Pakistan Cuts Rs2.6 Trillion in Public Debt Before Maturity

Pakistan has cut Rs2.6 trillion in public debt before its maturity, Advisor to the Finance Minister Khurram Schehzad confirmed on Sunday.

In a statement on X (formerly Twitter), Schehzad revealed that Rs1.6 trillion was paid back to the State Bank of Pakistan (SBP) within just 59 days. He described the achievement as a historic example of fiscal discipline. According to him, Rs500 billion was repaid on June 30, 2025, followed by another Rs1,133 billion on August 29, taking the total early repayments to SBP to Rs1,633 billion.

He also highlighted an earlier Rs1,000 billion repayment to domestic commercial banks during the first half of the fiscal year. Schehzad said this marked Pakistan’s first-ever early domestic debt settlement operation.

Historic Move: Pakistan Retires PKR 2,600 Billion Debt Before Time — A First in Pakistan’s History

In an unprecedented move and a record achievement for fiscal responsibility, the Ministry of Finance (MoF), Government of Pakistan (GoP), has retired over PKR 1,600 Billion of…

— Khurram Schehzad (@kschehzad) August 31, 2025^[1]

By combining the repayments to both SBP and the commercial sector, the total early retirement of Pakistan public debt now stands at Rs2.6 trillion within a single year. The advisor pointed out that 30 percent of SBP liabilities have already been cleared, reducing the stock from Rs5.5 trillion to Rs3.8 trillion, well before the scheduled 2029 maturity.

Schehzad stressed that these repayments have eased future refinancing risks, lowered rollover pressure, and created more fiscal space for development spending. He further noted that the average maturity of domestic debt has improved from 2.7 years in 2024 to 3.8 years, the largest single-year improvement in Pakistan’s history and above International Monetary Fund (IMF) targets.

He added that falling interest rates and disciplined repayments have saved the government more than Rs800 billion in taxpayer money this fiscal year.

Schehzad concluded that by cutting reliance on borrowing and prioritizing repayments, Pakistan is restoring fiscal credibility, reducing risks, and building long-term financial resilience.