QUETTA: While the link between the monetary policy and the tendency of the federal government to borrow big time has its negative impacts on the national economy, independent economist Mahfouz Kahn Yousufzai believes that the State Bank policy impacts Balochistan only through inflation and foreign exchange fluctuations as the private sector does not really exist in the province. In the absence of any major industry, the issue of bank borrowing also does not have a role to play.

The total quantum of farm and non-farm loans from the banking sector in Balochistan is less than one per cent, he said. Currently, all loans of the provincial government have a foreign currency orientation, and, hence, exchange rate fluctuations increase the debt burden.

Business leaders, however, have a different opinion on the issue. They think that the central back should further reduce the interest rate. “Reduction of interest rate by just one per cent would not encourage the people to borrow from the banks,” said Fazal-Ur-Rehman Dittu, former president of the FPCCI. He added that if federal government wanted more investment in the private sector, it should review its monetary policy and extend maximum incentives to the investors.

Energy crisis, law and order situation and the reluctance of the commercial banks to lend money were cited by businessmen, including Mr Dittu, Balochistan Chamber of Commerce of Industry, Sardar Raza Muhammad Baraich, and industrialist Musa Jan.

Despite decent recovery rates, the banks were reluctant to extend loans. Presently commercial banks were extending just one per cent loans in Balochistan of their total lending in the country. “It is injustice with the people of Balochistan,” said the provincial business leaders.

However, they also condemned those who take loan from the banks and invest it in saving schemes to earn a profit. Sardar Baraich said that lending at single-digit interest rate would lure Balochs to come forward and invest not only in industry, but also in other businesses, including livestock, agriculture and mining.