PESHAWAR, May 16: The likely availability of World Bank credit facility to NWFP would help the provincial government to gradually increase its development expenditure during the next three financial years, claimed senior government functionaries.

Apart from repaying part of its more expensive debt, the World Bank credit facility would help the province to remove budget imbalances enhancing its capacity to spend more on the development side.

“Provided we are made available $100m IDA facility for each of the next three financial years we would be able to improve our spending on the development side due to greater fiscal space the province is likely to have,” said the official sources.

However, according to some other official sources, although the size of the Programmatic Structural Adjustment Credit (PSAC) being extended by the World Bank is not decided, the provincial government has tied high hopes with the PSAC.

These sources, holding important assignments in the provincial government, however, differed with the notion that the credit facility would help increase the spending capacity of the provincial government.

The government, said the sources, was anticipating that its reforms programme envisaged for the next three financial years coupled with the availability of World Bank credit facility would help it raise the level of development spending from the existing 25.6 per cent during the current financial year to 28.8 per cent in the 2002-03 financial year, 29.6 per cent during the 2003-04 financial year and by 30.4 per cent in the 2004-05 financial year.

This would require of the provincial government, said the sources, to ensure substantial increase in its internal and external receipts.

“Unless the province gets improved its receipts from the divisible pool and net hydel profit in accordance with the A.G.N. Kazi formula provincial government would continue finding it difficult to improve its development spending,” said the sources.