Govt borrows Rs5.9tr from banks in FY26
KARACHI: The government has been borrowing heavily from banks, as evidenced by the latest State Bank of Pakistan (SBP) data, which showed that borrowing averaged about Rs500 billion per month in the outgoing fiscal year 2026. Reliance on borrowings to run...
Pakistan’s federal government borrowed Rs5.9 trillion from banks in the fiscal year 2026, according to State Bank of Pakistan data reported by Dawn Business, underscoring the scale of domestic financing being used to meet public spending needs.
The data, released on Monday and cited in a monitored public feed, shows the government relied heavily on bank borrowing throughout the year, averaging about Rs500 billion a month. On a daily basis, that worked out to roughly Rs16.4 billion in borrowing through banks, highlighting how frequently the state tapped the banking system for funds.
The amount was higher than the Rs5.4 trillion borrowed in FY25, indicating that the government’s dependence on bank financing continued to rise. The report said the trend reflects growing spending pressures and the need to support government operations through domestic resources.
The feed summary also noted that banks are not the only buyers of government paper. The corporate sector reportedly accounts for about a quarter of total investment in government securities, showing that public borrowing is drawing funds from multiple parts of the financial system.
Rising domestic debt has also increased the burden of repayment. According to the summary, debt servicing in FY27 is expected to consume 50 per cent of the total budget outlay, with the government projected to spend Rs8 trillion on servicing debt. The report said that further large-scale borrowing is likely to continue, in part to help finance those obligations.
The summary also pointed to the attractiveness of government paper for banks, which earn significant profits from risk-free investments in state securities. It said the finance minister did not take steps to cut the level of borrowing, despite the growing pressure on public finances.
The figures suggest that debt servicing and fresh borrowing are becoming central features of the fiscal framework, leaving less room for development spending. The summary said the Public Sector Development Programme, or PSDP, would receive Rs1 trillion for a population of about 250 million people, while a far larger amount would go toward debt servicing.
This article is based on a monitored public feed and summarizes information reported by Dawn Business.
Source: Dawn Business - https://www.dawn.com/news/2017153/govt-borrows-rs59tr-from-banks-in-fy26
