Govt borrowing drops 69% to Rs 1.32 trillion, private sector credit rises in FY25

Government sector borrowing for budgetary support fell sharply by 69%, or Rs 2.9 trillion, during the first nine months of fiscal year 2025. 

According to the Economic Survey of Pakistan, government borrowing for budgetary support decreased to Rs 1.320 trillion, down from Rs 4.220 trillion in the same period of fiscal year 2024, reflecting a decline of 69%.

This reduction in borrowing follows a significant fiscal tightening, with the government also retiring Rs 287.4 billion to the State Bank of Pakistan (SBP), compared to Rs 654.7 billion during the same period last year. 

Additionally, borrowing from scheduled banks stood at Rs 1.608 trillion, down from Rs 4.874 trillion in FY 2024. 

Consequently, net government sector borrowing dropped to Rs 1.019 trillion, a 73% decrease from Rs 3.856 trillion during the same period last year.

The fiscal deficit stood at 2.4% of GDP during July-March FY 2025, showing improvement compared to 3.7% during the same period in FY 2024, indicating fiscal consolidation efforts by the government.

In contrast, credit to the private sector saw a sharp increase, with loans rising to Rs 767.6 billion, up from Rs 265.2 billion in FY 2024. The manufacturing sector accounted for a significant share of this expansion, with loans increasing by Rs 573.1 billion. 

Other sectors, including textiles, construction, accommodation, and information services, also saw notable growth in credit.