ISEJ Institute for Social & Economic Justice
(Nasir Jamal): Punjab foreign debt stock is projected to steeply rise by a fifth to Rs620 billion at the end of the next financial year, mainly because of a Chinese loan of Rs.85 billion for the controversial Lahore Orange Line Metro Train Project.
According to the budget 2016-17 documents, the province`s outstanding foreign debt stock is estimated to spike to around Rs516bn at the end of the year from Rs436bn a yearago. The province has accumulated foreign debt of Rs79.9hn during the present year.
The government plans to borrow Rs.16 billion from the World Bank as budgetary support and Rs.30 billon from different multilateral and bilateral lenders for various development projects in addition to the Chinese loan for the train project next year.
China has already released the first metro train loan installment of Rs45bn during the current year.
The documents insist that the provincial foreign debt portfolio ishighly concessionary with longterm maturity. The average interest rate on foreign debt was calculated to be 1.38 per cent during the outgoing fiscal year. Most loans are based on Exed interest rates and the remaining on variable rates.
Around 46pc of the current debt stock comprises non-project/programme loans for education, poverty reduction and governance and 54pc consist of project aid for water, transport, agriculture, communication, governance, housing, health, energy, etc.The province`s foreign debt currently constitutes 96.8pc of its total debt portfolio with domestic outstanding loans (consisting of federal cash development loans) of Rs.17.1 billion, forming 3.2pc of the entire projected stock of Rs.533.1 billion at the end of the present financial year.
Punjab`s total debt servicing was estimated at Rs.33 billion or 2.2pc of total provincial income during the outgoing year. Almost 77pc of debt servicing was on account of foreign loans and interest payments are estimated to be Rs.4.1 billion.
