Govt borrowing crosses FY25 level before year-end

KARACHI: The government borrowed Rs122 billion per day from banks during June 15-19, taking total borrowing in the unfinished fiscal year beyond the full-year level recorded in FY25, according to the latest State Bank data issued on Tuesday.

The data showed that the government borrowed Rs611bn in five working days from June 15 to June 19, indicating a sharp increase in its reliance on domestic borrowing before the close of FY26.

The economy is already overloaded with domestic debt, which crossed Rs58 trillion by April 2026, and could rise further by the end of the fiscal year.

According to the SBP data, the government borrowed Rs5.434tr in FY25, while borrowing in the unfinished FY26 has already exceeded Rs5.529tr. In FY25, borrowing till June 20 stood at Rs4.71tr, showing that the pace of borrowing this year is much higher than the previous year.

The direct impact of rising borrowing is reflected in limited development spending, as the government must allocate a large share of its resources to debt servicing. The government is expected to spend Rs8tr on debt servicing in FY27, leaving little fiscal space for economic development.

The government has allocated about Rs1tr for the federal Public Sector Development Programme for FY27. The gap between Rs8tr in debt servicing and Rs1tr for the PSDP........

© Dawn Business