PESHAWAR, June 7: The NWFP government has given more than one proposal to the federal government for retiring the mounting provincial debt, official sources said.

In its recently prepared strategy to retire the provincial debt, the NWFP government has sought permission from the federal government for retiring the entire outstanding amount of cash development loan payable to Islamabad by taking loans from the open market.

The province is supposed to pay over Rs29bn principal amount of cash development loan (CDL) accumulated against it since 1972-73 financial year when the province started taking loans from the federal government for carrying out development works in its area of jurisdiction.

The province is also liable to pay Rs58.9bn as interest — accumulated against it since 1972-93 over and above the actual loan.

The federal government had required all the four provincial governments to submit their ‘debt strategy’ to underline comprehensive plans to clear debt which in the case of the NWFP eats up over 20 per cent of the total annual revenue receipts of the province in the form of debt repayment.

The debt strategy, approved recently by the provincial cabinet and submitted to the federal government, listed more than one proposal to tackle the growing problem of debt repayment.

The first proposal called upon the federal government to grant permission to the province in terms of taking loans from the open market to retire the most expensive CDL in lump sum.

In some of the cases, the province was paying interest at the rate of 15, 16 and 17 per cent against the CDL taken from the federal government, said the sources.

“We have asked for permission allowing us to retire the expensive CDL through direct borrowing from the open market,” said a senior finance manager of the province.

“The market is liquid and the province could easily retire the expensive loans by directly borrowing money from the open market where loans could be taken at six or seven per cent mark-up rate,” said another senior government functionary.

If the federal government granted permission to the province it would ease off the tight annual debt repayment schedule currently confronted to the province.

Out of the over Rs8bn the province pays in debt repayment every year, a paltry sum of slightly over Rs1bn serves the principal amount and the remaining goes down the drain to serve the mark-up payable over and above the actual loan.

In one of the other proposals submitted to the federal government in its debt strategy, the provincial government has asked for rescheduling of CDL payable to Islamabad.

The provincial government has adopted the stand that the NWFP’s CDL should be rescheduled after most of the lending countries have rescheduled their loans recoverable from Islamabad.