KARACHI: Despite a 10 per cent year-on-year increase in revenue collection, the government borrowed net Rs1.192 trillion from scheduled banks in the first half of the current fiscal year against retirement of Rs1.255tr in the same period last year.

The Federal Board of Revenue (FBR) collected Rs6.159 trillion during July-December FY26 against the target of Rs6.490tr, a shortfall of Rs331bn. However, it is 10pc higher compared to the year-ago figure of Rs5.618tr.

The borrowing in 1HFY26 means the government spent much higher than the last year.

This is also interesting to note that the State Bank reported a net profit of Rs2.5tr for FY25, which was transferred to the federal government. Despite this additional liquidity, the government is borrowing heavily from banks.

Banks are comfortable to invest in the government papers as they get risk-free high yields which made the financial sector most stable financial sector.

Last week the banks bids for the treasury bills auctions were Rs2.5tr reflecting the eagerness of banks to park their liquidity in the safest place.

“Investments in government securities remained the main driver of banking sector balance sheet,” said the State Bank in its annual report for 2024-25.

Published in Dawn, January 18th, 2026