Punjab, the most populous province, has seen its advance rise to the unparalleled mark of Rs. 405 billion within the opening 38 days of the 2025-26 fiscal year making it the highest borrower in Pakistan. The significant value of this amount, totaling between July 1 and August 8, 2025, was financed by the State Bank of Pakistan (SBP) signifying that Punjab is depending highly on funding through the central bank whereas there is still no provision to increase federal borrowing as there is capacity under the IMF conditions.
The provincial borrowing gap is remarkable Comparatively, Punjab has borrowed an amount of Rs. 405 billion compared to Rs. 16 billion, Rs. 21 billion and Rs. 13 billion availed by Sindh, Khyber Pakhtunkhwa and Balochistan respectively. This indicates financial reliance of Punjab on SBP loans is almost 25 times the level of Balochistan and 20 times more than Sindh to demonstrate the growing fiscal imbalance amongst provinces.
Meanwhile, State-Owned Enterprises (SOEs) in Pakistan consumed public funds and drained commercial banks an extra Rs. 65 billion in the operating subsidies. The total debt of these distressed SOEs has now surpassed Rs. 2,166 billion, adding more pressurized burden to the financial system.
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On the federal front, the government, bound by IMF conditions, was able to pay Rs. 55 billion to the State Bank leaving it with a remaining debt of Rs. 5,269 billion as of June 30, 2025. Such repayments notwithstanding, the domination in Punjab is a continued dependency in provincial borrowing to support fiscal demands.
Nearly Rs. 405 billion taken by Punjab at the onset of FY2025-26 highlights the dire financial condition of the region that has become heavily relying on the support of SBP and will remain a focal point in the upcoming fiscal year.
