction of the Swat valley and the surrounding region, once the fighting between government troops and militants, now in its final stage, had ended. That figure compares to the $1bn in aid initially estimated by government officials.

The warning comes as Pakistan widens its military offensive to other areas suspected of providing a haven to the Taliban, such as the Waziristan tribal region along the border with Afghanistan.

Pakistan’s annual budget at the weekend earmarked Rs50bn ($625m) over the next financial year to help people displaced by the Swat conflict.

Western diplomats have warned that a failure to quickly help the victims of Swat could provoke unrest in parts of the country, central to the US led war on terror in Afghanistan.

“They [Islamic militants] have a global agenda, they have a regional agenda, they are not confined to Pakistan. They could go in to the [Persian] Gulf, they could go in to India, they can go anywhere,” Mr Qureshi said. “There is a collective interest and there has to be a collective realisation that this is not Pakistan’s problem. It’s a larger problem”.

The US has begun lobbying the governments of the oil-rich Arab Muslim countries of the Gulf Co-operation Council [GCC] to be more generous in helping Pakistan deal with the fallout of the offensive in the Swat valley.

Shah Mahmood Qureshi warned that the Islamic militants had a global agenda

The GCC is a region which traditionally has had close business and military ties with Pakistan and is home to a large expatriate Pakistani community.

Mr Qureshi said US efforts to encourage GCC aid were only meant to “complement” Pakistan’s own recent contacts with GCC countries seeking help. “They [the US] are trying to help in whatever way they can, but Pakistan has independent relations [with the GCC],” he said.

A GCC diplomat in Islamabad told the Financial Times that Pakistan needed to “revive closer relations” with the region “which have been neglected in the war on terror”.

“Pakistan has an important role in our region but that role has to be built up very slowly through further effort,” the diplomat said.

Budget squares up to moribund economy and cost of insurgency

Pakistan has announced a budget for the next financial year aimed at reviving a moribund economybuffeted by the global economic crisis and the Taliban insurgency .

The budget was partly driven by conditions sought by the International Monetary Fund, which agreed a $7.6bn (€5.4bn, £4.6bn) loan late last year, thereby preventing a default on foreign debt payments.

“We are facing huge expenditures to get rid of militancy,” said Hina Rabbani Khar, minister of state for finance in her budget speech. “Our armed forces are in the forefront in the war against terrorism and militancy. Our western border is facing the most uncertain situation”.

Defence spending rose by a little more than 15 per cent, partly because of military campaigns against the Taliban. In the financial year ending this month, economic growth is expected to slide to 2 per cent.

The government expects the economy to grow by 3.3 per cent next year. Development spending is planned to rise by more than 17 per cent to Rps646bn ($8bn) in the next financial year.