Khyber Pakhtunkhwa Minister for Finance Taimur Saleem Jhagra has said that the Opposition was giving exaggerated figures of KP debt and said that the disbursed loan liability of the province on the end of the current financial year is Rs331billion as reflected in the Debt Statistical Bulletin.
In a statement issued here on Friday, he said that as these are foreign loans, hence they are converted at an exchange rate of PKR/USD of 175, which is communicated by the Ministry of Economic Affairs Islamabad.
He further said that there was no domestic debt liability against the provincial government as of 1st July 2022. He added that foreign currency was used for the financing of specified developmental projects under an agreement between Khyber Pakhtunkhwa and the federal government.
He said that the re-lending terms and conditions of the foreign loans to the provincial government were the same as those agreed upon by the federal government with foreign lenders.
He reiterated that the loans borrowed are long-term concessional loans for which interest rates range from 0.75 to 2 percent for development projects and programs. “The tenures of these loans are between 20 to 25 years with grace periods of 5 to 10 years. During the grace period, only interest is charged, whereas there are no principal repayments,” he explained.
Referring to the return of loans, the provincial minister for finance told that during the current Financial Year 2021-22, the Government of KP had repaid Rs12.155 billion on account of principal repayments and paid interest of Rs2.5 billion. Most of these loans are taken for various sectors including transport, energy and power, urban and rural development, roads infrastructure, health, and education, he added and said the ratio of outstanding debt stock as a percentage of Total receipts is only 44 percent, whereas the ratio of debt servicing (repayment) to total receipts is only 2.01 percent reflected on page 93 of White Paper 2022-23.
However, Jhagra elaborated that an amount of Rs556.666 billion had been shown as “undisbursed amount” in Debt Statistical Bulletin as of 31st December 2021, page 11. These are committed loan amounts on account of 23 active loans, meaning that the loan agreements for these projects are already signed, and the loan amount is expected to be received/disbursed in the next 5-7 years: hence the amount of Rs556.555 billion is not part of the outstanding debt liability of the province yet.
