KARACHI, Sept 3: The State Bank of Pakistan has offered relief package to the Balochistan government by putting its overdraft with the SBP into a blocked account.

SBP Governor Dr Shamshad Akhtar expressed her resolve to mitigate the financial difficulties of the Balochistan government by offering a financial relief package.

The financial package was offered by Dr Akhtar during a recent meeting with Chief Minister of Balochistan Nawab Muhammad Aslam Raisani.

The package aims at providing a breathing space to Balochistan government by putting its overdraft with the SBP into a blocked account which would be brought to zero within a period of six years by deductions of suitable monthly installments.

In order to further facilitate the Balochistan government, the existing limit of Ways and Means Advance would be enhanced to Rs2 billion from Rs1.7 billion.

Dr Akhtar has, however, emphasised that the Balochistan government can truly reap the benefits of facilitation package if it imposes strict financial discipline and manages its cash inflows from other resources such as royalties etc. The financial position of the Balochistan government began to deteriorate since November 2003. In 2004, the SBP had sanctioned various concessions for Balochistan government, but its measures to reduce its outstanding liabilities fell short of expectations.

In April 2008 the Balochistan chief minister was asked to provide the revised estimates of financial projections, additional amount expected from the Federal Government and additional cash inflows from other sources such as royalty etc.

“The Balochistan government during the meeting of SBP Governor and the CM Balochistan on Monday (Sept 1) presented its plan to overcome its financial crisis and to reduce the overdraft,” said a release issued by the SBP on Wednesday.

Based on the financial projections presented by the Balochistan government and its commitment to reduce the overdraft with the SBP, Dr Akhtar agreed to offer a one-time financial relief package as an exception to the Balochistan government subject to the approval of the Central Board of Directors of the State Bank.