PESHAWAR: The Khyber Pakhtunkhwa (KP) government has decided to amend the rules for securing loans and grants by any provincial department.
An important meeting regarding proposed amendments to the Khyber Pakhtunkhwa Fiscal Responsibility and Debt Management Act was held here on Wednesday under the joint chairmanship of Provincial Minister for Law, Human Rights and Parliamentary Affairs Aftab Alam and Adviser to the Chief Minister on Finance Muzammil Aslam.
The meeting was attended by the Secretary of Law, officials from the Finance Department, Law Department and other relevant departments. Participants reviewed the proposed amendments in detail, focusing on their legal, financial and administrative implications. A comprehensive briefing was given on existing provisions of the Act, the proposed changes and the rationale behind them.
Special emphasis was placed on strengthening fiscal discipline, setting prudent debt limits, reducing budget deficits and improving investment planning.
The proposed amendments include restricting the purposes of borrowing, abolishing the provision allowing loans for temporary cash requirements, increasing investment in non-financial assets and lowering debt servicing limits to create greater fiscal space for development spending.
Officials informed the meeting that the amendments aim to enhance financial discipline in the province, ensure effective debt management and align provincial legislation with principles of transparency and international best practices.
Proposals were also discussed to reduce the ceiling on total public debt and guarantees, remove pension liabilities from the debt framework and regulate borrowing by public sector entities under aggregate limits.
The meeting also reviewed amendments to Section 11 of the Act, proposing the establishment of a Debt Management Office in place of the existing Debt Management Unit. The proposed office will be headed by a Director General, supported by professionally recruited staff appointed on a contractual basis through a competitive process, with clearly defined tenure and performance criteria.
Addressing the meeting, Law Minister Aftab Alam said the provincial government firmly believes in responsible fiscal policies, transparent governance and legislation in line with constitutional requirements. He directed that the proposed amendments be finalised in accordance with legal procedures for submission to the provincial cabinet and the assembly.
It was further informed that, following approval of the amendments, no department or autonomous body will be able to obtain loans without prior approval of the provincial government, while grants will require the approval of the Chief Minister.
Adviser on Finance Muzammil Aslam stated that the reforms are aimed at minimising reliance on borrowing and encouraging departments to generate their own resources, which would help reduce fiscal deficits and unnecessary expenditures.
The meeting also agreed that consultations with all relevant stakeholders would be ensured before finalising the legislation to make the proposed amendments practical and in the best financial interest of the province.
