Peshawar – Khyber Pakhtunkhwa Finance Minister Taimur Jhagra while hitting back at opposition statements regarding exaggerated KP debt figures, said Khyber Pakhtunkhwa’s disbursed loan liabilities as of June 30, 2022 were 331 billion rupees, as shown in the Debt Statistical Bulletin on page 23.
He said there was no domestic debt to the provincial government as of July 1, 2022. He added that foreign currency is used for financing specified development projects under an agreement between the government of Khyber Pakhtunkhwa and the federal government. He said the terms and conditions for refinancing foreign loans to the provincial government are the same as those agreed by the federal government with foreign lenders.
He reiterated that the borrowed loans are long-term concessional loans with interest rates ranging from 0.75 to 2 percent for development projects and programs. “The duration of these loans is between 20 and 25 years with grace periods of 5 to 10 years. During the grace period, only interest is charged, while there is no principal repayment,” he explained.
Referring to loan repayments, KP Finance Minister said that in the current fiscal year 2021-22, Khyber Pakhtunkhwa government has repaid Rs 12.155 billion in principal repayments and paid interest of 2.5 billion rupees. Most of these loans are contracted for various sectors, including transport, energy and electricity, urban and rural development, road infrastructure, health and education.
“The ratio of outstanding debt as a percentage of total revenue is only 44%, while the ratio of debt service (repayment) to total revenue is only 2.01%, as stated on page 93 of the White Paper 2022-23,” added Taimur Jhagra.
However, Jhagra clarified that an amount of Rs 556.666 billion has been shown as “undisbursed amount” in the Debt Statistical Bulletin as of December 31, 2021, page 11. These are loan amounts committed to the account of 23 active loans, which 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.