Pakistan Repays Rs4.7 Trillion Debt Early, Improves Fiscal Health

Pakistan has repaid over Rs4.7 trillion of public debt ahead of its maturity through a series of buyback operations. This marks the country’s largest-ever proactive liability management exercise, aimed at improving fiscal health and reducing risks.

According to Finance Minister’s advisor Khurram Schehzad, the latest buyback of Pakistan Investment Bonds (PIBs) worth Rs279 billion, approximately $1 billion, has raised the total early debt retirement to Rs4.722 trillion. Schehzad described this as the “largest and most sustained liability management operation in Pakistan’s history.”

During the fiscal year 2026, Pakistan retired Rs2.9 trillion of debt ahead of schedule, a 62% increase from Rs1.8 trillion in fiscal year 2025. Of the total retired in FY26, 51% comprised central bank debt, with the remaining 49% being market debt.

This initiative is part of an active liability management strategy designed to reduce refinancing and rollover risks, lower debt servicing costs, optimize liquidity and cash flow management, and strengthen investor confidence and fiscal resilience.

The government’s debt profile has also shown improvement, with the average debt maturity increasing from 2.7 years in FY24 to over 3.8 years in FY26. Additionally, Pakistan’s debt-to-GDP ratio has declined from 75% in FY23 to approximately 68.5% in FY26, and reliance on central bank financing has been significantly reduced.