Punjab has become the biggest provincial borrower, taking Rs. 405 billion from the State Bank in just 38 days of the new fiscal year 2025-26, covering the period from July 1 to August 8, 2025.
Official data shows this borrowing is higher than any other province during the same time.
At the same time, the Punjab government has announced the repayment of its long-pending bank debt of Rs. 675 billion. This debt was linked to decades of loans taken for wheat procurement and subsidies.
Clearing this amount has been described by officials as a “historic move,” since it has freed the province from continuous interest payments that had been draining finances for years. By paying off this debt, the Punjab government will now save almost Rs. 500 million every month in interest costs.
The repayment not only reduces the financial burden on the provincial budget but also improves fiscal space for development and other spending priorities. This step highlights a major shift in Punjab’s approach to debt management, moving away from dependence on expensive bank loans.
However, despite this progress, another challenge remains. State-Owned Enterprises (SOEs) are still borrowing heavily from banks and financial institutions.
According to the latest figures, their total outstanding debt has now crossed Rs. 2.16 trillion. This heavy reliance on borrowing by SOEs continues to be a major concern for the overall financial system, as it adds pressure on banks and the government alike.
