PESHAWAR, April 25: The NWFP government has spent well over Rs11bn on debt repayment during the first nine months of the current financial year, according to official sources.
Part of the amount was utilized to retire some of the most expensive loans payable by the province to the federal government.
Whereas, an equally larger amount went down the drain to service the mark-up accumulated during the last three decades, according to sources.
Out of the total amount diverted towards debt repayment during the first three quarters of the 2002-03 financial year, major chunk of Rs5.7bn was utilized to retire some of the most expensive debt the province owed to the federal government.
The debt retired involved interest rate of over 17 per cent. In addition to retiring the expensive loan, the province also repaid Rs4.77bn to the federal government during this period.
At the start of the current financial year, the province’s total debt payable to federal government - on account of cash development loans taken from the Centre since early 1970s - stood at Rs36.6bn.
The Rs4.77bn amount, according to sources, was recovered from the province through at source deduction (by finance division, Islamabad) during the first nine months of the 2002-03 financial year.
Finance division, said the sources, deducted at source a sum of Rs530m every month from the direct federal transfers released to the province from the FDP.
The province has been released Rs14.7bn from the FDP during the first nine months of the current financial year.
Of this amount the province received about Rs10bn in cash - through bank transfers in nine months — whereas a total amount of Rs4.77bn was recovered (through book adjustments by finance division) against the liabilities payable by the province.
However, major chunk of the Rs4.77bn — deducted at source from the province on account of debt repayment to the federal government — had been used to pay interest charged over and above the total cash development loan payable to the Centre and international donor agencies.
Apart from Rs36bn payable to the federal government, the province also owes to repay Rs37.4bn to international donor and lending agencies who have been extending loans to the province, over the years, to finance developmental programmes.
The province has earmarked a sum of Rs8.68bn for debt servicing in the 2002-03 financial year.
Of this amount, only Rs1.9bn would serve the principal amount and the remaining would be eaten up by mark-up charges paid over and above the total debt liabilities of the province — standing well over Rs73.9bn on July 1, 2003.
The provincial finance managers had to pay half of the allocated amount (principal) by the end of the first six months of the current financial year.
“The province materialised the plan in its totality by retiring loan of Rs954m (principal amount) during the first six months,” said a government functionary.