KARACHI: In a significant move towards fiscal consolidation, the Ministry of Finance has retired a debt of Rs500 billion owed to the State Bank of Pakistan (SBP) four years ahead of its scheduled maturity in 2029, Adviser to the Prime Minister on Finance Khurram Schehzad announced on Monday.

In a post on his official X account, Mr Schehzad termed early retirement a breakthrough in the country’s debt management strategy.

The operation, executed by the Debt Management Office, forms part of a broader effort to shift from short-term to longer-term debt, thereby reducing concentration risk, lowering future liabilities, and curbing reliance on borrowing.

Mr Schehzad said the step reflects the government’s commitment to proactive, disciplined, and forward-looking financial governance and reinforces macroeconomic stability.

This development follows an earlier milestone — the successful buyback of Rs1tr in market debt by December 2024, marking the first such operation in Pakistan’s history.

Together, these two actions represent the early retirement of Rs1.5tr in public debt during FY25.

As a result, the country’s debt-to-GDP ratio has declined from 75pc in FY23 to around 69pc in FY25. The average time to maturity of public debt has also improved, rising from 2.7 to approximately 3.75 years, thereby lowering refinancing risks and creating fiscal space for development priorities.

Published in Dawn, July 8th, 2025