Government’s proactive debt management strategy lowers refinancing risks, cuts borrowing costs, and strengthens fiscal stability.
Pakistan has successfully retired more than Rs4.7 trillion in public debt ahead of maturity through an aggressive liability management strategy, marking the largest early debt retirement initiative in the country’s history. The achievement reflects the government’s efforts to strengthen fiscal sustainability and reduce long-term borrowing risks.
Adviser to the Finance Minister Khurram Schehzad announced on Tuesday that the latest buyback of Pakistan Investment Bonds (PIBs) worth Rs279 billion, equivalent to nearly $1 billion, pushed the cumulative value of early debt retirement to Rs4.722 trillion, or approximately $17 billion. He shared the update through a post on social media platform X.
According to Schehzad, the government retired Rs2.9 trillion in debt before maturity during fiscal year 2025-26, compared with Rs1.8 trillion in FY2024-25. The latest figure represents a substantial 62 percent increase year-on-year, highlighting the expanding scale of Pakistan’s debt management operations.
He explained that around 51 percent of the retired debt consisted of liabilities owed to the State Bank of Pakistan, while the remaining 49 percent was market-based debt. The balanced approach has enabled authorities to improve the overall structure of public liabilities while maintaining market confidence.
The adviser noted that proactive liability management has delivered several benefits, including a reduction in refinancing and rollover risks, lower debt servicing costs, enhanced liquidity management, and improved cash flow planning. These measures have also contributed to stronger investor confidence and greater resilience in public finances.
Pakistan’s debt profile has shown notable improvement over the past few years. The average maturity period of government debt increased from 2.7 years in FY2023-24 to more than 3.8 years in FY2025-26. At the same time, the country’s debt-to-GDP ratio declined from 75 percent in FY2022-23 to an estimated 68.5 percent in FY2025-26.
Schehzad said reliance on central bank financing has also decreased significantly, reflecting the government’s commitment to prudent fiscal management. He added that the debt management programme is part of broader economic reforms designed to strengthen macroeconomic stability, support lower inflation, improve fiscal and external balances, and enhance public financial management.
The government is increasingly shifting from conventional borrowing practices to proactive balance-sheet management, aiming to ensure long-term debt sustainability, lower financing costs, and stronger public finances in the years ahead.