In a significant development for Pakistan’s fiscal policy, the government has acquired an additional debt of Rs 308.27 billion during the week ending March 21, 2025. This borrowing has brought the total net borrowing for the ongoing fiscal year 2025 to Rs 603.25 billion, according to the latest weekly estimates released by the central bank. The figures reflect the government’s continued reliance on debt as a tool to meet its financial requirements and address budgetary shortfalls.
The borrowings undertaken by the government are categorized into three primary areas based on their purpose: budgetary support, commodity operations, and other miscellaneous needs. For the week in question, the largest portion of the borrowing—Rs 303.52 billion—was allocated toward budgetary support. A smaller amount, Rs 1.94 billion, was earmarked for commodity operations, while Rs 2.8 billion was borrowed for other purposes. These categories demonstrate the diversified financial strategies employed by the government to stabilize its finances and ensure continued economic operations.
As of now, the cumulative borrowing for fiscal year 2025 has reached Rs 902.89 billion for budgetary support, Rs 301.69 billion for the retirement of commodity operations, and Rs 2.05 billion for other borrowing needs. The government’s borrowings are typically financed through two primary channels: the State Bank of Pakistan (SBP) and scheduled banks. Both entities play a crucial role in enabling the government to manage its fiscal obligations.
The SBP, as one of the central players in financing the government’s needs, has seen repayments as well. This fiscal year, the government has paid off a net amount of Rs 406.7 billion to the central bank. Of this, Rs 125.29 billion was borrowed by the Federal Government, while the provincial governments collectively retired Rs 477.17 billion. Additionally, the Azad Jammu & Kashmir (AJK) Government and the Gilgit-Baltistan (GB) Government retired Rs 38.11 billion and Rs 16.72 billion, respectively.
In terms of borrowing from scheduled banks, the government has borrowed a net total of Rs 1.31 trillion this fiscal year. This sum includes Rs 1.52 trillion borrowed by the Federal Government, while the provincial governments have paid off Rs 206.25 billion during the same period. These figures underline the significant role that scheduled banks play in financing the government’s fiscal needs, particularly as the country navigates through ongoing economic challenges.
The increase in the government’s debt raises questions about the sustainability of Pakistan’s borrowing practices and their long-term impact on the economy. While the government’s borrowing is essential for managing fiscal deficits and financing critical expenditures, it also adds to the country’s overall debt burden, which may have implications for future fiscal policies and debt servicing requirements.
As Pakistan continues to address its budgetary constraints and fiscal responsibilities, the role of domestic borrowing remains crucial. However, the ability to manage this debt effectively and ensure that it is used for productive purposes will be key to maintaining economic stability and fostering growth in the coming years. Financial experts and policymakers will likely continue to monitor the country’s borrowing trends closely, given their significant impact on the economy and public finances.
This week’s borrowing, while part of the broader strategy to meet fiscal goals, signals the ongoing challenges Pakistan faces in managing its finances. The government’s reliance on both the central bank and scheduled banks highlights the complexities of balancing short-term financial needs with long-term fiscal sustainability.