Khyber Pakhtunkhwa's Debt Hits Record High: A 150 Billion Rupee Spike in a Single Year

This figure represents a 28% increase in just one year, the largest year-on-year growth in KP’s history.

The financial burden of Khyber Pakhtunkhwa (KP) has reached an unprecedented level, with the province’s debt to international financial institutions climbing to an all-time high of Rs. 679.54 billion. Over the past year, the debt surged by nearly Rs. 148.82 billion, marking a significant financial strain on the province.

Debt Analysis and Contributing Factors

According to a report by the KP Finance Department, as of June 30, 2024, the province owed eight international lending agencies a staggering Rs. 679.54 billion. This figure represents a 28% increase in just one year, the largest year-on-year growth in KP’s history.

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During the fiscal year 2023-2024, KP secured Rs. 75.96 billion in new loans. Additionally, factors such as a 13% rise in exchange rates and reduced principal repayments contributed another Rs. 72.86 billion to the overall debt.

Major Lending Agencies

KP's borrowing is heavily concentrated, with 90% of the loans coming from the World Bank and the Asian Development Bank (ADB). The breakdown of KP's current debt obligations is as follows:

• ADB: Rs. 305.20 billion
• World Bank (IDA): Rs. 291.26 billion
• Asian Infrastructure Investment Bank (AIIB): Rs. 16.20 billion
• Agence Française de Développement (AFD): Rs. 40.20 billion
• Japan International Cooperation Agency (JICA): Rs. 23.34 billion
• International Fund for Agricultural Development (IFAD): Rs. 2.10 billion
• International Bank for Reconstruction and Development (IBRD): Rs. 0.71 billion
• Germany: Rs. 0.49 billion

Debt Repayment Challenges

In the fiscal year 2023-2024, the provincial government managed to repay Rs. 24.78 billion in loans while disbursing Rs. 13.95 billion in interest payments. However, the province continues to grapple with mounting financial pressures amid a rising exchange rate and the need for new loans to fund development projects.

Concerns Over Rising Debt

The growing debt raises concerns over KP’s financial stability and its ability to sustain development while managing repayments. Analysts warn that such rapid borrowing, combined with unfavorable currency fluctuations, could further strain the province's already fragile economy.