In just over a month, Punjab has borrowed a staggering Rs. 405 billion from the State Bank of Pakistan (SBP), making it the largest provincial borrower in the early days of fiscal year 2025–26.
From July 1 to August 8, Punjab’s borrowing outstripped all other provinces combined. In comparison, Sindh borrowed Rs. 16 billion, Khyber Pakhtunkhwa Rs. 21 billion, and Balochistan Rs. 13 billion, according to SBP figures.
Analysts point out that while the IMF restricts the federal government from direct central bank borrowing, provinces have continued to rely heavily on the SBP to plug budget gaps.
Debt repayment hailed as historic
The borrowing spree came alongside Punjab’s announcement that it had cleared a Rs. 675 billion debt — a liability that had weighed on the province for more than 30 years. The debt, mostly tied to wheat procurement and subsidies, had forced the province to pay Rs. 250 million in daily interest.
Officials said the final instalment of Rs. 13.8 billion was repaid to the National Bank of Pakistan, rejecting banks’ requests for loan rollovers. This move, they claimed, saved Punjab an additional Rs. 500 million in monthly interest payments.
SOEs dig deeper into debt
Despite Punjab’s repayment milestone, state-owned enterprises (SOEs) continued to accumulate losses. In July alone, SOEs borrowed Rs. 65 billion from commercial banks, pushing their combined debt beyond Rs. 2,166 billion.
Meanwhile, the federal government, though bound by IMF conditions, managed to repay Rs. 55 billion to the State Bank, cutting its outstanding debt to Rs. 5,269 billion as of June 30, 2025.