The Khyber Pakhtunkhwa government’s debt burden is increasing sharply, with total foreign loans standing at Rs855.77 billion this fiscal year and projected to exceed Rs950.67 billion by the end of the next fiscal year.
According to details, the provincial government has allocated Rs71 billion in the upcoming budget for debt servicing, including Rs45 billion for principal repayments and Rs26 billion for interest payments.
The largest share of KP’s debt is owed to the World Bank at Rs380.36 billion, followed by the Asian Development Bank at Rs361.50 billion. The province also owes over Rs42.53 billion to Germany, more than Rs36.84 billion to Japan, and Rs21.11 billion to the French Development Agency, while Rs13.32 billion is payable to various other institutions.
The rapid rise in Khyber Pakhtunkhwa’s debt burden has raised concerns among economists, who warn that increasing debt repayments could reduce the province’s fiscal space for development projects and public welfare initiatives in the coming years.
With debt servicing costs continuing to climb, experts stress the need for stronger revenue generation and prudent financial management to ensure long-term fiscal stability and prevent excessive dependence on external borrowing.
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