Govt retires Rs1.5tr bank debt

The government retired Rs1.541 trillion in commercial banks’ debt during the first half of the current fiscal year against a net borrowing of Rs3.74tr in the same period last year, reflecting improved fiscal management. The State Bank of Pakistan (SBP) data issued on Tuesday showed that during the July 1-3-Jan 3 period of FY25, the government emerged as a net debt retiring institution despite being a net borrower for many years. “Primarily, the government got a big support from the SBP’s profit, which helped it to shift focus from short-term borrowing to long-term debts,” said Samiullah Tariq, Head of Research and Development at Pak-Kuwait Investment Company. The SBP earned Rs3.42tr in FY24 due to unprecedented policy rate and exchange parity gain. The SBP provided Rs2.7tr to the government, which was unexpectedly large liquidity support. The policy interest rate remained at 22pc during the entire FY24, which generated enormous profit for the SBP but cost heavily to the government.