Buyback operations: Govt retires record PKR 4.72tn domestic debt before maturity

Pakistan has achieved a significant milestone in public debt management by retiring more than PKR 4.72 trillion (approximately USD 17 billion) in domestic debt before its maturity through a series of buyback operations conducted over the last 20 months. During FY26 alone, the government prepaid over PKR 2.9 trillion in domestic debt, reflecting its proactive approach to strengthening the country's debt profile.

 

Sharing the development on X, Adviser to the Finance Minister Khurram Schehzad described the achievement as the largest and most sustained liability management exercise in Pakistan's history. He noted that the government's strategy focuses on actively managing liabilities rather than simply repaying debt as it falls due.

 

The most recent buyback took place in May 2026, when the government repurchased Pakistan Investment Bonds (PIBs) worth approximately PKR 279 billion (around USD 1 billion). Earlier buyback operations included PKR 826 billion in October 2024, PKR 200 billion in November 2024, PKR 273 billion in March 2025, PKR 500 billion in June 2025, PKR 1.133 trillion in August 2025, PKR 122 billion in November 2025, PKR 494 billion in December 2025, PKR 300 billion in January 2026, and PKR 595 billion in April 2026.

 

The pace of debt retirement accelerated considerably during FY26, with early repayments reaching PKR 2.9 trillion, representing a 62% increase compared with the PKR 1.8 trillion retired during FY25.

 

According to official figures, around 51% of the retired debt consisted of liabilities owed to the State Bank of Pakistan (SBP), while the remaining 49% comprised market-based debt.

 

Schehzad stated that these liability management initiatives have significantly improved Pakistan's debt sustainability. The average maturity of public debt increased from 2.7 years in FY24 to more than 3.8 years in FY26, while the debt-to-GDP ratio declined from 75% in FY2022-23 to an estimated 68.5% in FY2025-26.

 

He also highlighted that the government has substantially reduced its dependence on central bank financing, reflecting a transition toward more sustainable borrowing practices.

 

According to Schehzad, the government's broader fiscal reforms—supported by moderating inflation, stronger fiscal and external balances, and improving macroeconomic conditions—are helping build a more resilient and credible public finance framework.

 

He explained that Pakistan's debt strategy has evolved from conventional borrowing toward proactive balance sheet management. The new approach prioritizes extending debt maturities, reducing refinancing and rollover risks, lowering borrowing costs, and improving long-term fiscal sustainability instead of relying heavily on short-term financing.

 

Schehzad emphasized that these buyback operations represent active liability management rather than routine debt repayment. He said the strategy is generating taxpayer savings through lower debt servicing costs, improving liquidity and cash flow management, reducing refinancing risks, and strengthening investor confidence as well as the country's overall fiscal resilience.