ISLAMABAD, Jan 29: Adviser to the Finance Minister, Khurram Schehzad, announced on Thursday a significant achievement for Pakistan as the nation begins repaying its domestic debt before maturity at an unprecedented scale. This move marks a decisive shift towards fiscal discipline and responsible economic management.
In a post on social media, Schehzad noted that since late 2024, the Ministry of Finance has preemptively retired Rs3,654 billion of domestic debt owed to the market and the State Bank of Pakistan (SBP) over a period of just 14 months. The latest repayment, amounting to Rs300 billion, was made to the SBP on Thursday.
This milestone achievement demonstrates a clear move towards fiscal discipline, credibility, and responsible economic management, according to Schehzad. He detailed that early 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.
With the recent repayment, FY2026 (July–January) alone recorded over Rs2,150 billion in early debt retirement, reflecting a 44 percent increase compared to the total early repayments during FY2025.
Schehzad highlighted that nearly 44 percent of SBP-held debt was retired early, reducing the central bank’s debt stock from approximately Rs5,500 billion to about Rs3,000 billion, even addressing obligations originally maturing in 2029.
Of the total early repayments, 65 percent targeted SBP debt, 30 percent were directed towards treasury bills, and 5 percent involved Pakistan Investment Bonds. This resulted in a more sustainable debt profile.
He noted the positive impact extending to overall public debt, which decreased from over Rs80.5 trillion in June 2025 to around Rs80 trillion by November 2025. Schehzad further mentioned a decline in Pakistan’s debt-to-GDP ratio from approximately 74 percent in FY2022 to nearly 70 percent, indicating broader improvements in financial fundamentals and disciplined debt management.
Schehzad emphasized that per-capita debt figures often create misleading narratives, failing to accurately represent a country’s debt burden. He added that many developed nations maintain high per-person debt levels yet remain fiscally stable due to robust revenue bases, repayment capabilities, and effective debt management.
Crucial indicators for evaluating debt burden include the debt-to-GDP ratio, revenue and repayment capacity, interest cost savings, maturity profile, rollover risks, and savings from early repayments and reduced borrowing costs, according to Schehzad.
These improvements are helping to decrease future obligations and fiscal risks, alleviate the economic burden, and provide space for growth-oriented and social spending.
The adviser stated that Pakistan’s recent debt management strategies have mitigated refinancing and rollover risks, lowered borrowing costs by transitioning from costly to cheaper instruments, and increased fiscal space for development expenditures.
He asserted that fiscal resilience has notably strengthened, with the average domestic debt maturity improving from 2.7 years in FY2024 to over 4.0 years, recording the sharpest single-year improvement in history.
Schehzad reported substantial taxpayer savings, with over Rs850 billion saved during FY2025 and an additional Rs800 billion expected in FY2026 through debt restructuring and sustained fiscal discipline.
This strategic shift from excessive borrowing towards debt repayment, risk reduction, and sustainability signifies a structural transformation in fiscal management, enhancing economic credibility, resilience, and long-term financial stability.
