Provincial debt in Khyber Pakhtunkhwa is rising at an alarming pace, increasing by an average of Rs 5.5 billion per month, according to official financial records. The latest data highlights growing pressure on the province’s finances despite ongoing debt repayments.
Over the past six months alone, Khyber Pakhtunkhwa’s total liabilities increased by Rs 33.42 billion, taking the province’s overall debt to Rs 809.74 billion. In comparison, provincial debt stood at Rs 776.32 billion in June 2025, underscoring the speed at which borrowing has accelerated.
Borrowing Outpaces Repayments
Records show that while the provincial government continued servicing its debt, new borrowing significantly exceeded repayments during the period.
- Rs 25.56 billion was repaid in total
- This included Rs 15.81 billion in principal repayments
- Rs 9.75 billion was paid as interest
At the same time, the province secured fresh loans worth Rs 45.9 billion, more than offsetting repayments and pushing the overall debt burden higher.
Foreign Loans Driving Development Spending
A major portion of the borrowing is linked to development financing. The provincial government is currently funding 30 development projects through foreign loans, primarily aimed at infrastructure upgrades, social sector development, and long-term economic growth.
According to official figures:
- Loans from the World Bank amount to Rs 352.5 billion for 46 projects
- Financing from the Asian Development Bank totals Rs 351.8 billion for 44 projects
While these projects are intended to improve public services and stimulate economic activity in Pakistan, economists warn that the rising debt load could strain future budgets, particularly as interest obligations continue to grow.
Growing Fiscal Pressure
The sharp rise in provincial borrowing has sparked concern among financial analysts, who caution that sustained reliance on loans—especially foreign debt—could limit fiscal flexibility in the coming years. With development needs still high and revenues under pressure, managing debt sustainability is expected to remain a key challenge for the Khyber Pakhtunkhwa government.
