The Punjab government has emerged as the country’s largest borrower from the State Bank of Pakistan (SBP), drawing Rs. 405 billion in budgetary support during the first 38 days of the current fiscal year, far outpacing all other provinces combined.
From July 1 to Aug. 8, 2025, Punjab’s borrowing eclipsed Sindh’s Rs. 15.78 billion, Khyber-Pakhtunkhwa’s Rs. 21.6 billion, and Balochistan’s Rs. 13.6 billion, according to the central bank. Overall, Punjab borrowed over 25 times more than Balochistan and more than 20 times Sindh.
The excessive borrowing comes amidst a standing condition of the International Monetary Fund (IMF) barring the federal government from direct borrowing from the central bank to contain inflation. While Islamabad has complied, repaying Rs. 55 billion during the same period and reducing its outstanding debt with the SBP to Rs. 5.27 trillion, the provinces remain exempt from such restrictions.
Provincial spending
The aggressive borrowing by Punjab has drawn criticism from economists and raised questions over fiscal discipline at the provincial level. Economist Shahid Mahmood told the Nukta news outlet that Punjab’s expenditure surge included both new development projects and the creation of new departments, significantly raising administrative costs.
“Despite being subsidized by the federal government, Punjab is overspending and leveraging central bank financing unchecked,” he said.
A former federal finance secretary, speaking on condition of anonymity, said it was a “highly unusual” borrowing pattern. “All provinces are currently sitting on cash balances. I don’t see any justification for Punjab to borrow this aggressively, especially when other provinces are showing restraint,” the official said. He acknowledged, however, that Punjab had to meet certain debt obligations and recently cleared its wheat procurement debt.
Cash surplus commitments
The borrowing spree has complicated Pakistan’s commitments under its IMF program. The Prime Minister’s Office has reportedly sought an explanation from both the Punjab government and the Ministry of Finance over the province’s failure to deliver the promised budget surplus, a key IMF performance benchmark.
Punjab has attributed the shortfall to delays in federal tax transfers under the National Finance Commission (NFC) Award and shortfalls in Federal Board of Revenue collections. However, critics point out that other provinces faced the same shortfalls but still performed better. Balochistan, in particular, exceeded its agreed surplus target.