Punjab has emerged as the country’s biggest provincial borrower, securing a massive Rs. 405 billion loan from the State Bank of Pakistan (SBP) in only 38 days — from July 1 to August 8 of the current fiscal year (2025–26).
Despite the federal government being barred by IMF conditions from borrowing directly from the SBP, provinces continue to tap the central bank for financing. Punjab’s borrowing dwarfed that of other provinces, nearly 25 times higher than Balochistan and more than 20 times greater than Sindh during the same period.
According to SBP data, Sindh borrowed Rs. 16 billion, Khyber Pakhtunkhwa Rs. 21 billion, and Balochistan Rs. 13 billion during this time.
Clearing decades-old debt
Interestingly, the surge in borrowing coincided with Punjab’s announcement that it had fully repaid a long-standing debt of Rs. 675 billion that had accumulated over three decades, mostly from wheat procurement and subsidy programmes.
Officials termed the repayment a “historic step,” saying it ended daily interest payments of Rs. 250 million. The last instalment of Rs. 13.8 billion was paid to the National Bank of Pakistan, despite pressure from banks to roll over the loans. By clearing the debt, Punjab reportedly saved itself from an additional Rs. 500 million in monthly interest expenses.
SOEs remain in crisis
Meanwhile, Pakistan’s state-owned enterprises (SOEs) remain a financial black hole. Struggling to cover expenses, SOEs borrowed another Rs. 65 billion from commercial banks, pushing their total debt to an alarming Rs. 2,166 billion.
At the federal level, despite restrictions, the government managed to repay Rs. 55 billion to the SBP, bringing down its outstanding debt to Rs. 5,269 billion as of June 30, 2025.
