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Punjab loan surge has put new pressure on provincial finances as the province recorded heavy borrowing in the opening weeks of the fiscal year. The State Bank data shows Punjab borrowed Rs 405 billion from the central bank in the first 38 days of FY2025 26. This level of central bank financing is far higher than in other provinces and changes the shape of fiscal risk across the federation.
Loan Breakdown
The gap between Punjab and the next largest borrower is stark. Sindh availed Rs 16 billion and Khyber Pakhtunkhwa took Rs 21 billion, while Balochistan borrowed Rs 13 billion in the same period. The scale of Punjab borrowing highlights a widening reliance on central bank credit at a crucial moment for macroeconomic policy.
Debt Repayment
At the same time, the provincial government announced that it has paid off a long-standing bank debt of Rs 675 billion that was tied to wheat procurement and subsidy programmes. Officials described the repayment as a historic move that will stop daily interest charges and free resources for social spending. The final instalment of Rs 13.8 billion went to a national bank, and the government rejected requests to roll over the loans.
Wider Impact
State-owned enterprises also added pressure by borrowing an additional Rs 65 billion from commercial banks, and their outstanding liabilities now exceed Rs 2,166 billion. Meanwhile, the federal government made a repayment of Rs 55 billion to the State Bank, which reduced its outstanding balance to about Rs 5,269 billion as of June 30, 2025. These moves matter for monetary management and intergovernmental fiscal balance.
Punjab loan surge has now become a part of national fiscal discourse, and it will dominate transfer discussions, borrowing limits, and the use of central bank funds in the coming months.
