By Staff Reporter
KARACHI: The government has retired more than Rs1.6 trillion of debt owed to the central bank in less than two months, a record achievement that underscores efforts to bolster fiscal discipline and reduce borrowing risks, a senior official said on Sunday.
The Ministry of Finance repaid Rs500 billion on June 30 and followed up with a Rs1.133 trillion repayment on August 29, bringing the total to Rs1.633 trillion, Khurram Schehzad, an adviser to the finance minister, said. The moves cut the State Bank of Pakistan debt load by nearly 30 percent, from Rs5.5 trillion to Rs3.8 trillion, well ahead of the obligations’ 2029 maturity.
“The MoF had earlier in 1H FY25 retired domestic commercial market debt of Rs1,000 billion — the first such advanced debt retirement operation in Pakistan’s history,” Schehzad said.
“Including both the central bank and commercial portions, the total early debt retirement in less than one year now comes to over Rs2,600 billion — an unprecedented scale and decisive action in the country’s fiscal history.”
The repayments mark a sharp departure from Pakistan’s longstanding reliance on heavy borrowing, which has historically squeezed fiscal space and heightened vulnerabilities. By prioritising early retirements, the government is easing the burden of 2029 refinancings, curbing rollover risks and freeing up resources for development expenditures.
The actions have also extended the average maturity of domestic debt to 3.8 years from 2.7 years in fiscal 2024, representing the steepest annual improvement on record and surpassing targets set under the International Monetary Fund program.
With interest rates declining amid the disciplined approach, the government has locked in more than Rs800 billion in savings for taxpayers in the current fiscal year.
This shift toward responsible financial management reverses a cycle of unchecked borrowing, aiming to restore credibility, enhance resilience and lay the groundwork for sustainable growth.
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