Pakistan’s government borrowing hits PKR 36.79 trillion as cash in circulation falls

Pakistan’s broad money supply contracted in the week ended July 24, 2026, as currency in circulation declined following the end-June cash buildup, while government borrowing edged higher, according to monetary data compiled by AKD Securities from State Bank of Pakistan (SBP) figures.

Currency in circulation fell 2% week-on-week to PKR11.91 trillion from PKR12.10 trillion a week earlier, contributing to a decline in broad money (M2) to PKR43.57 trillion. On a fiscal year-to-date basis, M2 was down 6.2%.

Total government borrowing increased marginally to PKR36.79 trillion from PKR36.71 trillion a week earlier. Borrowing for budgetary support rose to PKR35.80 trillion from PKR35.73 trillion.

Government borrowing from the SBP increased 1% week-on-week to PKR1.96 trillion, while borrowing from scheduled banks edged up to PKR33.84 trillion from PKR33.79 trillion.

Scheduled bank deposits remained broadly unchanged at PKR31.61 trillion, while deposits with the central bank declined 3% to PKR49 billion.

On the asset side of the banking system, net foreign assets (NFA) fell 6% week-on-week to PKR1.91 trillion, while net domestic assets (NDA) remained largely unchanged at PKR41.66 trillion.

Credit to the non-government sector stood at PKR13.88 trillion, while private-sector credit declined 1% week-on-week to PKR11.02 trillion.

The decline in currency in circulation reflects seasonal liquidity normalization following elevated cash demand around the end of the fiscal year, analysts said. Meanwhile, the modest increase in government borrowing points to continued reliance on domestic financing to meet fiscal requirements.