Punjab’s overdraft converted into loan

ISLAMABAD: The overdraft borrowing by Punjab from the federal government is within the limit of Rs20 to Rs22 billion, and the federal government has converted it into a loan payable over a period of four years, Punjab Finance Minister Tanvir Ashraf Kaira said in Rawalpindi on Friday. 

It is not only Punjab, but other provinces also face the situation of overdraft since eighty per cent resources come from the federation, he said while addressing the members of Rawalpindi Chamber of Commerce and Industry.


Mr Kaira said the province was due to receive Rs10 billion against hydel sources shortly.

However, in contrast, a report of the ministry of finance confirmed that the State Bank and the Punjab government reached an agreement to convert Punjab’s outstanding overdraft of Rs50.9 billion into a four-year loan with interest equal to the six-month T-bill rate.

Balochistan is facing an overdraft of Rs8.8 billion. The government has provided a guarantee to the State Bank for these loans. For Sindh and NWFP, no long-term loans were needed.

In response to a question on reasons for the overdraft, Mr Kaira said that the Punjab government was spending about Rs125 billion on development projects and social sectors like public health and education. Overall, Rs170 billion is to be spent on the development during the current fiscal year, he said.

At the provincial level, the government has cut its expenditure from Rs23 billion to Rs17 billion, which reflects the government’s sincerity towards public welfare.

He suggested drafting of a thirty-year development policy to take the country to the heights of development.
Mr Kaira defended the rental power projects, and said that the energy situation would have been better today if these were installed yesterday. A report from the Asian Development Bank on the transparent process of rental power projects is about to come, after which the government will take a decision.

He said that the Punjab government was making all out efforts to promote industrialisation in the province, and various MoUs have been signed with China for the development of industrial zones.