Monitoring Desk: The debt Trap of foreign loans is engulfing the future of Khyber Pakhtunkhwa province as of December 31, 2023, the outstanding debt portfolio (disbursed loans) has grown to PKR 632,448 million, marking a 19.17% rise from PKR 530,723 million on June 30, 2023.
Interestingly, KP bureaucracy and political leadership officially believe that debt not only enhances economic growth but also enables the government to achieve its social and developmental objectives. With such an understanding of financial issues, PTI led government is taking loans almost every quarter of the year.
There are 32 active loans, indicating that their grace periods have not yet ended. These loans are made to the projects and interest is paid on the disbursed balance. In contrast, 73 loans are closed, meaning their grace periods have expired, and both principal repayments and interest payments have commenced.
Former bureaucrats in Finance claim that during the last 10 years of Tehreek-e-Insaf’s (PTI) rule in Khyber Pakhtunkhwa, a plan to pledge the province to international financial institutions and the Asian Development Bank came to light. From 2013 to 2021, according to the agreements signed by the PTI government with other financial institutions, including the Asian Development Bank, Khyber Pakhtunkhwa will be burdened with 2,555 billion rupees of debt by 2030.
According to the documents of the Finance Department, Khyber Pakhtunkhwa currently owes 632 billion rupees and by December 2024, after increasing by another 93 billion rupees, the amount of debt will reach 725 billion rupees.
Documents indicate that in 2025, another loan of 215 billion rupees will be taken, while according to the agreements with financial institutions and banks, a loan of 284 billion rupees will be taken in 2026, and thus in 2026, Khyber Pakhtunkhwa will become an indebted province of 1,224 billion rupees.
According to the documents, a plan has been made to borrow another 353 billion rupees in 2027 and 455 billion rupees in 2028. During this period, the province will owe a total of 2,032 billion rupees. After borrowing 346 billion rupees in 2029 and 177 billion rupees in 2030, Khyber Pakhtunkhwa will be burdened with 2,555 billion rupees of debt. In 2023, a loan of 19 billion rupees has been returned by the provincial government, in which six billion 36 crore 40 lakh rupees have been paid as interest. During the current year 2024, 15 billion rupees will be paid in the form of interest in repayment of 41 billion rupees.
The completion of ongoing development projects in Khyber Pakhtunkhwa has become dependent on foreign loans and documents of the Finance Department show the provincial government has taken 9038 million rupees from the Asian Development Bank. Khyber Pakhtunkhwa has taken foreign loans from the International Development Agency, the Japan International Cooperation Agency, the French Development Agency, the International Fund for Agriculture Development, the International Bank of Reconstruction and Development, the Asia Infrastructure Investment Bank, and the Asian Development Bank.
