Pakistan’s federal government has significantly ramped up borrowing from banks, exceeding Rs. 5.7 trillion in the first 10 months of fiscal year 2023-2024 (July 1, 2023 – April 19, 2024). This data, released by the State Bank of Pakistan (SBP), marks a staggering 103% increase compared to borrowing during the same period in the previous fiscal year (Rs. 2.8 trillion).
It’s important to note that the government has repaid Rs. 738 billion in net loans to the SBP during this period, adhering to IMF regulations against direct central bank borrowing.
The current fiscal year’s borrowing from scheduled banks has already surpassed the total debt accumulated in the entirety of fiscal year 2022-2023 (Rs. 3.6 trillion). Net government sector borrowing for budgetary support also hit Rs. 4.83 trillion in the first 10 months of the current fiscal year, compared to Rs. 3.75 trillion in the previous year.
For running state affairs, the net federal government borrowing stands at a substantial Rs. 4.5 trillion, exceeding the total borrowed by the previous government in the same timeframe.
Meanwhile, financing from Islamic banks witnessed a sharp decline of 90% year-on-year. This dropped from Rs. 448 billion in the entire fiscal year 2022-2023 to only Rs. 44 billion in the current fiscal year’s first 10 months. Islamic banking branches of conventional banks provided Rs. 23.7 billion in credit during the reviewed period, compared to a negative impact of Rs. 425 billion last year.
This data sheds light on the federal government’s significant financial activities and the evolving trends in borrowing and financing within Pakistan’s banking sector.