KP to borrow loans from ADB in euros instead of dollars

Khyber Pakhtunkhwa (KP) government has decided to borrow foreign loans in euros instead of dollars from the Asian Development Bank (ADB), mainly due to the steady fall of rupee against US dollar.

An agreement has also been reached with ADB and now the bank will provide loans to KP government in euros for the largest urban development project. 

According to KP Local Government Department sources, the government has finalized the arrangements for borrowing the biggest loan of the province, $655 million, from the ADB. A loan of $400 million was also requested for the second phase of KP Cities Improvement Project.

The KP government has so far received a total of $1.5 billion but due to the falling rupee against dollars, it was extremely difficult for the government to repay the loan in dollars. 

Thus, the government has requested ADB to provide loans for the project in euros instead of dollars, which the bank has approved.

The Economic Affairs Division has sent the Ministry of Law’s revised legal opinion on the loan agreement to the ADB and requested the bank to start the process of paying the loan of 529.50 million euros. 

The PC-1 of the project has already been approved and it has also completed the identification of sub-development projects, after which the process of disbursement of loan will begin.

The provincial government has approved PC-1 of Rs99 billion for the first phase of the urban development project, of which Rs94 billion will be paid by the ADB and Rs5 billion by the KP government.