Buyback operations: Govt retires record Rs4.72trn domestic debt before maturity

KARACHI: Under a proactive debt management strategy, Pakistan has successfully retired more than Rs2.9 trillion in domestic debt before maturity during the last fiscal year (FY26), raising the cumulative value of early debt retirement through buyback operations to over Rs4.72 trillion.

In his X platform, Khurram Schehzad, Adviser to the finance minister, on Tuesday revealed that Pakistan has achieved a historic milestone in public debt management by retiring more than Rs4.72 trillion or around USD17 billion in domestic debt before maturity through a series of buyback operations carried out over the past 20 months since October 2024.

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Schehzad termed it as a historic milestone in the country’s public debt management. “This early retirement is the largest and most sustained liability management exercise in the country’s history,” he added.

The latest operation involved the buyback of Pakistan Investment Bonds (PIBs) worth Rs279 billion approximately USD1 billion in May 2026, he informed.

According to the official data, the government conducted debt buybacks in multiple phases, including Rs826 billion in October 2024, Rs200 billion in November 2024, Rs273 billion in March 2025, Rs500 billion in June 2025, Rs1.133 trillion in August 2025, Rs122 billion in November 2025, Rs494 billion in December 2025, Rs300 billion in January 2026, Rs595 billion in April 2026, and Rs279 billion in May 2026.

The pace of early debt retirement accelerated significantly during FY26, with the government retiring Rs2.9 trillion worth of debt before maturity. This represents a 62 percent increase over the Rs1.8 trillion retired during FY25.

The data further showed that 51 percent of the retired debt comprised liabilities owed to the State Bank of Pakistan (SBP), while the remaining 49 percent consisted of market debt.

Schehzad said that the government’s liability management measures also strengthened Pakistan’s debt profile. The average maturity of public debt improved from 2.7 years in FY24 to more than 3.8 years in FY26, while the debt-to-GDP ratio declined from 75 percent in FY2022-23 to an estimated 68.5 percent in FY2025-26.

In addition, the government significantly reduced its reliance on financing from the SBP, reflecting a shift towards more sustainable debt management.

“This is part of a broader transformation in Pakistan’s public finances,” Schehzad said. Alongside moderate inflation, stronger fiscal and external balances, and improving macroeconomic stability, proactive debt management is helping build a more resilient, sustainable, and credible fiscal framework, he added.

Schehzad said Pakistan’s debt strategy has shifted from conventional borrowing to proactive balance sheet management, focusing on reducing rollover risks and promoting long-term fiscal sustainability instead of relying on short-term financing. “The disciplined debt management approach is lowering refinancing risks, reducing borrowing costs, and strengthening the country’s public finances,” he added.

This is active liability management, not routine debt repayment. It is helping Pakistan to reduce refinancing and rollover risks, lower debt servicing costs and generate taxpayer savings, optimise liquidity and cash flow management and strengthen investor confidence and fiscal resilience, he mentioned.

Copyright Business Recorder, 2026