LAHORE, June 17: The Punjab government's plan to swap its expensive cash development loan (CDL) stock with low-priced loans obtained from the international donors will result in a saving of Rs10 billion through reduced debt servicing costs each year from 2008.
In his budget speech, finance minister Sardar Hasnain Bahadur Dareshek said on Thursday that the savings from premature debt retirement would provide Punjab the much needed fiscal space for further increasing its annual development programme.
Punjab finance secretary Salman Siddique told this reporter after the presentation of the budget that the province had saved Rs900 million by returning Rs12 billion to the federal government during the current year.
The provincial government has negotiated two low-cost facilities from the Asian Development Bank and the World Bank. Both the donors have disbursed first tranche of $100 million each.
Mr Siddique said the total impact of the swap this year was not as big as expected because the ADB had released its tranche in January and the World Bank in the last week of April. Next year, he said, the province would be able to save Rs1.85 billion due to this swap.
The review missions of the donors would arrive here in August to take stock of the situation before releasing the tranches for the next fiscal year. Total federal loan liability as on June 30 this year would be Rs68.449 billion or 44.50 per cent of the province's entire debt liability.
