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Ministry of finance retires Rs1.6tr debt owed to SBP in 59 days

By Our Correspondent  
September 01, 2025
This image shows a person counting currency notes. — AFP/File
This image shows a person counting currency notes. — AFP/File

ISLAMABAD: The Ministry of Finance (MoF) has retired over Rs1.6 trillion of debt owed to the State Bank of Pakistan (SBP) — and done so in just 59 days.

On June 30, 2025, the ministry early-retired Rs500 billion. Only two months later, on August 29, 2025, the Debt Management Office executed another monumental repayment of Rs1,133 billion, which brings the total early retirement of SBP debt to Rs1,633 billion.

The Ministry of Finance had earlier in 1H FY25 retired domestic commercial market debt of Rs1.0 trillion — the first such advanced debt retirement operation in Pakistan’s history.

Including both the central bank and commercial portions, the total early debt retirement in less than one year now comes to over Rs2.6 trillion — an unprecedented scale and decisive action in the country’s fiscal history.

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:

30 percent of SBP debt retired early: In just under two months, Pakistan cut SBP debt from Rs5.5 trillion to Rs3.8 trillion — nearly 30 percent retired well before its 2029 maturity.

Reduced risks, improved fiscal space: Early repayments eased the 2029 refinancing burden, lowered rollover risks, and created more room for development spending.

Strengthened fiscal resilience: The average maturity of domestic debt has risen to 3.8 years from 2.7 in FY24 — the sharpest single-year improvement in history, and well ahead of IMF targets.

Major taxpayer savings: With falling rates and disciplined repayments, the government has already secured over Rs800 billion in taxpayer savings (FY25).

This is not just debt repayment — it is responsible, forward-looking financial governance. By reversing the old cycle of unchecked borrowing and putting repayment at the centre of fiscal management, Pakistan is restoring credibility, strengthening resilience, and building a more sustainable future.