ISLAMABAD, Jan 29: Khurram Schehzad, Adviser to the Finance Minister, announced on Thursday that Pakistan has embarked on a historic move to repay its domestic debt ahead of maturity, marking a significant step toward fiscal discipline and responsible economic management.
Since late 2024, the Ministry of Finance has early-retired Rs3,654 billion in domestic debt to both the market and the State Bank of Pakistan (SBP), according to a statement on X by the advisor. The most recent repayment of Rs300 billion was made to the SBP on Thursday.
Khurram Schehzad emphasized that this milestone underscores a commitment to fiscal discipline, credibility, and prudent economic management.
He detailed that the early payments 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.
Notably, in FY2026 alone (July–January), over Rs2,150 billion was retired early, which is 44 percent higher than early repayments during FY2025.
Nearly 44 percent of the debt held by the SBP has been paid off early, bringing down the central bank’s debt stock from approximately Rs5,500 billion to around Rs3,000 billion, including debts originally due by 2029.
Of the total early repayments, 65 percent were attributed to SBP debt, 30 percent to treasury bills, and 5 percent to Pakistan Investment Bonds, leading to a more sustainable debt profile.
Khurram Schehzad also highlighted a decrease in overall public debt from over Rs80.5 trillion in June 2025 to around Rs80 trillion by November 2025.
Further improvements were seen in Pakistan’s debt-to-GDP ratio, which fell from around 74 percent in FY2022 to nearly 70 percent, indicating strengthened fiscal fundamentals through disciplined debt management.
He clarified that per-capita debt figures can be misleading and do not truly reflect a country’s debt burden, as even advanced economies with high per-person debt levels remain stable due to strong revenue bases and efficient debt management.
Key indicators of debt burden include the debt-to-GDP ratio, revenue and repayment capabilities, interest cost savings, maturity profiles, rollover risks, and savings from early repayments. These improvements reduce fiscal risks and create room for growth and social spending.
Recent debt management efforts have mitigated refinancing and rollover risks, decreased borrowing costs, and expanded fiscal capacity for development expenditures.
Fiscal resilience has been significantly enhanced, with the average maturity of domestic debt improving from 2.7 years in FY2024 to over 4.0 years, marking a record-setting improvement.
Khurram Schehzad stated that disciplined debt management has led to noteworthy savings for taxpayers, with over Rs850 billion saved during FY2025 and another Rs800 billion anticipated in FY2026 due to debt switches, stable interest rates, and enhanced fiscal discipline.
The country’s strategic shift from excessive borrowing to repayment and risk reduction signals a structural change, bolstering economic credibility, resilience, and ensuring long-term financial stability.
