PESHAWAR, July 30: The World Bank has released over $95m loan to the North West Frontier Province (NWFP) from its Structural Adjustment Credit (SAC) facility, according to official sources.

In his budget speech on June 28, the provincial finance minister Farid Rehman had announced that World Bank would provide $90m loan to NWFP government during the 2002-03 financial year.

However, according to official sources, the province has been released around $95m loan, and intimation to this effect was made to the provincial government by the federal authorities concerned some 10 to 15 days back.

“A sum of Rs5.69 bn was transferred to the provincial account in the middle of the current month,” said a senior government functionary.

With the release of the SAC loan, NWFP has become the second province - after Sindh - to have been extended credit facility directly by the World Bank.

The credit facility involves zero interest and nominal service charges whereas exchange rate risk would be taken care of by the federal government.

The loan, extendible for a period of three years, would be repaid in a span of 35 years.

The provincial government has qualified for the credit facility on the basis of its three-year medium term reforms programme, which also contains the Medium Term Budgetary Framework (MTBF) for a period of three years starting from the current financial year.

The MTBF, said the sources, envisaged fiscal adjustment through expenditure management and increasing non-tax revenues. Rate of user charges, said the sources, might well undergo increase due to the low potential for enhancing rates of provincial taxes.

The provincial finance minister in his budget speech had underlined that if the future provincial government, that would come into effect after the Oct polls, managed to implement the reform programme in the right direction the World Bank’s loan facility might be extended for another two years.

The first tranche of the World Bank loan, according to the sources, would partly be utilized on development activities to support the Annual Development Programme of the provincial government for the 2002-03 financial year, which has a resource gap of well over Rs7bn against the over Rs13.67bn total size of the annual ADP.