In an unprecedented move aimed at ensuring fiscal responsibility, the Ministry of Finance has announced that the Government of Pakistan retired over Rs. 1.6 trillion of debt owed to the State Bank of Pakistan (SBP) in just 59 days.
According to the ministry’s statement, it retired Rs. 500 billion in debt owed to the central bank on June 30, 2025. Two months later, on Aug. 29, the Debt Management Office executed another repayment of Rs. 1,133 billion, bringing the total early retirement of SBP debt to Rs. 1,633 billion.
The ministry noted it had retired domestic commercial market debt of Rs. 1 trillion in the first half of FY25, declaring it the first such advanced debt retirement operation in Pakistan’s history.
Overall the total debt retired in less than a year comes to more than Rs. 2.6 trillion.
This action marks a decisive shift from past debt-heavy practices, where reliance on borrowing crowded out fiscal space and increased risks. Now, debt discipline is firmly in action. The Ministry of Finance’s actions have reduced the government’s debt to the central bank from Rs. 5.5 trillion to Rs. 3.8 trillion, well before its 2029 maturity.
The early repayments have eased the 2029 refinancing burden, lowered rollover risks, and created more room for development spending. It has enabled the raising of average maturity of domestic debt to 3.8 years from 2.7 in FY24, the sharpest single-year improvement in history, and well ahead of IMF targets.
Falling interest rates and disciplined repayments have led to the government securing over Rs. 800 billion in taxpayer savings in the last fiscal year.