Government Cuts Domestic Borrowing by 66% in FY25

Pakistan’s federal government has significantly reduced its reliance on domestic banks, with borrowing for budgetary support dropping by 66% in the first 8.5 months of FY2025. The total borrowing fell from Rs 4.06 trillion in the same period last year to Rs 1.386 trillion, according to a recent report.

This dramatic decline is largely due to:
✅ Higher foreign inflows
✅ Record-breaking Rs 3.4 trillion profits from the State Bank of Pakistan (SBP)

The government secured Rs 116 billion from the central bank, in contrast to last year’s Rs 408 billion net repayment. However, most borrowing still came from scheduled banks, as IMF restrictions prevent direct borrowing from the SBP. Despite this, borrowing from scheduled banks has plummeted by 71%, down to Rs 1.27 trillion from Rs 4.4 trillion last year.

Meanwhile, provincial governments have aggressively repaid their debts, with total repayments more than doubling compared to the previous year:
🔹 Punjab – Rs 187B
🔹 Sindh – Rs 226B
🔹 KPK – Rs 77.43B
🔹 Balochistan – Rs 38.75B
🔹 AJK & GB – Rs 51B combined

This financial shift has helped reduce debt pressures, but with lower-than-expected revenue collection