ABSTRACT
Terrorism has been a severe threat to human civilisation in the contemporary world. After the 9/11 incident, terrorism has taken to the centre stage of world politics. There are several reasons for terrorism in Pakistan, intra-religious violence, ethnic conflicts, uneven development, the policy of exclusion, high rate of illiteracy, economic inequality, inflation, unemployment, uncontrolled population growth political instability, poverty, and lack of social justice. This chapter aims to investigate the interconnecting factors of terror financing in Pakistan. It also intends to delineate the economic effects of terror financing on the national economy of Pakistan and its impacts on regional security. The foreign policy and defence policy of Pakistan are framed based on India as the foremost enemy. The international funding agencies and donor countries have had information about Pakistan's connections with terrorist groups. The radical Islamic terrorist groups are not only a security threat to Pakistan, but it is also very alarming for the Pakistani economy.
