October 22, 2002	Tuesday	Sha’aban 15,1423

PESHAWAR, Oct 21: NWFP has paid Rs5.7bn to federal government during the current financial year clearing part of its expensive cash development loan (CDL)—principal amount—by diverting major chunk of the recently taken World Bank’s structural adjustment credit (SAC), according to official sources.

The debt repayment made to Islamabad during the first quarter of the current financial year includes a major chunk of Rs3.7bn diverted from SAC.

Back in July last the province was released $95m by World Bank under its SAC facility, setting some really difficult targets under different sectors for the provincial government to achieve during the current financial year to qualify for the second tranche of the same size in the 2003-04 financial year.

Apart from the Rs3.7bn chanalized from the SAC for debt repayment purposes, a sum of Rs2bn, said the sources, had been diverted from the provincial hydel fund—created for bringing the hydel power generation potential under utility by developing power generation units.

“The money lying useless in the provincial hydel fund has been brought under utilization to clear some of the most expensive CDL,” said the sources.

The sources said that the diversion of funds from the hydel fund would not hinder the execution of the under-construction Malakand-III hydro power generation unit - which the provincial government intends to execute purely in the provincial public sector involving an estimated cost of Rs6bn and total generation capacity of 80 mw.

“The money withdrawn from the hydel fund would be provided when need arises,” said the senior government functionaries.

The Rs5.7bn debt retired during the first quarter of the current fiscal year, according to the sources, would create Rs1bn fiscal space for the province.

“Reduction in the overall size of the principal debt under the CDL would help the province save around Rs1bn,” said the sources.

Some of the most expensive CDLs, said the sources, had been cleared.

The lowering of the size of total amount payable against the CDL would save the amount (Rs1bn) the province would have to pay in the shape of mark-up the future provincial governments would have to pay against the loans, now stand cleared.

As on June 30 last, the province owed to repay a total of Rs36.56bn CDL against the funds the successive provincial governments have been taking to carry out development activities in the province between 1972-73 financial year and 1998-99 financial year.

Apart from the Rs5.7bn debt repayment made recently, the provincial government would also repay around Rs8.67bn during the current financial year - of which a colossal sum of Rs6.76bn goes down the drain on account of mark-up against the total amount the province owed to pay till June 30, 2002.

Out of the total funds earmarked for debt repayment during the current financial year only a sum of Rs1.9bn would be paid against the principal amount of loans the provincial governments, in the past, obtained for the development purposes.

The province is supposed to pay a total of Rs73.9bn debt involving a sum of Rs36.56bn CDL and remaining Rs37.4bn to international donors from whom the successive governments took loans in the shape of foreign project assistance.