Pakistan retires Rs500bn SBP debt early, total early paydowns reach Rs1.5tr

July 07, 2025 (MLN): In another bold and unprecedented step toward fiscal responsibility, the Ministry of Finance has successfully retired Rs500 billion in debt owed to the State Bank of Pakistan (SBP), a full four years ahead of its scheduled maturity in 2029.

The afore stated information was shared by Khurram Schehzad, Advisor to the Finance Minister on X today. 

This early retirement of central bank debt, executed by the Debt Management Office (DMO), marks a major breakthrough in Pakistan’s debt management strategy.

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 by curbing reliance on borrowing, he added. 

More importantly, it reflects the government’s strong commitment to proactive, disciplined, and forward-looking financial governance. This latest achievement builds on an earlier milestone - the successful buyback of Rs1 trillion in market debt completed by December 2024, the first such operation in Pakistan’s history.

Combined, these two strategic actions amount to the early retirement of Rs1.5 trillion in public debt in FY25, sending a strong signal of economic confidence and reform, he further informed. 

Together, these actions have:

• Reduced Pakistan’s debt-to-GDP ratio from 75% in FY23 to ~69% in FY25
  
• Extended the average time to maturity (ATM) of public debt from 2.70 to around 3.75 years
  
• Lowered refinancing risks
  
• Freeing up fiscal space for development priorities.

Moreover, capitalizing on the significant decline in interest rates with the government’s disciplined borrowing, early repayments, and smart refinancing has led to a staggering Rs830bn in interest cost savings in FY25.

This is not just debt reduction; it is decisive, future-focused economic management aimed at building a resilient, credible, and fiscally sustainable Pakistan.

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