Pakistan has achieved a historic milestone by repaying over Rs3,650 billion of domestic debt ahead of schedule, marking the first time in the country’s history that early retirement of public debt has been undertaken on such a scale. Khurram Schehzad, Advisor to the Federal Minister for Finance and Revenue, confirmed the unprecedented repayment on X, formerly Twitter, highlighting the shift toward disciplined fiscal management and responsible economic governance.
Over the past 14 months, the Ministry of Finance has retired Rs3,654 billion of debt owed to the market and the State Bank of Pakistan. The latest tranche, amounting to Rs300 billion, was paid to the central bank, further reducing Pakistan’s debt obligations and strengthening fiscal credibility. The early repayment schedule includes notable amounts: PKR 1,000 billion in December 2024, PKR 500 billion in June 2025, PKR 1,160 billion in August 2025, PKR 200 billion in October 2025, PKR 494 billion in December 2025, and PKR 300 billion in January 2026.
Fiscal year 2026 (July–January) alone has recorded early repayments exceeding Rs2,150 billion, representing a 44% increase over the total early retirements in FY25. Of total repayments, approximately 65% pertained to SBP debt, 30% to Treasury Bills, and 5% to Pakistan Investment Bonds (PIBs). These repayments have significantly reduced refinancing and rollover risks while lowering borrowing costs by switching expensive debt instruments to cheaper alternatives.
As a result, Pakistan’s total public debt has declined from over Rs80.5 trillion in June 2025 to Rs80 trillion in November 2025, with the debt-to-GDP ratio improving from around 74% in FY22 to approximately 70%. The average maturity of domestic debt has also increased sharply from 2.7 years in FY24 to over 4.0 years, providing a record single-year improvement and greater stability in debt management.
Khurram Schehzad emphasized that per-capita debt metrics, while often cited in headlines, do not reflect the real economic sustainability of a country. He noted that what matters is debt-to-GDP, revenue and repayment capacity, interest savings, maturity structure, and overall fiscal risk reduction. By focusing on these factors, Pakistan has created significant fiscal space for development and social spending.
The early debt repayment program has already resulted in substantial taxpayer savings. PKR 850 billion was saved in FY25, and a further PKR 800 billion is projected in FY26 through continued debt discipline, stable rates, and debt instrument switches. Beyond reducing debt, this approach represents a fundamental reset in Pakistan’s fiscal policy, shifting from borrowing-driven practices to proactive management focused on sustainability and risk reduction.
This achievement signals a transformative step in Pakistan’s economic governance, demonstrating that fiscal credibility, resilience, and long-term sustainability can be enhanced through disciplined debt management, early repayments, and strategic financial planning. It sets a precedent for responsible economic stewardship and positions the country on a stronger path for growth and development.
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