KARACHI: The government has been borrowing heavily from banks, as evidenced by the latest State Bank of Pakistan (SBP) data, which showed that borrowing averaged about Rs500 billion per month in the outgoing fiscal year 2026.

Reliance on borrowings to run government affairs was more concerning when the data revealed that per day borrowing through banks was Rs16.4bn.

And this was only from banks; the corporate sector also invests in government papers, which accounts for about 25 per cent of the total investment in government papers.

Each year, the government borrows more than the previous year, reflecting its sizable spending. It has accumulated large liquidity through taxes and is diversifying its borrowing sources.

The State Bank data released on Monday showed that the government borrowed Rs5.9 trillion in FY26, compared with Rs5.4 trillion in FY25. This aggressive borrowing swelled domestic debt, and its servicing would consume 50 per cent of the total budget outlay in FY27.

The government will spend Rs8 trillion on debt servicing in FY27 and will again borrow trillions for this purpose.

Banks are making huge profits by investing in risk-free paper, but the banker-turned finance minister did not try to reduce this massive borrowing.

The situation is so grave that Rs8tr would go for debt servicing while the entire nation of 250 million people will get just Rs1tr for under PSDP.

Published in Dawn, July 21st, 2026