One Debt Cleared, Another Begins? The Truth Behind Punjab’s Rs. 405 Billion Borrowing.

It seems Punjab has taken the top spot for borrowing among the provinces, and by a huge margin. In just the first 38 days of the new financial year, from July 1st to August 8th, the province, under Chief Minister Maryam Nawaz, racked up an incredible Rs. 405 billion in loans from the State Bank.

What’s interesting is that the federal government is currently blocked from borrowing directly from the State Bank due to its agreement with the IMF. However, the provincial governments don’t have the same restrictions, and they seem to be using that option quite a bit.

To put that number in perspective, Punjab’s borrowing completely overshadows the other provinces. During that same period, Sindh borrowed Rs. 16 billion, Khyber Pakhtunkhwa took Rs. 21 billion, and Balochistan borrowed Rs. 13 billion. Punjab’s loan is more than 20 times what Sindh borrowed.

But here’s where the story gets a twist. At the same time this new borrowing was happening, the Punjab government announced it had finally paid off a massive, 30-year-old bank debt of Rs. 675 billion. This old debt was mostly tied to buying wheat and providing subsidies. Officials are calling this a major win, saying it frees up a ton of cash for public projects, saving the province around Rs. 250 million in interest payments every single day.

While Punjab sorts out its finances, the country’s state-owned companies are still struggling. They had to borrow another Rs. 65 billion from commercial banks just to keep their operations running. This brings their total outstanding debt to a whopping Rs. 2,166 billion. On a more positive note, the federal government did manage to pay back Rs. 55 billion to the State Bank, slightly reducing its own debt.