Islamabad, August 31, 2025 – In an unprecedented fiscal milestone, the government of Pakistan has made a record repayment of domestic debt, significantly ahead of schedule, signaling a strategic shift toward financial discipline and sustainability.
According to Advisor to the Finance Minister Khurram Schehzad, the Ministry of Finance has retired over Rs2.60 trillion of domestic debt within a single year, a feat unmatched in recent economic history. This includes liabilities owed to the State Bank of Pakistan (SBP) as well as the domestic commercial banking sector.
Schehzad detailed that Rs500 billion in SBP debt was cleared on June 30, followed by another Rs1.13 trillion repayment on August 29, 2025, bringing the total early settlement with SBP to Rs1.63 trillion — all within a mere 59 days. Earlier, the ministry had also retired Rs1,000 billion in domestic commercial market borrowings during the first half of FY25, further underscoring a decisive shift toward responsible fiscal management.
The move has brought several economic advantages:
• Lower Refinancing Risks: Early repayments reduce the heavy rollover burden that previously strained national finances.
• Improved Fiscal Space: By easing debt servicing requirements, the government can channel more resources toward development and public welfare projects.
• Enhanced Debt Profile: The average maturity of domestic debt has improved from 2.7 years in FY24 to 3.8 years in FY25, the sharpest annual increase on record.
• Massive Taxpayer Savings: With declining interest costs, Pakistan has already secured PKR 800 billion in savings for FY25 alone.
“This is not just a repayment; it is a statement of intent,” Schehzad said. “We are reversing the cycle of dependency on borrowing and focusing on building a stable, self-reliant economic future.”