The federal government borrowed Rs272 billion from domestic banks during the first month of fiscal year 2025-26 (FY2026), despite recording a budget surplus, highlighting the country’s continued dependence on borrowing to meet financing and debt management requirements. The borrowing figures were released by the State Bank of Pakistan (SBP) and analyzed in a report.

According to the report, the government relied primarily on scheduled banks for financing while reducing its dependence on direct borrowing from the central bank. Analysts noted that even with improved fiscal performance, borrowing remains necessary to refinance maturing debt, manage cash flows, and fund government operations.

Economists say Pakistan’s growing debt burden continues to pose a major challenge for fiscal sustainability. Although the government has pledged to improve revenue collection, broaden the tax base, and reduce unnecessary expenditures, public borrowing remains a key tool for meeting budgetary needs and servicing existing obligations.

The latest figures come as Pakistan works to maintain economic stability under ongoing fiscal reforms while balancing development spending with debt repayments. Financial experts believe prudent debt management, stronger tax collection, and higher economic growth will be essential to reducing reliance on borrowing in the coming years and ensuring long-term macroeconomic stability.