KP will borrow loans from AfDB in euros instead of dollars
The government of Khyber Pakhtunkhwa (KP) decided to borrow foreign loans in euros instead of dollars from the Asian Development Bank (ADB), mainly due to the constant fall of the rupee against the US dollar.
An agreement has also been reached with the AfDB and the bank will now provide loans to the KP government in euros for the largest urban development project.
According to sources from the KP local government department, the government has finalized arrangements to borrow the province’s largest loan, $655 million, from the AfDB. A $400 million loan has also been requested for the second phase of the KP Towns Improvement Project.
The KP government has so far received a total of $1.5 billion, but due to the fall of the rupee against the dollar, it has been extremely difficult for the government to repay the dollar loan.
Thus, the government asked the AfDB to provide loans for the project in euros instead of dollars, which the bank approved.
The Economic Affairs Division provided the AfDB with the Ministry of Justice’s revised legal opinion on the loan agreement and requested the bank to begin the process of repayment of the €529.50 million loan.
The PC-1 of the project has already been approved and it has also completed the identification of underdevelopment projects, after which the loan disbursement process will begin.
The provincial government has approved PC-1 of Rs99 billion for the first phase of the urban development project, of which Rs94 billion will be paid by AfDB and Rs5 billion by the KP government.