Punjab Defies IMF Fiscal Curbs with Rs405 Billion Central Bank Borrowing

Punjab has quietly turned into Pakistan’s fiscal outlier, racking up Rs405 billion ($1.4 billion) in central bank borrowing within just 38 days of the new fiscal year—an amount dwarfing the combined borrowings of all other provinces and running counter to the austerity drive enforced by the International Monetary Fund.

From July 1 to August 8, Punjab’s drawdowns from the State Bank of Pakistan towered over Sindh’s Rs15.78 billion, Khyber Pakhtunkhwa’s Rs21.6 billion, and Balochistan’s Rs13.6 billion, documents show. The scale—25 times higher than Balochistan’s tally—raises alarms over fiscal discipline at a moment when the IMF is pressing Pakistan to rein in excess spending and deliver provincial budget surpluses.

The borrowing binge lands as state-owned enterprises deepen the fiscal rot. Cash-strapped SOEs borrowed another Rs65 billion from commercial banks to plug deficits, pushing their total outstanding debt to more than Rs2.16 trillion. That swelling burden underscores the structural weakness of Pakistan’s public sector, which continues to weigh heavily on state coffers.

In stark contrast, the federal government—bound by IMF conditionality—repaid Rs55 billion to the State Bank, trimming its stock of central bank debt to Rs5.27 trillion as of June 30. The split exposes a gaping loophole: IMF scrutiny ties Islamabad’s hands, but provinces remain free to raid the central bank for budgetary support.