PESHAWAR, July 30: The NWFP government will prematurely retire part of the cash development loan (CDL) in fiscal 2004-05 but the federal government has not yet assented to a plan submitted by the province during the last fiscal year.

"The Centre has not (yet) responded to the plan submitted by the province earlier last year, the NWFP government intends to pre-pay part of the CDL payable to the federal government," an official said.

Successive provincial governments had been availing the CDL facility since fiscal 1973-74 for execution of development projects. As of June 30, the province's total debt amounted to over Rs60 billion and it owed Rs27 billion to the federal government under the head of CDL.

The sources said that the province had prematurely retired Rs7 billion against CDL during the previous two financial years. In real terms, they said, the move resulted in a net saving of Rs1.5 billion, which the province would have paid on account of interest against the loan.

The Frontier intended to prematurely retire over Rs5.5 billion in fiscal 2002-03 but the province could barely pre-pay Rs1.9 billion during the last financial year and that, too, after experiencing difficulties in connection with adjusting the same against the CDL account.

However, the federal government had favoured the province by adjusting the same from the date the funds were released by the provincial government. Officials said that the provincial government intended to pursue the previous financial year's strategy in this regard.

"We will shift the required funds ... and then move the Centre to adjust it against our CDL (account)," another official said. In its budget for the current financial year the provincial government has made a projection of Rs2.1 billion on account of prematurely retiring part of the CDL.

"The amount would be arranged by diverting part of funds from the second tranche of a World Bank loan," the official said. He said that the provincial government also intended to raise money through internal borrowings from some of the its public sector entities to pre-pay part of the cash development loan during the 2004-05 financial year.