Pakistan has made progress in extending the repayment period of its public debt, giving the government more time to meet its financial obligations. The average maturity of public debt increased to 3.8 years by June 2026, compared with 2.7 years in June 2024, as authorities continue efforts to reduce refinancing risks and improve debt management.
According to the Ministry of Finance, the government is targeting a further increase in the average maturity of public debt to 4.2 years by June 2028. The strategy is aimed at spreading repayment obligations over a longer period and reducing the pressure associated with large amounts of debt becoming due within a short timeframe.
The improvement reflects a gradual shift towards longer-term borrowing, diversified financing sources and more proactive management of government liabilities. By extending debt maturity, Pakistan aims to reduce its dependence on frequent refinancing and create greater flexibility in managing public finances.
However, the improvement in average debt maturity does not mean that Pakistan’s overall repayment burden has disappeared. The country continues to face substantial principal repayments, particularly during the upcoming fiscal year, highlighting the challenges associated with managing domestic and external borrowing.
Domestic debt principal repayments are estimated at Rs. 17 trillion during the fiscal year 2027 (FY2027). This figure does not include the rollover of Treasury Bills, meaning the government’s overall financing and liquidity requirements could remain considerable.
In addition to domestic obligations, Pakistan is expected to face external principal repayments of approximately Rs. 4.531 trillion during the same fiscal year. These payments add to the country’s financial commitments and underline the importance of maintaining access to stable financing sources.
The government’s debt management strategy focuses on reducing refinancing risks by avoiding excessive dependence on short-term borrowing. When a large portion of public debt matures within a limited period, authorities must arrange funds or secure new financing to meet repayment deadlines. This can increase pressure on government revenues, financial markets and foreign exchange reserves.
Extending the average maturity period can help distribute these obligations more evenly. It may also provide policymakers with additional time to manage fiscal requirements, although the actual impact depends on borrowing costs, interest rates, currency movements and the availability of financing.
Diversifying funding sources is another important part of the government’s approach. A broader financing base can help reduce reliance on a limited number of borrowing channels and provide more options when managing future repayment requirements.
Pakistan’s progress in extending public debt maturity comes at a time when fiscal management and external financing remain important economic priorities. The government must balance its borrowing requirements with efforts to control financing costs and maintain economic stability.
The next major target is to increase average public debt maturity to 4.2 years by June 2028. Achieving this objective will require continued efforts towards longer-term financing and effective management of domestic and external liabilities.
While the latest figures indicate an improvement in repayment scheduling, the substantial obligations expected in FY2027 show that Pakistan still faces significant debt management challenges. The effectiveness of the government’s strategy will depend on its ability to manage upcoming repayments without creating additional pressure on the economy.