KP’s external debt rises by Rs791bn during PTI government

The Pakistan Tehreek-e-Insaf government signed Rs791 billion loan agreements with international institutions during its nine year as a result, KP’s external loan volume has exceeded Rs887.97 billion.

Until 2013, the foreign loan burden was just Rs97 billion but after that PTI started borrowing from the World Bank, the Asian Development Bank, the International Development Agency and other financial institutions for various development projects which will be repaid with high interest rates.

Moreover, loan of Rs233.36 billion will be taken from the Asian Development Bank for various development projects. Agreements have also been signed to borrow Rs319.51 billion from the International Development Agency (IDA) for uplift projects. Similarly, loan of Rs148.32 crore will be obtained from ADB for various projects.

Sources in the KP finance department said that the foreign loans will not only increase the burden on the provincial exchequer but the government will also increase taxes in the budget of the new financial year 2022-23 to repay these loans along with interest. Thus, there will be a direct burden on the general public.

At the end of the Muttahida Majlis-e-Amal rule in 2008, the foreign debt of the province was Rs17 billion. From 2008 to 2013, the Awami National Party and the PPP, increased the loan burden to Rs97 billion. During its five-year tenure, the ANP borrowed Rs80 billion from the World Bank, Asian Development Bank and other financial institutions. In 2013, the PTI got the opportunity to rule KP for the first time and in 2018, it was voted into power for the second time in the province. During this time, it has borrowed a total of Rs791 billion.

According to documents, Rs10.71bn has been borrowed from Balakot energy project from ADB till December 31, 2021, Rs2.54 billion for construction of highways, Rs745 million for Peshawar BRT, Rs541 million for Pekhor High Level Canal expansion project. A loan of Rs160 million has been obtained for cities development, Rs92 million for Revenue Mobilization and Public Resource Management, Rs45 million for Khyber Pakhtunkhwa Hydro Power Project, Rs32 million for improvement of highways and Rs7 million for tourism project.

Similarly, Rs11.42 billion more will be borrowed for Pekhor High Level Canal, Rs2.876 billion for Peshawar BRT, Rs22.769 billion for energy access project, Rs6.5 billion for rehabilitation of highways,  A loan of Rs12.686 billion from French Development Agency for Peshawar BRT. A loan of Rs7.47 billion will be taken for Mardan-Swabi highway and Rs346 million for districts improvement project.

Similarly, Rs 14.476 billion will be taken from IDA for Khyber Pakhtunkhwa Revenue Mobilization and Public Resource Management, Rs8.186 billion for KP Integrated Tourism Development Project, Rs26.16 billion for Irrigation Project and Rs54 billion for better development project. Rs81.98 billion for KP Economic Corridor, Rs44.40 billion for energy project and 23.946 billion for human development project. An agreement worth Rs53.54 billion has been signed with IBRD for the energy project.

According to documents, Rs42.83 billion loan from ADB and Rs44.62 billion will be borrowed  the AIIB for  the Balakot energy project, Rs66.2 billion will be borrowed for urban improvement and development from ADB and Rs34 billion from the AIIB for the same project. A loan of Rs13.22 billion will be obtained from IFAD for rural economic development.

Finance Minister Taimur Khan Jhagra has said that amount of loans taken by December 2021 was Rs331 billion. Jhagra added that agreements worth Rs556.7 billion have been signed but the province has not yet received the funds. The minister said that every government has the right to take loans on easy terms for best financial management. He claimed that these loans have been taken on easy terms for 40 years.