KARACHI: Pakistan’s finance ministry said on Tuesday the government had made record early repayments worth Rs2.6 trillion ($9.3 billion) across commercial and central bank obligations — the first such move in the country’s history — reducing rollover pressures and generating “hundreds of billions of rupees” in interest savings.
The announcement comes as Pakistan remains under the close watch of the International Monetary Fund (IMF) and global credit ratings agencies, after years of recurring balance-of-payments crises and repeated bailouts. Analysts say the country’s heavy reliance on short-term borrowing and vulnerability to currency swings have long fueled concerns about its ability to refinance maturing obligations.
Officials framed the early repayments as a signal that Pakistan is moving toward a more resilient debt profile.
“The government prepaid Rs2,600 billion before maturity across commercial and central bank obligations, reducing rollover and refinancing risks and generating hundreds of billions of rupees in interest savings,” the finance ministry said in a statement.
Beyond repayments, the ministry pointed to improvements in other debt indicators.
“The appropriate measure of sustainability is looking at debt relative to the size of the economy i.e., debt-to-GDP — not absolute rupee amounts,” it said. “By this yardstick, which is followed globally, Pakistan’s position has actually improved over the last few years, with the debt-to-GDP ratio declining from 74 percent in FY22 to 70 percent in FY25.”
Debt servicing costs also fell as interest rates eased in FY25, delivering Rs850 billion ($3 billion) in savings compared with budget estimates. Debt maturity profiles improved, with the average tenor of public debt rising to 4.5 years in FY25 from 4 years the year before.
On the fiscal side, the federal deficit narrowed to 6.2 percent of GDP in FY25 from 7.3 percent in FY24, while Pakistan posted a primary surplus of 2.4 percent of GDP (Rs2.7 trillion) for the second year in a row, a key IMF benchmark.
Officials also reported a $2 billion current account surplus in FY25, the first in 14 years, reducing Pakistan’s external financing needs. Part of the increase in external debt, the ministry said, reflected valuation effects from currency depreciation rather than new borrowing.
Key inflows included IMF disbursements under the Extended Fund Facility and bilateral support such as Saudi Arabia’s oil financing facility, which did not require rupee financing.
“The government’s continued focus on debt-to-GDP reduction, early repayments, lower interest costs, and a stronger external account underscores its commitment to macroeconomic stability, reduced risk, and responsible fiscal management,” the statement said.
Pakistan has been struggling with boom-and-bust cycles for decades, leading to 22 IMF bailouts since 1958.
