PESHAWAR
Khyber Pakhtunkhwa government has launched the KP Public Debt Management Fund (DMF) in 2024-25 fiscal year, kickstarting it with a substantial PKR 150 billion in seed capital. This initiative aims to bolster province’s ability to service its public debt and ultimately lower borrowing costs.
According to a spokesperson of KP Finance Department, the DMF operates by investing the government’s unutilized funds into secure, income-generating instruments. This strategy is designed to create additional fiscal flexibility for development projects and improved public services.
The fund is governed by KP Debt Management Fund Rules, 2024, and overseen by a Management and Oversight Committee led by the Chief Secretary while a specialized team within Finance Department manages the fund.
The initial PKR 150 billion transferred to DMF for the 2024-25 fiscal year has been strategically invested in low-risk, high-yield options such as commercial bank term deposits and short-term government securities (like T-Bills). These investments have already begun generating income, which will be used to reduce the burden of debt servicing on annual budget.
The establishment of DFM represents a significant shift in KP’s approach to managing its debt and liquidity. By transforming idle government funds into productive investments, the DMF would help finance a portion of debt obligations without solely relying on budgetary allocations.
This not only supports debt servicing but also fosters financial discipline and more efficient cash management. The province plans to continue expanding fund’s investment portfolio prudently to ensure consistent returns while safeguarding public resources.
As the DMF matures, it’s expected to play an increasingly vital role in reducing borrowing costs and enhancing fiscal sustainability. The fund is envisioned as a long-term financial tool that will contribute to both budget stability and improved debt management practices for Khyber Pakhtunkhwa.
