Pakistan retires record Rs4.7tr debt ahead of maturity

July 14, 2026 (MLN): Pakistan has retired more than Rs4.7 trillion (around US$17 billion) in public debt ahead of maturity through proactive liability management operations, according to Khurram Schehzad, Adviser to the Finance Minister.

This development has marked the largest early debt retirement exercise in the country's history.

In a post shared on social media platform X on Tuesday, Schehzad said the government's latest Pakistan Investment Bond (PIB) buyback worth Rs279 billion (US$1 billion) has taken the cumulative value of debt repaid before maturity to Rs4.722 trillion.

He described the initiative as the country's largest and most sustained liability management operation, aimed at strengthening Pakistan's debt profile while reducing refinancing risks and debt servicing costs.

Record early debt retirement

According to the adviser, the government has carried out a series of early debt retirement operations over the past two years. The timeline includes:

Collectively, these operations amount to Rs4.722 trillion, equivalent to nearly US$17 billion, repaid before the scheduled maturity dates.

FY26 saw accelerated liability management

Schehzad noted that debt management activities gained significant momentum during FY26, with the government retiring Rs2.9 trillion of debt ahead of maturity.

The amount was 62% higher than the Rs1.8 trillion retired in FY25.

Of the total debt retired during FY26:

• 51% comprised liabilities owed to the State Bank of Pakistan (SBP); and

• 49% represented market debt, including government securities.

Focus on liability management

The adviser emphasized that these transactions should not be viewed as routine debt repayments but rather as active liability management operations.

According to him, retiring debt before maturity helps the government:

• Reduce refinancing and rollover risks;

• Lower debt servicing costs, generating savings for taxpayers;

• Improve liquidity and cash flow management; and

• Enhance investor confidence and strengthen fiscal resilience.

Such operations allow governments to replace expensive or short-term obligations with more efficient financing structures, thereby improving the overall composition of public debt.

Improvement in debt profile

Schehzad also highlighted several indicators that, according to him, reflect improvements in Pakistan's debt management framework.

He stated that the average maturity of public debt has increased from 2.7 years in FY24 to more than 3.8 years by FY26, reducing the frequency with which debt needs to be refinanced.

At the same time, public debt as a percentage of GDP has declined from 75% in FY22/23 to an estimated 68.5% in FY26, while the government's reliance on central bank financing has also fallen significantly.

Part of broader macroeconomic reforms

The adviser said proactive debt management forms part of a broader effort to improve Pakistan's public finances alongside easing inflation, stronger fiscal and external sector balances, and improving macroeconomic stability.

He added that the government's strategy represents a shift from traditional borrowing practices toward active balance-sheet management by reducing rollover risks, extending debt maturities, lowering financing costs, and promoting long-term fiscal sustainability.

Schehzad said these measures are helping build a more resilient and credible fiscal framework by improving the government's debt profile while reducing financial vulnerabilities over time.

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