Jul-Mar: Pakistan govt borrowing slumps 69%
KARACHI: The government sector borrowing for budgetary support declined sharply, ie, 69 percent or Rs 2.9 trillion during the nine months of this fiscal year (FY25).
According to Economic Survey of Pakistan, issued on Monday, during July-March FY 2025, the government sector borrowing for budgetary support decreased to Rs 1.320 trillion compared to Rs 4.220 trillion during the same period last year (FY24), showing a notable declined of Rs 2.9 trillion. During the period, the government retired Rs 287.4 billion to the State Bank of Pakistan (SBP) against a retirement of Rs 654.7 billion last year.
Similarly, the government borrowed Rs 1.608 trillion from scheduled banks, significantly less than Rs 4.874 trillion in the same period last year. Therefore, net government sector borrowing decreased from Rs 3.856 trillion in July-March FY 2024 to Rs 1.019 trillion in same period of FY25.
Pakistan debt stock reaches all-time high of Rs75trn
During the period under review, low government borrowing reflects fiscal consolidation as fiscal deficit remained 2.4 percent of GDP during July March FY 2025 compared to 3.7 percent the same period last year.
On the other side, credit to private sector rose markedly to Rs 767.6 billion during July to March of FY25, a substantial increase from Rs 265.2 billion in the same period last year. Within the private sector credit, loans to businesses observed expansion of Rs 830.9 billion compared borrowing of Rs 307.8 billion during same period last year.
According to Economic Survey, this expansion was primarily driven by the manufacturing sector, which accounted for Rs 573.1 billion (increase of Rs 278.7 billion). Across sectors, credit to food sector declined, whereas the textile sector witnessed a sharp surge in borrowing, reaching Rs 255.1 billion compared to Rs 26.7 billion in the previous year.
Other sectors also exhibited strong credit growth: construction sector credit rose to Rs 19.9 billion (from Rs 4.2 billion), accommodation and food services jumped to Rs 40.4 billion (from Rs 2.6 billion), and the information and communication sector rebounded significantly with a credit inflow of Rs 103.5 billion from a net retirement of Rs 3.0 billion.
The disaggregated data shows that the increase in credit to private sector was largely concentrated in working capital loans, which rose to Rs 611.8 billion July-March FY 2025 from Rs 275.7 billion last year. Fixed investment loans also picked up significantly, owing to higher investment in petroleum, sugar and fertilizer.
Fixed investment loans surged to Rs 236.7 billion during the period under review, up from Rs 47.2 billion last year. The revival in credit appetite is largely attributed to a more accommodative monetary policy stance, which lowered borrowing costs. Additionally, the relaxation of import restrictions on raw materials and capital goods, coupled with an improved outlook for business activity, supported the expansion in investment and operational financing.
During July–March FY 2025, commodity financing recorded a net retirement of Rs 303.4 billion, slightly lower than Rs 362 billion observed in the same period last year. This was mainly contributed by Wheat financing, with a net retirement of Rs 326.9 billion, lower than Rs 427.7 billion recorded during the same period last year.
The continued contraction in wheat financing reflects a significant policy shift, as the federal government has stepped back from regulating wheat prices and the Pakistan Agricultural Storage & Services Corporation (Passco) has not participated in wheat procurement during this period. This policy realignment contributed to reduced financing needs within the wheat supply chain.
Copyright Business Recorder, 2025
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
8 hours ago
- Business Recorder
Budget: JI assails govt for ‘neglecting' Karachi
KARACHI: Jamaat-e-Islami (JI) Karachi Chief, Monem Zafar Khan has strongly criticised the budget 2025-26, claiming it demonstrated a clear neglect of Karachi — the economic hub of the country. Speaking at a press conference held at Idara Noor-e-Haq, he said that Karachi was conspicuously missing from the list of federal priorities. Flanked by several town chairmen, Monem Zafar Khan demanded an allocation of Rs 500 billion for Karachi's development, along with Rs 2 billion for each town and Rs 2.5 million for every Union Council (UC), in order to address the city's pressing issues. Highlighting the severe water crisis in Karachi, he said the K-IV water supply project — vital for the city's future — appears to have been sidelined by the federal government. Although Rs 40 billion were requested, the budget allocates just Rs 3.2 billion for the project, despite its scheduled completion by June 2026. He pointed out that while the Water Resources Division was allocated Rs 133 billion, the K-IV project's share amounts to only 2.5 percent of that total. The JI Karachi chief denounced the federal budget as a 'jigsaw puzzle of statistics' that ignores the city's core issues. He noted that the Karachi IT Park, launched in 2022 and expected to complete by 2026, received only Rs6 billion — a figure he described as 'peanuts' in relation to the scale and importance of the project. He further criticised the reduction in the Higher Education Commission's budget from Rs 65 billion to Rs 39.5 billion, and condemned the 18 percent tax imposed on the solar energy sector, calling it a severe blow to an emerging industry. Monem Zafar Khan lambasted the federal government for failing to complete several critical transport projects in the city, including the Green Line Bus, 20-bus Orange Line, and the Red Line. He stressed that Karachi has long been deprived of its fair share in resources, despite being the financial lifeline of Pakistan. Referring to historical trends, he said that while Sindh received Rs 178 billion from the federal government in 2007-08, the allocation has now increased to Rs 1,853 billion. Yet, the provincial government continues to centralise power, ignoring the urgent need for administrative and fiscal devolution. Monem Zafar Khan also turned his attention to what he described as rampant corruption and poor governance in solid waste management, particularly under the Pakistan Peoples Party (PPP). He accused the Sindh government of outsourcing Karachi's waste management to inefficient and corrupt contractors, leading to severe issues during Eid-ul-Azha. He shared specific examples, including the case of a JI-run town that submitted its Eid waste management plan well in advance. The Solid Waste Management Board (SWMB) responded only two days before Eid, disregarding all local recommendations and issuing outdated instructions. In another case, while the SWMB committed to sending 15 pickup vehicles, only 10 were dispatched on the day — raising questions about the misuse of funds allocated for vehicles, staff, and fuel. The JI leader also narrated an incident where a town chairman lodged a complaint with the mayor about waste management failures. Instead of holding the contractor accountable, the mayor suspended the town's Deputy Director of Solid Waste, he said. In a scathing indictment, Monem Zafar Khan also accused the MQM, PPP, and PML-N of complicity in a 'fake census', which, according to him, cut Karachi's population in half. This undercounting, he said, has serious consequences for resource allocation and representation. He also highlighted the disparity between the government's treatment of the poor and lawmakers. 'On one hand, 100 million Pakistanis live below the poverty line. On the other, the government has approved a six hundred percent increase in the speaker's allowances and over 140 percent salary hikes for lawmakers,' he stated. Monem Zafar Khan urged the federal government to revise its approach and recognise Karachi's pivotal role in the national economy. He called for transparent governance, fair distribution of resources, and greater autonomy for local administrations to ensure the city's problems are addressed effectively. Copyright Business Recorder, 2025
Business Recorder
8 hours ago
- Business Recorder
Civil servants: Institutional restructuring, compensation packages discussed
ISLAMABAD: Under the chairmanship of Planning Minister Ahsan Iqbal, the 13th meeting of the Civil Service Reforms Committee was convened Wednesday. The meeting focused on key agenda items, including institutional restructuring and reviewing compensation packages for civil servants. Presentations were made by the Cabinet Division on institutional restructuring, while officers from the Finance Division and Economic Affairs Division (EAD) briefed the Minister on current situation and proposed recommendations to review financial compensation. Discussions centered around modernizing recruitment criteria to cater to the evolving needs of the civil service. The Minister emphasized the need for restructuring service in a way that allows officers to differentiate themselves based on performance rather than their initial service allocation. 'A strategy must be devised to enable top talent at senior level to compete for key positions on merit,' stated the Minister. Regarding financial compensation, an analysis presented by EAD and Finance Division officers highlighted the challenges faced by civil servants, including inadequate medical support, transportation, and accommodation. Key findings highlighted the unavailability of affordable housing and transportation in Islamabad as major deterrents for officers. Several recommendations were discussed at length and direction was given by Minister to incorporate the most viable recommendations into summary to be presented before the PM. The meeting participants were informed that the state bears a significant burden of Rs. 1.04 trillion annually for pension payments to two million officers. Finance Division representatives apprised the Minister that significant pension reforms have been introduced as part of the Budget 2025-26, aiming to rationalise public spending and reduce the growing fiscal burden posed by the existing pension system. The Minister stressed that pension should not be a 'dead investment' and suggested utilizing the skills of retired officers in various organizations. To address medical support issues, a summary prepared by the Ministry of National Health Services proposing health insurance as a viable alternative was discussed. The Minister directed relevant officials to conduct a comparative analysis of allowances drawn by civil servants in federal and provincial governments. Recommendations were made to make it mandatory for civil servants to serve in the federal government for a specific period to be eligible for promotion. The committee discussed various suggestions to address issues related to remuneration, accommodation, transport, and monetization. The Minister emphasized the need for administrative steps to attract officers to serve in the federal government, rather than relying solely on financial incentives. The meeting concluded with Minister's direction to compile a final report, incorporating all recommendations and findings, for discussion in the next meeting. Copyright Business Recorder, 2025
Business Recorder
9 hours ago
- Business Recorder
Cotton market: 200 bales of new crop sold at Rs 16,000 per maund
LAHORE: The local cotton market on Wednesday remained steady and the trading volume remained low. Cotton Analyst Naseem Usman told Business Recorder that the current cotton prices in Sindh and Punjab is in between Rs 16,500 and Rs 17,500 per maund, depending on quality and payment. Approximately, 200 bales of new cotton crop of Tando Adam were sold Rs 16,000 per maund and 400 bales of Tando Adam were sold at Rs 16000 per maund. The Spot Rate remained unchanged at Rs 16,900 per maund. Polyester Fiber was available at Rs 333 per kg. Copyright Business Recorder, 2025
