KARACHI: The State Bank of Pakistan (SBP) has remitted Rs1,932 billion to the federal government as profit for 2025-26, helping reduce its dependence on large domestic borrowings.

With the easing of monetary policy, the central bank’s profitability is also declining. From a peak of 22pc a few years ago, the benchmark interest rate has been reduced in intervals to 11.5pc. However, rising energy prices due to tensions in the Middle East have once again heightened inflationary pressures.

The SBP issued its Annual Financial Statements on Thursday, reporting that the bank earned a profit of Rs1,990bn in FY26.

“During the year, the SBP earned a net profit of Rs1,990bn. After accounting for appropriations as required under the accounting framework and statutory requirements, the surplus profit of Rs1,932bn has been remitted to the federal government,” said the central bank.

Central bank deposits Rs1.9tr into national kitty

In FY25, the SBP recorded a profit of Rs2.5 trillion and remitted most of it to the government. For the past three years, the central bank has been remitting trillions of rupees to the federal government, helping it reduce its ever-increasing borrowing from banks and the corporate sector.

Despite large borrowings, the State Bank’s profits helped the government keep the fiscal deficit within limits and enabled it to collect higher non-tax revenue. Non-tax revenue is considered the federal government’s net income and is not transferable to the provinces’ divisible pool.

Each year, the government faces a shortfall in tax revenue against the target; this SBP profit bridges the gap.

This surplus liquidity also helped the government retire short-term domestic debt and borrow for the long term. The State Bank’s balance sheet showed that money borrowed for long-term Pakistan Investment Bonds (PIBs) has been increasing, while short-term Market Treasury Bills have declined over the last three years.

According to the State Bank, domestic debt reached Rs59.94tr by the end of 2025-26. The debt grew by 9pc, or about Rs4.969tr.

SBP reserves

The country’s total liquid foreign reserves stood at $22.587bn during the week ending Aug 21, the central bank announced.

The State Bank’s forex reserves increased by $17m to $17.098bn, while commercial banks’ holdings stood at $5.488bn.

Published in Dawn, August 28th, 2026