Asian Development Bank (ADB) with 46 percent holding is the principal creditor of Punjab foreign debt followed by the World Bank and government of Japan with 46 percent and 6 percent foreign debt holding, respectively. Punjab's total debt, 6 percent or Rs 26.1 billion is domestic while 94 percent or Rs 425.6 billion is foreign.
As per budget document, Punjab government has a small debt liability compared to size of the gross regional product of the province. At end-June 2014, the province's total debt is expected to be Rs 451.8 billion, or 3.52 percent of GDP. This ratio appears even smaller relative to national GDP, ie, 1.9 percent.
In 2013-14, average explicit interest rate on foreign debt stood at only 1.47 percent with average maturity of15 years. Most of the loans have embedded fixed interest rates; only 16 loans are on LIBOR terms (variable interest rate). Foreign debt, in terms of currency composition, is heavily denominated in US dollars which accounts for more than two-thirds of foreign debt stock. During 2013-14, foreign debt stock increased by Rs 22.4 billion. Favourable exchange rate movements, of US dollar and Japanese Yen, resulted in transactional gains in the foreign debt stock of Punjab government during 2013-14. This impact would have been the reverse, in line with its historical trend, had it not been due to appreciation of Pak rupee against US dollar and Japanese yen. In 2013-14, programme loans/non-project aid constituted half of Punjab's foreign debt portfolio (or Rs 213 billion), the remaining half, of the same magnitude, came in the form of project aid. In 2013-14, Punjab's domestic debt accounted for 6 percent of total debt or Rs 26.1 billion.
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