K-P to take $200m loan from World Bank

Provincial govt wishes to increase reliance on its on sources of revenue, rather than looking at federal transfers

PESHAWAR: The Khyber Pakhtunkhwa (K-P) government has decided to obtain a $200 million loan from World Bank to increase reliance on its on sources of revenue rather than looking at federal transfers for running government operations.

Sources in K-P finance department claimed the loan would be “result-based financing,” intended to improve revenue mobilisation, public resource management, and service delivery.

Officials close to the matter told The Express Tribune that the K-P government's request for the loan was forwarded to WB in May 2016 by Economic Affairs Division (EAD), following which the bank held an identification mission in November last year. “The Pre-CDWP (Central Development Working Party) for the loan has been held,” an official said.

Explaining why the K-P government needed the loan the official said, “we are more than 85% dependent on federal transfers for running our developmental and current expenditures.

“We receive funds from the federal government on 1st and 29th of each month. If the transfers get delayed by a few days, our operations start suffering as we don’t have money to make releases,” the official said, adding that they want to decrease dependency on the federal government for their budget financing. “We need to strengthen our own resources,” the official said.

It would be disbursement-linked indicators- (DLIs) based financing, and the tranches would be released after achievements of required results in the targeted areas. The WB would also provide technical support to K-P for tackling challenges and meeting targets.

Four target areas have been highlighted for achieving the needed results; area-1 is “efficient in revenue mobilisation from both tax and non-tax sources,” over which 40 per cent of the loan will be spent. To achieve the targets in the first result area the government will focus on existing sources of revenue as well as potential new areas in various sectors including agriculture, livestock, and fisheries, tourism, energy and hydro-power, oil and gas, and mines and minerals.

The government will also integrate and simplify systems of the three revenue collecting department and will facilitate tax-payers through simplification of tax-filing system.

It will also focus on increasing non-tax revenue by exploiting new areas of non-tax revenue collection, i.e. Infrastructure Development Cess, leasing public land and buildings, sale of electricity to industrial users and the national grid.