Federal govt borrows Rs5.5trn from commercial banks in 10 months

The federal government borrowed Rs5.5 trillion from commercial banks from July 1 to April 5, 2023-24, an increase from Rs2.95 billion in the corresponding period of the previous fiscal year, according to the State Bank of Pakistan (SBP). 

As per SBP data released on April 13, the government borrowed Rs657 billion in just the last week, bringing its total borrowing for the period to Rs5.5 trillion. 

This level of borrowing has placed substantial pressure on the economy, as the government now allocates most of its revenue to servicing domestic debt.

For fiscal year 2023, the government’s borrowing from banks was Rs3.7 trillion. However, this fiscal year’s borrowing has already surpassed the previous year’s total by Rs1.784 trillion in just nine months.

It is common for the government to increase borrowing from banks in the final quarter of the fiscal year to enhance reported economic performance metrics.

The economy faces severe challenges, with most generated revenue being consumed by domestic debt repayment and interest. This restricts the government’s ability to fund new development programs, leading to reduced allocations for other sectors.