Government borrowing from the State Bank of Pakistan (SBP) stayed in negative territory during the first five months of FY26, as Islamabad continued to retire central bank debt and rely on commercial banks to meet its financing requirements.
The federal government retired Rs877.23 billion between July 1 and November 28, 2025, compared with net borrowing of Rs32 billion in the same period last year. During the same five months, the government raised Rs115.4 billion from scheduled banks, whereas a year earlier it had repaid Rs1.681 trillion to them.
Analysts said the trend reflects ongoing fiscal consolidation and adherence to the SBP Act’s prohibition on central bank borrowing. They noted that a record budget surplus and disciplined cash-flow management enabled early repayment.
According to Finance Ministry adviser Khurram Schehzad, the government’s approach “supports policy credibility and will create fiscal space for development, social protection, and growth-enhancing priorities”.
For budgetary support specifically, Islamabad retired Rs804.69bn during July–November, down from Rs2.166tr in the same period last year. The country recorded a 1.6% of GDP fiscal surplus (Rs2.1tr) in July–September FY26, compared to 1.7% in the corresponding quarter of FY25, largely due to substantial SBP profits of Rs2.42tr from large open-market operation positions.
Despite the improved fiscal balance, revenue performance remained strained. The Federal Board of Revenue collected Rs3.835 trillion in July–October, falling short of its Rs4.108tr target by Rs274bn, mainly due to lower domestic sales tax receipts. Year-on-year, however, collections were up 12%.
Meanwhile, bank credit to the private sector remained subdued. Lending during July–November amounted to Rs186.81bn, sharply lower than the Rs1.3tr extended in the same period last year, despite improved financial conditions and signs of economic recovery.
Officials and analysts say the borrowing pattern underscores the government’s focus on reducing dependence on SBP financing while managing fiscal pressures amid weak revenue mobilisation.
