In an unprecedented and historic achievement for fiscal responsibility, the Ministry of Finance (MoF), Government of Pakistan (GoP), has retired over Rs2,600 billion of domestic debt ahead of its maturity date. This includes debt owed to the State Bank of Pakistan (SBP) and the domestic commercial market.

According to Advisor to Finance Minister Khurram Schehzad, this debt retirement was accomplished by the MoF in less than one year. The ministry had early-retired Rs500 billion debt of the central bank on June 30 and followed up with another monumental repayment of PKR 1,133 billion on August 29, 2025, bringing the total early retirement of SBP debt to PKR 1,633 billion — within just 59 days.

The MoF had also previously retired PKR 1,000 billion of domestic commercial market debt in the first half of FY25. The total early debt retirement now exceeds PKR 2,600 billion, including both the central bank and commercial portions, which marks an unprecedented action in the country’s fiscal history, the finance minister’s advisor said.

Pakistan debt stock reaches all-time high of Rs75trn

This move signals a decisive shift from past debt-heavy practices, where reliance on borrowing crowded out fiscal space and increased risks. Debt discipline is now a firm reality:

• 30% of SBP debt retired early: In just under two months, Pakistan has cut its SBP debt from Rs5.5 trillion to 3.8 trillion, retiring nearly 30% of the debt well ahead of its 2029 maturity date.

• Reduced risks, improved fiscal space: The early repayments have eased the 2029 refinancing burden, lowered rollover risks, and created more room for development spending.

• Strengthened fiscal resilience: The average maturity of domestic debt has sharply risen to 3.8 years from 2.7 years in FY24, the steepest single-year improvement in history and a figure well ahead of the International Monetary Fund target.

• Major taxpayer savings: The government has already secured over PKR 800 billion in taxpayer savings for FY25, thanks to falling interest rates and disciplined, early repayments.

Transforming maturity profile of domestic debt

“This is not merely debt repayment; it is a demonstration of responsible and forward-looking financial governance. By reversing the old cycle of unchecked borrowing and placing repayment at the center of fiscal management, Pakistan is restoring credibility, strengthening resilience, and building a more sustainable financial future,” Schehzad said.