Pakistan retires Rs3.65 trillion in domestic debt ahead of maturity, says finance adviser

Pakistan has retired Rs3,654 billion in domestic debt ahead of schedule since late 2024, marking a shift toward early repayments and reduced refinancing risks, according to Khurram Schehzad, Adviser to the Finance Minister.

In a post on X, the adviser said the early retirements were made by the Ministry of Finance to both the market and the State Bank of Pakistan over a 14-month period. The latest repayment of Rs300 billion was made to the SBP on Thursday.

He said the repayments included Rs1,000 billion in December 2024, Rs500 billion in June 2025, Rs1,160 billion in August 2025, Rs200 billion in October 2025, Rs494 billion in December 2025 and Rs300 billion in January 2026. As a result, more than Rs2,150 billion was retired early during the first seven months of FY2026, which he said was 44% higher than the total early repayments made in FY2025.

According to the adviser, around 44% of SBP-held debt has been retired ahead of maturity, reducing the central bank’s domestic debt stock from about Rs5,500 billion to nearly Rs3,000 billion, including liabilities that were originally scheduled to mature in 2029.

He said 65% of the early repayments related to SBP debt, 30% to treasury bills and 5% to Pakistan Investment Bonds, contributing to a longer and more balanced maturity profile.

Schehzad said the impact was also visible in overall public debt, which declined from over Rs80.5 trillion in June 2025 to around Rs80 trillion by November 2025. He added that the debt-to-GDP ratio had fallen from about 74% in FY2022 to close to 70%, alongside improvements in fiscal indicators.

Addressing per-capita debt figures, he said such metrics do not fully reflect a country’s debt position and noted that assessment should focus on debt-to-GDP ratios, revenue capacity, interest costs, maturity profiles and rollover risks.

He said recent debt management measures had reduced refinancing pressures, lowered borrowing costs by shifting from higher-cost instruments and created fiscal space for development and social spending. Average domestic debt maturity, he added, improved from 2.7 years in FY2024 to over 4.0 years, representing the largest single-year increase on record.

Schehzad said the measures resulted in savings of over Rs850 billion in FY2025, with a further Rs800 billion expected in FY2026 through debt switches, stable interest rates and continued fiscal discipline.