The federal government’s borrowing from scheduled banks for budgetary support has experienced a drastic decline of 58% in the first two months of fiscal year 2025 (FY25).

Statistics from the State Bank of Pakistan (SBP) indicate that the government borrowed Rs660.3 billion from scheduled banks between July 1 and August 30, 2024, compared to Rs1.584 trillion during the same period in FY24. This marks a substantial decrease of Rs924.3 billion.

In the first two months of fiscal year 2025, the federal government repaid Rs 176.6 billion to the State Bank of Pakistan (SBP), a significant decrease from Rs 714 billion repaid during the same period in FY24.

During this review period, total net borrowings by the government, including budgetary support and commodity financing, fell by 27%, amounting to Rs248.153 billion. From July to August FY25, federal and provincial governments raised Rs681 billion for various purposes, including budgetary support and commodity financing, compared to Rs929 billion during the same months of the previous fiscal year.

Analysts attribute the recent decline in borrowing to improvements in foreign inflows and revenue collection, though they expect borrowing may rise again to address ongoing financial needs.

In terms of repayments, the Balochistan government returned Rs23.4 billion and Khyber Pakhtunkhwa repaid Rs30 billion to the SBP. Meanwhile, the Sindh government borrowed Rs5 billion, while the Punjab government borrowed Rs294 billion from the SBP during the same timeframe.

Additionally, the SBP has announced auction calendars for the sale of short-term and long-term government securities, aiming to borrow Rs6.295 trillion for the federal government over the next three months (September-November). Of this amount, Rs3.475 trillion will be raised through the sale of 3-month, 6-month, and 12-month Market Treasury Bills.

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