September 20, 2007	Thursday	Ramazan 07, 1428

PESHAWAR, Sept 19: The MMA government in the NWFP received loans and grants worth millions of dollars from various international lending and donor agencies over the past five years, it is learnt.

Data collected from international lending agencies showed that the NWFP government had received $673.122 million from the World Bank and the Asian Development Bank under various credit schemes and uplift projects over the last five years.

Officials said the foreign grants mainly borrowed from the World Bank were soft-term loans and interests on them are not more than one per cent.

Grants and technical assistance extended by the DIFD, GTZ, USAID, JICA and other donor agencies in the social sector, especially health and education, are in addition to such borrowings.

The World Bank topped the list of major lenders. The bank had released $360.922 million to finance the Provincial Reform Programme (PRP) launched by the previous civilian-cum-military government.

The MMA government, which has been critical of foreign lending, continued with the reform agenda and had in 2003 received the first tranche of $90 million under the Structural Adjustment Credit (SAC). It had received the second tranche of $90.863 million in the financial year 2004-05 and $50.059 million as supplementary credit to it.

The government is set to receive $130 million in the financial year 2007-08 under the Development Policy Credit (DPC-II) to finance the second phase of the Provincial Reform Programme (PRP-II). This will put the overall borrowing figure from the World Bank at $360.922 million.

The provincial government was in contact with the World Bank for acquiring the third tranche of $130 million to pool maximum resources for the ongoing reform programme, finance department officials told Dawn.

The World Bank has not only lent big loans to the provincial government, but also organised the NWFP Economic Forum in 2006 to attract contribution of other donor agencies for its ongoing reform agenda.

The Asian Development Bank granted $312.2 million to finance two major projects in the NWFP. It provided $301 million for the NWFP Road Sector Development Project.

The loan was approved in November 2004 and the project is in different stages of progress across the province.

Likewise, the ADB provided $11 million for the Restructuring of the Technical Education and Vocational Training System in the NWFP. It was approved in December 2004.

The officials said the borrowings had helped the provincial government reduce the volume of expensive domestic loans.

The province had pre-maturely retired Rs12.884 billion expensive domestic loans over past five years and created a permanent fiscal space of Rs2.979 billion.

Although the Frontier government considers foreign funding essential for financing its reform agenda, it put the overall debt of the cash-strapped province at Rs85.178 billion by June 30, 2007.

A major surge in the size of debt is because of fresh borrowings from international lending agencies, mainly the World Bank. At present the volume of foreign debt stands at Rs66.749 billion, out of a total debt of Rs85.178 billion.

This puts the foreign loan component at over 78 per cent of the overall debt, while the size of domestic loans is just Rs18.429 billion or 22 per cent of the total debt.