Islamabad, Apr 3, 2025: The federal government’s borrowing from domestic banks for budgetary purposes saw a significant decline of 66% in the first eight and a half months of fiscal year 2025.
This totalled Rs 1.386 trillion, a sharp drop from Rs 4.06 trillion during the same period in the previous fiscal year.
This reduction is primarily due to increased foreign inflows and the record profits achieved by the State Bank of Pakistan (SBP).
For budgetary support, the government borrowed Rs 116 billion from the central bank, marking a notable shift from the Rs 408 billion net repayment seen in the prior year.
The majority of the borrowing came from scheduled banks, following the IMF’s restrictions on borrowing directly from the SBP.
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However, borrowing from scheduled banks fell to Rs 1.27 trillion, which is 71% lower than the Rs 4.4 trillion borrowed during the corresponding period last year.
The reduction in domestic borrowing is largely credited to the transfer of more than Rs 3.4 trillion in record profits from the SBP, which alleviated the government’s debt burden and minimized its reliance on domestic loans.
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While lower-than-expected tax revenue led the government to depend more on domestic banks to cover the fiscal deficit, the sizable profits from the SBP provided substantial relief.
In contrast, provincial governments have made repayments to the SBP and scheduled banks that are more than double the previous year’s amounts.
From July 2024 to March 14, 2025, provincial repayments amounted to Rs 735.58 billion, compared to Rs 312.36 billion during the same timeframe last year.
Balochistan, Khyber Pakhtunkhwa, Sindh, and Punjab repaid Rs 38.75 billion, Rs 77.43 billion, Rs 226 billion, and Rs 187 billion, respectively.
Additionally, the AJK and Gilgit-Baltistan governments repaid Rs 39 billion and Rs 12 billion, respectively.
