The Federal Ministry of Finance has issued a clarification on Pakistan’s debt position announcing that for the first time in history the country repaid Rs2,600 billion of debt ahead of schedule.
Officials stressed that Pakistan’s debt profile is now more sustainable than in previous years.
According to the ministry’s spokesperson, better debt management and declining interest rates helped cut borrowing costs. As a result, Pakistan saved Rs850 billion in interest payments this year.
The government had set aside Rs8.2 trillion for interest payments in the current fiscal year, compared to Rs9.8 trillion allocated last year.
Debt-to-GDP ratio improvement
The ministry noted that the debt-to-GDP ratio, which stood at 74 percent in 2022, has now declined to 70 percent in 2025. This improvement, officials said, reflects reduced refinancing and rollover risks, contributing to greater financial stability.
The federal deficit also narrowed to Rs7.1 trillion from Rs7.7 trillion previously, bringing the deficit-to-GDP ratio down from 7.3 percent to 6.2 percent.
Primary surplus and slower debt growth
Pakistan recorded a primary surplus of Rs1.8 trillion for the second consecutive year, the ministry confirmed. Annual debt growth also slowed to 13 percent compared to 17 percent last year.
The average maturity of public debt improved from 4 years to 4.5 years, while domestic debt maturity rose from 2.7 years to 3.8 years, signaling reduced repayment pressures.
For the first time in 14 years, Pakistan posted a current account surplus of $2 billion. The ministry clarified that a partial increase in external debt came from IMF and Saudi Oil Fund facilities, while an additional Rs800 billion increase was attributed to rupee depreciation rather than new borrowings.
