Govt Borrows Rs672B from Banks in H1 FY26

ISLAMABAD: The federal government has flipped dramatically, borrowing Rs672 billion from banks in H1 FY26 — a stark reversal from retiring Rs1.7 trillion last year — as SBP data exposes heavy reliance on domestic banks to plug fiscal holes. Experts warn the bank borrowing addiction — 86% of deficit — starves private credit, fueled by SBP’s Rs2.7T FY25 dividends giving temporary breathing room. Bank investments hit Rs36.7T by June 2025. Domestic financing dominated 91% (FY25) and 88% (FY24), with external shortfalls forcing bank raids — worst in FY23. Borrowing expected to accelerate H2 on revenue misses and liquidity crunch. World Bank (Dec 19 report) approved $700M (up to $1.35B phased) for public resources — demands stronger domestic mobilisation and efficient spending for inclusive growth.