PESHAWAR, Aug 30: The NWFP government is to borrow over Rs3 billion during the current financial year to prematurely retire part of an expensive cash development loan (CDL) to the federal government
, as well as clear some of its other liabilities, official sources told Dawn.
The province intends to pay ahead of schedule Rs2.1 billion against total debt it owes to the centre on account of CDL. "If the federal government grants permission to the NWFP to prematurely retire part of the CDL, the provincial government intends to borrow funds to carry out its budgetary plan," said a finance manager of the province.
The provincial government made a request in this respect to the federal government last year, and is awaiting a reply. Nevertheless, the province managed to get adjusted the amount it paid to the centre on its own to clear part of the CDL which has been putting substantial burden on the provincial kitty for the last two decades because of high mark-up rate.
According to official record, the province had to put in extra effort last year to get the federal government acknowledge that it had 'prepaid' Rs1.9bn against its total liability on account of CDL.
"The provincial government had 'prepaid' Rs1.9bn at the start of last financial year on its own without waiting for the permission from the federal government, but the centre adjusted it against the NWFP's CDL account at the end of the year," said an official source.
Now the government plans to 'prepay' Rs2.1bn more during the current financial year. However, as the increasing administrative cost, inflated further by rising salary bill, left little fiscal space for the provincial government to execute its plan, it intends to borrow money from different sources to do so.
The government intends to borrow funds from financially strong endowment funds that are being maintained by the provincial public sector. "The provincial government's endowment funds created for the payment of pension and gratuity to its ex-employees are among the options open to finance managers to borrow money," said a finance manager.
