Pakistan pays off debt worth Rs500b owed to SBP

ISLAMABAD: Pakistan has achieved a significant fiscal milestone by successfully retiring 500 billion rupees in debt owed to the State Bank of Pakistan, four years ahead of its scheduled maturity in 2029

This was shared by Advisor to Finance Minister Khurram Schehzad in a post on social media platform X.

The post said that the debt was due for 2029, but its early retirement reflects the government’s strong commitment to proactive, disciplined and forward-looking financial governance.

It will help reduce concentration risk, lower future liabilities and strengthen the country’s macroeconomic foundation by curbing reliance on borrowing.

Earlier, Khurram Shehzad, Adviser to the Finance Minister, stated that the federal government has successfully resolved Pakistan’s long-standing issue of circular debt through a historic Rs1.275 trillion Islamic financing agreement with 18 commercial banks.

Also read: Federal govt’s debt hits high record: SBP

Khurram Shehzad made the announcement, hailing the development as a foundation of the Prime Minister Shehbaz Sharif administration’s major energy restructuring.

Khurram Shehzad indicated that the financing deal will eradicate Rs1.275 trillion in circular debt, a burden that has long overwhelmed the country’s power sector.

A total allocation of Rs683 billion will be directed towards settling liabilities of the Power Holding Company, while Rs592 billion will be designated for Independent Power Producers (IPPs).

A loan of Rs1.275 trillion has been secured at a concessional rate to resolve Pakistan’s circular debt, set at 0.9% below the three-month KIBOR benchmark, in line with Pakistan’s commitment to achieving interest-free banking by 2028.