PESHAWAR, June 25: NWFP is likely to project around Rs9.9bn for debt servicing in its budget for the next financial year to repay part of its soaring domestic and foreign loan, according to sources.

“This would be the highest ever amount to be specified for debt servicing in a single financial year by the provincial government,” said the official sources.

The province had set aside Rs8.6bn for debt servicing during 2001-02 financial year and retired a total debt of Rs7.1bn.

The sources attributed the likely move of specifying over Rs9.9bn, or even more than that, for debt servicing in the 2002-03 financial year to the NWFP government’s chances of getting loan from the World Bank from its structural adjustment facility.

“The Programmatic Structural Adjustment Credit (PSAC) of the World Bank would help the province to reduce the size of its total debt liabilities as the provincial government intends to retire some really very expensive domestic and foreign loans by repaying the principal amount,” said the sources.

Out of the Rs9.9bn most likely to be specified for the debt servicing, greater chunk of Rs5.7bn, however, would be spent to retire debt accumulated due to mark up over and above the principal amount.

Whereas a sum of Rs4.18bn — an all time high amount — is to be projected to retire principal of some of the domestic and foreign loans.

The province, according to official documents, has total debt liabilities of around Rs70bn, involving domestic and foreign loans.

Out of the Rs4.18bn to be projected to retire principal loans, a collective sum of Rs3.4bn would be specified to repay part of the cash loans, Rs742m of foreign loans and Rs1.6m USAID local current loans.

Whereas out of the Rs 5.7 bn likely to be specified for retiring part of the provincial debt accumulated due to interest, a sum of Rs5.4bn would go down the drain by paying interest against cash development loans and an other amount of Rs325m against interest on foreign loans.