PESHAWAR – The Khyber Pakhtunkhwa debt has reached an unprecedented level, exceeding Rs679bn, due to the province’s increasing dependence on international financial assistance.
The World Bank and the Asian Development Bank (ADB) dominate this debt portfolio, contributing significantly to the overall financial obligations. In the past year, the Khyber Pakhtunkhwa debt increased by nearly Rs150bn, raising serious concerns over fiscal sustainability and the province’s financial management practices.
The sharp rise in debt is attributed to new loans, exchange rate fluctuations, and reduced repayments of principal amounts. Documents from the Khyber Pakhtunkhwa Finance Department reveal that as of June 30, 2024, the province’s total debt, sourced from eight international lending agencies, reached Rs679.54bn.
This reflects a 28% rise within one fiscal year, marking the steepest annual increase in the province’s history. During this period, the provincial government borrowed Rs75.96bn in new loans, while adjustments in exchange rates and reduced principal repayments added Rs72.86bn to the total debt burden.
The World Bank and ADB together account for 90% of the Khyber Pakhtunkhwa debt. The ADB has provided loans amounting to Rs305.20bn, while the Asian Infrastructure Investment Bank (AIIB) contributed Rs16.20bn. Additionally, the International Development Association (IDA), a World Bank subsidiary, extended loans worth Rs291.26bn.
Other financial contributors include Agence Française de Développement (AFD) with Rs40.20bn, the Japan International Cooperation Agency (JICA) with Rs23.34bn, and the International Fund for Agricultural Development (IFAD) with Rs2.10bn. Loans from the International Bank for Reconstruction and Development (IBRD) and Germany stand at Rs710.91mn and Rs49.92mn, respectively.
Despite these loans, the provincial government repaid Rs24.78bn during the fiscal year 2023-24 and paid Rs13.95bn in interest. The rising debt underscores the need for strategic fiscal policies and efficient debt management practices to ensure financial stability.
