Karachi: The Government of Pakistan borrowed approximately Rs5.9 trillion from commercial banks during the fiscal year 2025–26 (FY26) to meet its financing requirements, reflecting continued reliance on the domestic banking sector amid rising budgetary needs. The latest figures released by the State Bank of Pakistan (SBP) show that government borrowing remained elevated despite efforts to improve fiscal management.
According to the data, the bulk of the borrowing came through investments in government securities, including Treasury Bills (T-bills) and Pakistan Investment Bonds (PIBs). Banks continued to allocate a significant portion of their liquidity toward government debt, attracted by relatively high returns and lower investment risk compared with private-sector lending.
Economists note that while domestic borrowing helps the government finance its fiscal deficit, it may also reduce the availability of credit for businesses and private-sector investment. This phenomenon, commonly referred to as the “crowding out” effect, can limit economic expansion if banks prioritize government securities over lending to industries and businesses.
Financial analysts say the government’s future borrowing requirements will depend on tax revenue growth, fiscal reforms, external financing inflows, and overall economic performance. They also emphasize that reducing the fiscal deficit and broadening the tax base will be essential to lowering reliance on domestic borrowing in the coming years.
