PESHAWAR: The provincial cabinet of Khyber Pakhtunkhwa approved the establishment of a Debt Management Fund to safeguard the financial future and investment unutilized funds from the government treasury into low-risk instruments.
The meeting of the provincial cabinet held here with Chief Minister Sardar Ali Amin Khan Gandapur in the chair was also attended by the provincial ministers and administrative secretaries.
The provincial cabinet also approved filing of a constitutional petition in the Supreme Court of Pakistan against the proposed constitutional amendment.
The cabinet not only approved the establishment of a Debt Management Fund but also formulated and approved Rules for it too. In view of the fact that surging debt servicing costs and the adverse impact of depreciation of Pak Rupee, it said the establishment of this fund was essential to manage the province’ debt obligations effectively and ensure the financial sustainability.
Invoking Section 36 (1) of the Khyber Pakhtunkhwa Public Financial Management Act, 2022, finance department has devised the creation of the Debt Management Fund which is long-term economic stability. The approval of this initiative will be instrumental in safeguarding our province’s financial future.
The Fund will invest unutilized balance from the government treasury into low-risk instruments. The Fund Shall not only create a revenue source that offsets growing debt obligations, but also result in optimal cash management, ensuring the province can better manage its financial obligations and ensure that substantial fiscal space is available to prioritize expenditure on service delivery.
The draft Khyber Pakhtunkhwa Debt Management Fund Rules, 2024 for governing the control, management, utilization and oversight of the proposed Debt Management Fund too were approved during the meeting.
Meanwhile the provincial cabinet formally expressed its regret over the Ministry of Poverty Alleviation & Social Safety Pakistan's offer/ decision to obtain a US $118.4 million loan from the Islamic Development Bank for the "Poverty Graduation of Extremely Poor & Flood Affected Households Project” in Khyber Pakhtunkhwa. This decision was made in light of Khyber Pakhtunkhwa's current debt burden and the availability of alternative funding sources that offer lower costs and more favorable terms.
With regard to the filing of constitutional petition against the proposed constitutional amendment in the Supreme Court of Pakistan, the cabinet held that the parliament; i.e., both the National Assembly and the Senate, was incomplete at the moment because the PTI has not been given its reserved seats, so no constitutional of such important implications could be enacted.
The Provincial cabinet also approved policy guidelines for Khyber Pakhtunkhwa's participation in the carbon market. Key points of agreement include: 5% Deduction at Source for Nationally Determined Contributions (NDCs); Correspondent Adjustment Fund (CAF): 12% of net revenues generated from carbon credit sales will be allocated to CAF. Of this, 50% will be transferred to the province where the project is based, and the remaining 50% will go to the Pakistan Climate Change Fund or other climate initiatives across the country in consultation with the province and; 1% administrative cost to be charged by the Ministry of Climate Change, subject to endorsement by other provinces.
The provincial cabinet approved a recurring grant of PKR 1.5 billion for public sector universities in Khyber Pakhtunkhwa. Since 2018, the Higher Education Commission's (HEC) annual grants to universities in the province have been frozen.
Copyright Business Recorder, 2024
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