Karachi, April 7, 2026 – Khurram Ijaz, General Secretary of the Businessmen Panel Progressive (BMPP) and former Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has expressed strong concern over the federal government’s rapidly rising borrowing from commercial banks, warning that it will further squeeze credit availability for the private sector.
Citing newly released data from the State Bank of Pakistan (SBP), Ijaz noted that government borrowing from commercial banks surged by 61% during the first nine months of FY2025–26. From July to March, borrowing climbed to Rs2.90 trillion, up sharply from Rs1.80 trillion in the same period last year. He stressed that such aggressive borrowing through Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) reflects an increasing dependence on domestic financing to cover the widening budget deficit.
Ijaz acknowledged the government’s significant repayment of Rs2.14 trillion to the central bank during the same period—aligned with the Fiscal Responsibility and Debt Limitation framework—but underscored that this shift has placed undue pressure on commercial banks, leaving less room for businesses seeking financing.
“When the government aggressively taps into commercial bank resources, it directly crowds out the private sector,” Ijaz said. “Industries depend on affordable and accessible credit to expand, invest, and generate employment. This trend sends a worrying signal for economic growth.”
Despite a substantial decline in the policy rate—from 22% to 10.50%—private sector borrowing has shown only a marginal increase, rising to Rs833 billion from Rs778 billion last year. According to Ijaz, this muted response underscores the structural challenges created by excessive government borrowing.
He warned that sustained crowding-out could undermine industrial activity, reduce job creation, and stall Pakistan’s broader economic recovery.
“The government must prioritize strengthening revenues, reducing deficits, and adopting policies that encourage private sector-led growth,” he added. “Relying on bank borrowing as a long-term strategy is neither sustainable nor productive for Pakistan’s economic future.”
Ijaz urged policymakers to adopt more balanced and growth-friendly fiscal measures that support business activity and ensure credit flows toward productive sectors of the economy.