PESHAWAR, June 19: The NWFP government is set to receive $130 million in loan from the World Bank for its reforms programme for 2007-2008, which will take the total borrowing from the bank since the programme’s launch more than four years ago to $459.714 million.
Budget documents reveal that greater reliance on external resources for financing development and operational activities of the government has taken the overall debt stock of the cash-strapped province to Rs85.178 billion at the end of the outgoing fiscal year 2006-07.
The debt stock of the provincial government stood at Rs71.587 billion and Rs63.336 billion in fiscal years 2005-06 and 2004-05, respectively.
A major surge in the size of the debt stock has been witnessed because of fresh borrowings from international lending agencies, mainly the World Bank, which currently stand at Rs66.749 billion against the net debt stock of Rs85.178 billion.
This takes the foreign loan component to more than 78 per cent of the overall debt stock. Domestic borrowing stands at Rs18.429 billion, or 22 per cent of the total stock.
The MMA government since coming to power in 2002 has been actively pursuing the multi-sectoral reforms programme that was originally formulated by the previous military-cum-civilian government.
The previous government had engaged the World Bank and borrowed $90 million as the first tranche under the Structural Adjustment Credit (SAC-I) to finance the reforms strategy.
The MMA government carried forward this plan and borrowed two yearly tranches of $90.863 million and $50.059 million under the SAC-II and Development Policy Credit (DPC-I) in the subsequent financial years.
For the financial year 2007-08, the government is set to receive $130 million under DPC-II for financing the second phase of the Provincial Reform Programme (PRP-II).
This will take the overall borrowing by the provincial government from the World Bank alone to $459.714 million (Rs27.582 billion).
Officials of the provincial finance department told Dawn that foreign loans, mainly borrowed from the World Bank, had been obtained under soft terms and their interest rates were not more than 1 per cent.
They said such borrowings had helped the provincial government reduce the size of domestic loans, which comparatively carried higher interest rates, ranging between 15 and 17 per cent.
The provincial government, said the officials, had prematurely retired Rs12.884 billion in domestic loans in the last four years.
