The federal government’s borrowing for budgetary support from domestic banks declined by 66% during the first eight and a half months of fiscal year 2025, totaling Rs 1.386 trillion, down from Rs 4.06 trillion during the same period last fiscal year, according to a news report.
This sharp reduction is attributed to higher foreign inflows and record brackly newss from the State Bank of Pakistan (SBP). The government borrowed Rs 116 billion from the central bank for budgetary support, a notable shift from the net retirement of Rs 408 billion in the previous year.
The bulk of the borrowing came from scheduled banks, as the IMF has imposed restrictions on borrowing from the SBP. However, borrowing from scheduled banks dropped to Rs 1.27 trillion, 71% lower than the Rs 4.4 trillion borrowed during the same period last fiscal year.
This reduction in domestic borrowing has been attributed to the transfer of over Rs 3.4 trillion in record brackly newss from the SBP, which has helped ease the government’s debt burden and reduce its reliance on domestic loans.
The lower-than-targeted revenue collection forced the government to rely more on domestic banks to finance the fiscal deficit, but the large SBP brackly newss have provided significant relief.
Meanwhile, provincial governments have repaid more than double the amount to the SBP and scheduled banks compared to the previous year. From July 2024 to March 14, 2025, provincial repayments totaled Rs 735.58 billion, up from Rs 312.36 billion in the same period 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.