KARACHI: Pakistan repaid more than Rs2.9 trillion in debt before maturity in the last fiscal year that ended in June, increasing total early debt retirements through buybacks to over Rs4.7 trillion, helping the country reduce refinancing and rollover risks and lower debt servicing costs, the government official said on Tuesday.
“Pakistan’s proactive debt management continues to set new milestones,” said Khurram Schehzad, adviser to the finance minister, in a post on X. “With the last Rs279 billion ($1 billion) PIB buyback, total early debt retirement has reached Rs4,722 billion ($17 billion) — the largest and most sustained liability management operation in Pakistan’s history,” Schehzad said.
The adviser added that the Rs2.9 trillion debt repayment in FY26 represented a 62 per cent increase over Rs1.8 trillion in FY25. Of the total debt retired in FY26, 51 per cent was central bank debt, while the remaining 49 per cent consisted of market debt.
He emphasised that this process is an active approach to liability management rather than routine debt repayment. This strategy is helping Pakistan reduce refinancing and rollover risks, lower debt servicing costs, generate taxpayers’ savings, optimise liquidity and cash flow management, and boost investor confidence and fiscal resilience.
Schehzad also mentioned that the government’s debt profile has improved, with the average debt maturity increasing from 2.7 years in FY24 to over 3.8 years in FY26. According to the adviser, Pakistan’s debt-to-GDP ratio has decreased from 75 per cent in FY23 to around 68.5 per cent in FY26, while reliance on central bank financing has significantly reduced.
“This is part of a broader transformation in Pakistan’s public finances,” he said. “Alongside moderate inflation, stronger fiscal and external balances, and improving macroeconomic stability, proactive debt management is helping build a more resilient, sustainable, and credible fiscal framework,” he added.
Pakistan’s record early retirement of Rs4.7 trillion in domestic debt reflects a meaningful shift from passive debt rollover to active liability management, supported by improved fiscal liquidity, easing inflation, and declining interest rates,” said Saad Hanif, head of research at Ismail Iqbal Securities.
“By retiring expensive short-term liabilities ahead of maturity and extending the average debt tenor, the government is reducing refinancing risk while positioning itself to benefit from lower debt servicing costs over the medium term,” Hanif said.
“This strategy should enhance fiscal sustainability, strengthen investor confidence, and provide greater flexibility for future borrowing needs,” he said and added that the long-term success of this approach will depend on maintaining primary fiscal discipline, sustaining macroeconomic stability, and ensuring that lower-cost borrowing replaces maturing debt without reversing the recent improvement in the debt-to-GDP ratio. domestic debt reflects a meaningful shift from passive debt rollover to active liability management, supported by improved fiscal liquidity, easing inflation, and declining interest rates,” said Saad Hanif, head of research at Ismail Iqbal Securities.
“By retiring expensive short-term liabilities ahead of maturity and extending the average debt tenor, the government is reducing refinancing risk while positioning itself to benefit from lower debt servicing costs over the medium term,” Hanif said.
“This strategy should enhance fiscal sustainability, strengthen investor confidence, and provide greater flexibility for future borrowing needs,” he said and added that the long-term success of this approach will depend on maintaining primary fiscal discipline, sustaining macroeconomic stability, and ensuring that lower-cost borrowing replaces maturing debt without reversing the recent improvement in the debt-to-GDP ratio.
