KARACHI: Pakistan has repaid Rs1.2 trillion ($4.3 billion) in debt owed to the central bank ahead of schedule, its largest single early repayment to date, an adviser to the finance minister said on Saturday, as Islamabad seeks to reduce refinancing risks and future debt-servicing costs.

The latest payment to the State Bank of Pakistan (SBP) takes cumulative domestic debt retired before maturity since October 2024 to about Rs5.92 trillion ($21.3 billion), according to Khurram Schehzad, adviser to Finance Minister Muhammad Aurangzeb.

The repayment comes as Pakistan seeks to improve its debt profile and maintain fiscal discipline under a $7 billion International Monetary Fund program, even as its overall domestic debt remains high and interest payments continue to consume a large share of government spending. The IMF said in May Islamabad had reaffirmed its commitment to a primary surplus of 2 percent of GDP in the current fiscal year.

“This is the single largest early-repayment tranche undertaken so far,” Schehzad said in a post on social media platform X, adding that it surpassed a previous record repayment of Rs1.133 trillion ($4.1 billion).

The previous record was set in August 2025, when the government repaid Rs1.133 trillion to the SBP ahead of maturity, following another Rs500 billion ($1.8 billion) repayment two months earlier. The Finance Ministry said at the time that the payments were aimed at reducing the government’s debt burden and improving its maturity profile.

Schehzad said Pakistan had retired around Rs1.8 trillion ($6.5 billion) in debt early during fiscal 2025 and Rs2.9 trillion ($10.5 billion) in fiscal 2026, with the latest Rs1.2 trillion repayment coming less than two months into the current fiscal year, which began in July.

Pakistan’s government domestic debt nevertheless stood at Rs59.44 trillion ($214.2 billion) at the end of June, up from Rs54.47 trillion ($196.3 billion) a year earlier, according to the latest central bank data.

Debt servicing remains one of the government’s largest expenditures. Pakistan has budgeted Rs8.05 trillion for interest payments in the fiscal year ending June 2027, accounting for about 43 percent of total federal expenditure of Rs18.77 trillion.

The government has been seeking to lengthen debt maturities and reduce refinancing risks after years in which large short-term borrowing requirements left public finances highly exposed to interest-rate movements. Fitch Ratings said in June that Pakistan’s interest costs remained structurally high because of its large stock of shorter-maturity domestic debt.

Schehzad described the early repayments as part of a shift toward active sovereign liability management, aimed at using improved fiscal space to retire obligations before they fall due.

“Pakistan is increasingly moving from simply managing debt maturities to actively strengthening its sovereign balance sheet,” he said.