The government borrowed more than Rs. 4.9 trillion from commercial banks during the first eleven and a half months of FY26, exceeding borrowing during the same period last year despite a sharp increase in tax revenues.

According to data released by the State Bank of Pakistan, government borrowing from banks stood at Rs. 4.918 trillion between July 1, 2025 and June 12, 2026, compared with Rs. 3.7 trillion in the corresponding period a year earlier.

With 18 days still remaining in the fiscal year, analysts expect total bank borrowing to surpass the Rs. 5.434 trillion recorded in FY25.

Over the past three fiscal years, from FY24 through June 12 of FY26, cumulative government borrowing from banks has reached Rs. 18.86 trillion, exceeding the total federal budget outlay of Rs. 17.57 trillion proposed for FY27.

The continued dependence on bank borrowing has added to debt servicing pressures, which account for more than half of the FY27 budget. The government has allocated nearly Rs. 8 trillion for debt repayments in the upcoming fiscal year, leaving only around Rs. 1 trillion for the Public Sector Development Programme.

Meanwhile, domestic debt rose by Rs. 5.566 trillion over the past year to Rs. 58.089 trillion in April. Since June 2025 alone, domestic debt has increased by Rs. 3.6 trillion, according to central bank data.

Economists say rising expenditures and the absence of a credible strategy to contain spending are forcing the government to rely heavily on borrowing even as tax collections continue to improve.

They argue that the policy focus remains tilted toward raising additional revenue rather than addressing inefficiencies in public spending.