Pakistan cuts Rs2.6 trillion in public debt ahead of schedule

Pakistan has made a major step in reducing its debt, clearing Rs2.6 trillion in public loans before maturity within a single year. Advisor to the Finance Minister Khurram Schehzad confirmed the development on Sunday, calling it a historic example of financial discipline.

He explained that Rs1.6 trillion was repaid to the State Bank of Pakistan (SBP) in just 59 days, with Rs500 billion cleared on June 30, 2025, and another Rs1,133 billion on August 29. Earlier, the government had also repaid Rs1,000 billion to domestic commercial banks, marking Pakistan’s first-ever early domestic debt settlement.

With these repayments, nearly 30 percent of SBP liabilities have already been cleared, reducing the stock from Rs5.5 trillion to Rs3.8 trillion, well before the scheduled 2029 maturity. This step has lowered refinancing risks, eased rollover pressure, and created more room for development spending.

Schehzad highlighted that the average maturity of domestic debt has improved from 2.7 years in 2024 to 3.8 years, the largest single-year improvement in the country’s history and above IMF targets. He added that falling interest rates and disciplined repayments have saved the government more than Rs800 billion in taxpayer money this fiscal year.

By reducing reliance on borrowing and focusing on repayments, Pakistan is working to restore fiscal credibility, reduce financial risks, and build long-term economic stability.

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