PESHAWAR: Khyber Pakhtunkhwa (KP) Minister for Finance and Health Taimur Saleem Jhagra while retaliating against opposition statements regarding exaggerated figures of KP Debt said the KP’s disbursed loan liability on 30th June 2022 is Rs 331 billion as reflected in Debt Statistical Bulletin on page 23.
Since these are foreign loans, they are converted at an exchange rate of PKR/USD of 175, this exchange rate is communicated by the Ministry of Economic Affairs Islamabad, according to an official statement issued here.
Jhagra furthered that there is no domestic debt liability against the provincial government as of 1st July 2022. He added that foreign currency is used for the financing of specified developmental projects under an agreement between KP government and the federal government.
The minister said the re-lending terms and conditions of the foreign loans to the provincial government are 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 percent to 2 percent for development projects and programmes.
“The tenor of these loans is 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,” the minister explained.
Referring to the return of loans, finance minister KP said that during the current Financial Year 2021-22, the KP government has repaid Rs 12.155 billion on account of Principal Repayments and paid Interest of Rs 2.5 billion. Most of these loans are taken for various sectors including Transport, Energy and Power, Urban and Rural Development, Roads Infrastructure, Health, and Education.
“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,” Taimur Jhagra added.
However, Jhagra elaborated that an amount of Rs. 556.666 billion has 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, means 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 Rs. 556.555 billion is not part of the outstanding debt liability of the province yet.
Copyright Business Recorder, 2022
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