Pakistan retires PKR 1.5 trillion in public debt early
Landmark fiscal reforms save PKR 830 billion in interest costs

Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)

The Pakistan government has successfully retired PKR 1.5 trillion in public debt ahead of schedule during the fiscal year 2024-25 (FY25), significantly improving the country’s financial outlook.
According to official statements, this early repayment has brought Pakistan’s debt-to-GDP ratio down from 75% in FY23 to 69% in FY25, a 6% reduction over two years. The achievement is being hailed as a major breakthrough in the country’s debt management strategy.
Khurram Schehzad, advisor to the finance minister, announced on social platform X that PKR 500 billion in debt owed to the State Bank of Pakistan (SBP) was retired four years ahead of its scheduled maturity in 2029. The move, executed by the Debt Management Office (DMO), is part of a broader strategy to reduce reliance on short-term borrowing and strengthen macroeconomic stability.
“Early debt retirement while converting shorter-tenure with longer-tenure debt significantly reduces concentration risk, lowers future liabilities, and strengthens the country’s macroeconomic foundations,” Schehzad stated.
This latest development follows the government’s historic buyback of PKR 1 trillion in market debt by December 2024, the first such operation in Pakistan’s history.
The early repayments were made possible in part by a record profit transferred from the SBP to the federal government, which bolstered liquidity and eased fiscal pressure.
In the year ended June 30, the SBP earned nearly PKR 2,620 billion as profit compared to estimates of PKR 2,500 billion, according to the Ministry of Finance Data.
The government also hopes that in the current fiscal year, the SBP profit might be around PKR 2,400 billion.
Schehzad emphasized that these actions reflect a broader shift toward “proactive, disciplined, and forward-looking financial governance”. He noted that the government’s strategy — leveraging lower interest rates, disciplined borrowing, and strategic refinancing — has saved the country PKR 830 billion in interest costs in FY25 alone.
Analysts say the early debt retirement and improved fiscal indicators send a strong signal of economic confidence and reform. With reduced refinancing risks and increased fiscal space, the government is now better positioned to prioritize development spending and long-term growth.
“This is more than just debt reduction,” Schehzad concluded. “It is decisive, forward-looking economic management aimed at building a resilient, credible, and fiscally sustainable Pakistan.”
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