PESHAWAR: The federal government has put its feet over the provinces’ right of borrowing directly from domestic or foreign donors to the dismay of the Khyber Pakhtunkhwa government, which wants to use the constitutional provision in this respect to its benefit.

According to well-placed official sources, the Khyber Pakhtunkhwa government has moved the federal government more than once to fulfil the constitutional obligation and allow the federating units to borrow directly from the domestic or foreign donors.

“They (federal decision makers) have not been listening to the provinces’ repeated reminders,” said an official of the provincial government.

After the passage of the 18th Constitutional Amendment in April 2010, said the official, the federating units could borrow directly from the domestic and international lenders but the constitutional right remained unfulfilled.

The Section (4) of Article 167 of the Constitution empowers the federating units to negotiate and borrow directly by issuing sovereign guarantees, but the incumbent federal government, like its predecessor, said the official, had exercised reluctance to let the provinces avail themselves of the facility.

The constitutional provision, in this regard, says: “a province may raise domestic or international loan, or give guarantees on the security of the Provincial Consolidated Fund within such limit and subject to such conditions as may be specified by the National Economic Council.”

According to officials, the constitutional obligations remains unfulfilled because the NEC has yet to prescribe a framework for the provincial governments thereby they could negotiate the loan agreements.

“Like its predecessor, the sitting federal government, too, has been uncompromising,” said the official.

Another official said the federal government was unrelenting due to its own compulsions.

“The centre has used the borrowing limit to the maximum, leaving little for the provinces to take loans directly,” he added.

The denial of the constitutional rights has been a source of anxiety for the Khyber Pakhtunkhwa government and its bureaucrats.

The province, said an official, wanted to exploit the facility for carrying out capital intensive development initiatives.

Apart from exploiting the expensive hydel power generation opportunities, the provincial government, said an official, could use the Centre denying KP right of direct borrowing facility to exploit the province’s oil and gas sector potential and the future promise held by the tourism sector.

The province, added the official, had got plans, which needed massive investment.

“Even if the domestic and foreign lenders do not lend money to the provincial government, it may use other options available to it to raise money for undertaking the growth-oriented development endeavor,” said the official.

He said in such an eventuality (no lending by domestic and foreign lending institutions), the provincial government might issue bonds, tapping the potential entailed in the overseas Pakhtun diasporas.

“Though there is no such organised thinking at present to issue bonds, but this makes a vibrant option to raise money from the market without looking towards the lending institutions,” said the official.

The provincial bureaucracy attaches significance to the facility as it would allow the province to arrange much wanted funds for the growth oriented projects.

The province does not have ample fiscal space to undertake expensive endeavors whereas the existing mechanism of borrowing funds (from international lending institutions) happens to be time consuming as the Economic Division has the decisive role in borrowing money for the federating units.

Provincial finance minister Sirajul Haq, when contacted, said apart from acquiring investment for the hydro power generation plants, the provincial government needed funds for extracting mineral resources of the province.

“The provincial government does not have the financial resources to exploit the province’s mineral resources,” said the minister, adding that the provincial government also needed investment for constructing an important trade road to access Central Asian markets by linking Chitral with Tajikistan.

“This is a huge economic endeavor which would benefit the province’s economic interest, in particular, and Pakistan’s, in general, in the long run, but the provincial government does not have the funds to build the road,” said the minister.

He said the direct borrowing facility would help the province materialise the Chitral-Tajikistan trade route linkage apart from undertaking other projects vital for boosting the provincial economy.

In this respect, according to official sources, the minister also explained the province’s grievance to the leaders of the provincial parliamentary parties belonging to the joint opposition, in a meeting with them on Thursday, and sought their cooperation in this regard.

He apprised the opposition leaders that despite the lapse of more than three years after the passage of the 18th Constitutional amendment, the framework to be prescribed by the NEC had not been put in place.

However, Senator Haji Adeel of Awami National Party, who is also representing Khyber Pakhtunkhwa as its non-statutory member on the National Finance Commission, on Saturday said the provincial government should take up the matter at the Senate.

“Since both the Jamaat-i-Islami and Pakistan Tehreek-i-Insaf do not have representation in the Senate, they can ask us (ANP’s senators) to raise the province’s concerns in the Upper House of the Parliament,” he told Dawn.