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March 13, 2018

KP govt obtained Rs80b loans since Feb 2017


March 13, 2018

PESHAWAR: The Khyber Pakhtunkhwa government since February last year has taken Rs80 billion loans, including Rs67 billion foreign debts and Rs49.34 billion it borrowed to build the mega Bus Rapid Transit (BRT) project.

The province’s foreign loan component, both committed and confirmed, was $3.70 billion, including includes $1.25 billion taken for 82 projects till July 1, 2013.The provincial government finalised a foreign loan of $658.805 million for three projects. Another whooping $1.79 billion loans are also in the pipeline and would be obtained for the execution of 12 other projects.

However, the financial managers defended borrowing by the province if the money is taken for projects that could earn and also pay back the debt.The key aspect of the provincial government policy for debt management over the last four years, however, remained the repayment of the costly national loans which had been transferred by the federal government as one of the resources and liabilities of devolution arrangements under the 18th Constitutional Amendment.

According to the documents of the Finance Department, the copy of which is available with The News, the previous Awami National Party (ANP) and Pakistan People’s Party (PPP) coalition government had also taken foreign and local loans.

The province from July 2007 to July 2013 borrowed Rs30.58 billion, including Rs19.56 billion foreign and Rs11billion local lending just for two projects. These borrowings included $45.85 million Rs4.86 billion) taken from the Asian Development Bank (ADB) in October 2007 for the Energy and Power Department project, Development of Renewable Energy in Khyber Pakhtunkhwa.

The project was aimed at developing power potential available in the province on sustainable basis to provide cheaper renewable power.The overall project has been completed and the document says the only issues pending concern the Ministry of Power regarding the purchase agreement and transmission line. The grace period of five years for the loan expired in 2012 and the province has to return the loan in 20 years.

The second loan taken during 2007 to 2013 was the one obtained from Japan International Cooperation Agency (JICA) for the rehabilitation of emergency roads in 2011.The JICA provided $135 million (Rs14.69 billion) for the rehabilitation and restoration of the 120 kilometres provincial, 158 kms district and 241 kms rural roads along with 1,050 meter bridges in various districts. The project has been completed and the government has to pay the loan in 30 years.

Contrary to the claims of the PTI chief Imran Khan not to seek a single penny in loans, Chief Minister Pervez Khattak’s government has taken hefty loans of over Rs80.26 billion since February 2017 for just three projects.

These projects include the much-trumpeted BRT, setting up 1,000 small hydro projects and solarisation of 8,000 schools in the province.The PTI-led coalition government finalised a loan of Rs20.76 billion for its Access to Energy project to build mini-hydro projects (MHP) on canals, rivers, and tributaries and also solarise schools and Basic Health Units (BHUs).

The ADF (Agence Francaise de Development) and Asian Development Bank (ADB) are lending $485 million (Rs16.14 billion) and Rs4.46 billion have been taken from the Hydel Development Fund (HDF). The province has to pay back the loan in 20 years after five years of grace period.

The BRT is another project which is being built mainly with the foreign money borrowed from the AFD and ADP. Both International Financial Institutions (IFIs) are providing Rs41.88 billion ($485 million) in loan for the project. The government has also borrowed Rs7.46 billion from the HDF to complete the project.

The provincial government also finalised in June last year Rs9 billion ($86.405 million) loan with the ADB to arrange Rs10.15 billion finances for its project to construct Pehur high level canal extension in Swabi district for which Rs1.11 billion has been borrowed from the HDF. The project would bring about 8,727 hectares of rain-fed areas under irrigation in Swabi and Nowshera districts.

The provincial development and economic managers have lined up 11 projects which would mainly be executed with local and foreign loans amounting to Rs168.324 billion. If approved, this would raise the loan portfolio of the province to Rs415 billion over the next few years.

Defending the loans, Secretary Finance Shakeel Qadir told The News, “It (foreign debt) is worrying. The loans are mostly taken to reserve your own resources and manage your assets in a better manner with others’ money on nominal interest rate and pretty good concessional grace periods. Our debt ratio to Gross Domestic Product (GDP) is not worrying.”

The encouraging constituent of the successive provincial government debt-management policy remained its commitment to first pay the costly internal loans mainly devolved to the province with other assets and liabilities under the 18th Amendment, he said.

Secretary Finance Shakeel Qadir pointed out that all the projects launched by the government with the borrowed money were socio-economic as well as “payback” projects at the same time.

“These loans are not going to burden the province. These have been taken for the payback projects,” he argued. He added that the main “catch of it is that these (loans)

have been taken for purposeful projects at the cheapest rates available in the entire world.”About the local debt (national and banks loans), he said, “It is zero. Last year we paid final installment and this year our liability is zero in terms of local debt repayment.”

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