KP’s foreign debt piles up as govt inks fresh Rs30bn loan deals with WB

PESHAWAR: Under the leadership of Chief Minister Ali Amin Gandapur, the Khyber Pakhtunkhwa government has signed two agreements to secure an additional Rs30 billion in loans from the World Bank during the very first fiscal year, further adding to the province’s foreign debt burden.

Sources in the KP Finance Department told HUM News English that, with cabinet approval, the provincial government has finalised agreements with the World Bank for additional funding for two ongoing major projects: the “Khyber Pakhtunkhwa Rural Accessibility Project (KP-RAP)” and the “Khyber Pakhtunkhwa Integrated Tourism Development (KITE) Project” for the tourism sector.

Under these agreements, the World Bank will provide Rs22 billion for the KP-RAP and Rs7 billion for the KITE Project. The provincial government has also revised the PC-1 documents for both projects, raising the total cost of KP-RAP to Rs112 billion and the KITE Project to Rs17 billion.

According to documents of the KP-RAP project available with HUM News English, the PC-1 has been revised to exclude four road projects in Lower Kohistan, and include a total of 19 new and additional road projects in several districts — among them, Dera Ismail Khan, the home district of the chief minister, and Khyber, the native district of the adviser to C&W.

Also read: Khyber Pakhtunkhwa govt terminates 601 projects, expects Rs 473b savings

This revision has expanded the scope of the project from the rehabilitation and construction of 768 kilometres of roads to 877 kilometres in total.

Sources said that the KP government has also revised plans for two mega road projects: Abbottabad-Thandiani Road and Swat-Mankial Road. A new agreement has been signed with the World Bank for an additional Rs7 billion in funding for these projects.

According to documents of the KP Finance Department Debt Management Unit, the PTI government in Khyber Pakhtunkhwa has taken a total of Rs680 billion in loans from international financial institutions — including the World Bank and the Asian Development Bank— over the past decade.

Meanwhile, sources said that successive provincial governments have signed agreements to secure loans worth Rs200 billion to date.

Advisor to the KP Finance Ministry, Muzzammil Aslam, said that the PC-1 of the KITE Project was revised at the request of the donor, which led to an increase in the overall project cost.