The federal government retired a net Rs2.24 trillion in debt during the first two months of the current fiscal year, including Rs2.02 trillion repaid in the week ending August 28, according to the latest weekly estimates released by the State Bank of Pakistan (SBP).
The sharp reduction in government borrowing was driven almost entirely by repayments made for budgetary support, reflecting the government’s continued efforts to reduce its outstanding liabilities.
The SBP classifies government borrowing into three categories: budgetary support, commodity operations and others.
During the week under review, the government retired a net Rs2.02 trillion under budgetary support. In contrast, borrowing for commodity operations increased marginally by Rs1.03 billion, while another Rs122 million was repaid under the “others” category.
As a result, cumulative figures for FY27 show net debt retirement of Rs2.22 trillion for budgetary support, Rs15.92 billion for commodity operations and Rs1.21 billion under other heads.
The government’s budgetary financing primarily comes from two sources: the State Bank of Pakistan and scheduled commercial banks.
Data showed that the government repaid a net Rs430.24 billion to the central bank during the current fiscal year.
The federal government accounted for the bulk of these repayments, retiring Rs1.34 trillion owed to the SBP. However, provincial governments recorded net borrowing of Rs923.45 billion over the same period, partially offsetting the federal repayments. Meanwhile, the governments of Azad Jammu and Kashmir and Gilgit-Baltistan retired Rs9.43 billion and Rs8.16 billion, respectively.
Repayments to scheduled banks were even larger, with the government retiring a net Rs1.79 trillion so far in FY27.
Of this amount, the federal government repaid Rs1.93 trillion to commercial banks, while provincial governments recorded fresh borrowing of Rs137.52 billion.
The latest figures suggest the federal government has relied on debt retirement rather than fresh borrowing to finance its fiscal operations during the opening months of FY27, although provincial governments continued to access bank financing.
Read next: SBP weekly report shows over Rs500 million debt retired