Govt Borrows Rs. 4.9 Trillion From Banks in 11.5 Months Despite Higher Tax Revenues

The government borrowed more than Rs. 4.9 trillion from commercial banks during the first eleven and a half months of FY26, surpassing borrowing during the same period last year despite a sharp rise in tax revenues.

According to data released by the State Bank of Pakistan, government borrowing from banks totaled Rs. 4.918 trillion between July 1, 2025 and June 12, 2026, compared with Rs. 3.7 trillion during the corresponding period a year earlier. With 18 days remaining in the fiscal year, analysts expect total borrowing to exceed the Rs. 5.434 trillion recorded in FY25.

Over the past three fiscal years, from FY24 through June 12 of FY26, cumulative government borrowing from banks has reached Rs. 18.86 trillion, exceeding the total federal budget outlay of Rs. 17.57 trillion proposed for FY27.

The continued reliance on bank borrowing has pushed up debt servicing costs, which account for more than half of the FY27 budget. The government has earmarked nearly Rs. 8 trillion for debt repayments in the upcoming fiscal year, leaving only about Rs. 1 trillion for the Public Sector Development Programme.

Meanwhile, domestic debt rose by Rs. 5.566 trillion over the past year to Rs. 58.089 trillion in April. Since June 2025 alone, domestic debt has increased by Rs. 3.6 trillion, according to SBP data.

Economists say rising expenditures and the absence of a clear strategy to contain spending are forcing the government to rely heavily on borrowing, even as tax collections continue to grow. They argue that the emphasis remains on generating additional revenue rather than reducing inefficiencies in public spending.