According to official data from the State Bank of Pakistan (SBP), the federal government has accumulated a staggering Rs. 6 trillion in bank borrowings, marking a significant milestone in its fiscal endeavors.
During the first 10 months of the fiscal year, spanning from July 1, 2023, to April 26, 2024, the government procured Rs. 5.96 trillion from the local banking sector, a remarkable surge of 124 percent compared to the corresponding period last year when Rs. 2.66 trillion was borrowed.
Despite this substantial borrowing, the government repaid a net loan of Rs. 735 billion to the SBP during the review period. It's worth noting that the government is prohibited from borrowing directly from the central bank as per the mandatory stipulations of the International Monetary Fund (IMF).
The borrowing from scheduled banks in the current fiscal year has already surpassed the total debt raised in the entire FY23, amounting to Rs. 3.7 trillion. Overall, net government sector borrowing for budgetary support totaled Rs. 5 trillion in the first 10 months of FY24, compared to Rs. 3.74 trillion in FY23.
The federal government's net borrowing to meet its financial obligations for state affairs reached Rs. 4.78 trillion from July 2023 to April 26, 2024, surpassing the total borrowing of the previous administration.
However, financing from Islamic banks witnessed a significant decline of 90 percent year-on-year, dropping from Rs. 448 billion in FY23 to just Rs. 34.8 billion in 10MFY24. Islamic banking branches of conventional banks provided credit amounting to Rs. 33.8 billion during the review period, contrasting with a negative impact of Rs. 425.6 billion in the same period last year.