Latest news with #Rs76
Business Recorder
08-07-2025
- Business
- Business Recorder
Pakistan achieves early retirement of Rs1.5trn public debt in FY25
KARACHI: In a significant economic achievement, the government of Pakistan has demonstrated its firm commitment to fiscal discipline and long-term stability by retiring Rs 1.5 trillion in public debt ahead of schedule in FY25. This substantial early repayment has contributed to a notable improvement in Pakistan's fiscal indicators, bringing the debt-to-GDP ratio down from 75 percent in FY23 to 69 percent in FY25. 'In another bold and unprecedented step toward fiscal responsibility, the Ministry of Finance, Government of Pakistan, has successfully retired Rs 500 billion in debt owed to the State Bank of Pakistan (SBP- a full four years ahead of its scheduled maturity in 2029,' Khurram Schehzad Advisor to Finance Minister revealed on social platform X. Public debt recorded at Rs76,007bn by end-March This early retirement of central bank debt, executed by the Debt Management Office (DMO), marks a major breakthrough in Pakistan's debt management strategy. 'Early debt retirement while converting shorter-tenure with longer-tenure debt, significantly reduces concentration risk, lowers future liabilities, and strengthens the country's macroeconomic foundations by curbing reliance on borrowing,' he added. More importantly, he said that it reflects the government's strong commitment to proactive, disciplined, and forward-looking financial governance. This latest achievement builds on an earlier milestone- the successful buyback of Rs 1 trillion in market debt completed by December 2024- the first such operation in Pakistan's history. Combined, these two strategic actions amount to the early retirement of R 1.5 trillion in public debt in FY25, sending a strong signal of economic confidence and reform. In a historical move, with improved liquidity position the federal government conducted the first buyback auction of government securities during the first half of last fiscal year to reduce the debt burden. The Rs 3 trillion profit of SBP, transferred to the federal government, has eased the financial burden, and make cushion to retired the public debt, he said. He mentioned that with these early retirements of debt, Pakistan's debt-to-GDP ratio declined by 6 percent in the last two years from 75 percent in FY23 to 69 percent in FY25. In addition, it has extended the average time to maturity (ATM) of public debt from 2.70 to around 3.75 years. These early payments have also lowered refinancing risks and freeing up fiscal space for development priorities. Moreover, by capitalising on the sharp decline in interest rates- combined with disciplined borrowing, timely repayments, and strategic refinancing- the government has achieved an extraordinary Rs 830 billion in interest cost savings in FY25, Schehzad informed. 'This is more than just debt reduction; it is decisive, forward-looking economic management, aimed at building a resilient, credible, and fiscally sustainable Pakistan.' Copyright Business Recorder, 2025
Business Recorder
08-07-2025
- Business
- Business Recorder
Country achieves early retirement of Rs1.5trn public debt in FY25
KARACHI: In a significant economic achievement, the government of Pakistan has demonstrated its firm commitment to fiscal discipline and long-term stability by retiring Rs 1.5 trillion in public debt ahead of schedule in FY25. This substantial early repayment has contributed to a notable improvement in Pakistan's fiscal indicators, bringing the debt-to-GDP ratio down from 75 percent in FY23 to 69 percent in FY25. 'In another bold and unprecedented step toward fiscal responsibility, the Ministry of Finance, Government of Pakistan, has successfully retired Rs 500 billion in debt owed to the State Bank of Pakistan (SBP- a full four years ahead of its scheduled maturity in 2029,' Khurram Schehzad Advisor to Finance Minister revealed on social platform X. Public debt recorded at Rs76,007bn by end-March This early retirement of central bank debt, executed by the Debt Management Office (DMO), marks a major breakthrough in Pakistan's debt management strategy. 'Early debt retirement while converting shorter-tenure with longer-tenure debt, significantly reduces concentration risk, lowers future liabilities, and strengthens the country's macroeconomic foundations by curbing reliance on borrowing,' he added. More importantly, he said that it reflects the government's strong commitment to proactive, disciplined, and forward-looking financial governance. This latest achievement builds on an earlier milestone- the successful buyback of Rs 1 trillion in market debt completed by December 2024- the first such operation in Pakistan's history. Combined, these two strategic actions amount to the early retirement of R 1.5 trillion in public debt in FY25, sending a strong signal of economic confidence and reform. In a historical move, with improved liquidity position the federal government conducted the first buyback auction of government securities during the first half of last fiscal year to reduce the debt burden. The Rs 3 trillion profit of SBP, transferred to the federal government, has eased the financial burden, and make cushion to retired the public debt, he said. He mentioned that with these early retirements of debt, Pakistan's debt-to-GDP ratio declined by 6 percent in the last two years from 75 percent in FY23 to 69 percent in FY25. In addition, it has extended the average time to maturity (ATM) of public debt from 2.70 to around 3.75 years. These early payments have also lowered refinancing risks and freeing up fiscal space for development priorities. Moreover, by capitalising on the sharp decline in interest rates- combined with disciplined borrowing, timely repayments, and strategic refinancing- the government has achieved an extraordinary Rs 830 billion in interest cost savings in FY25, Schehzad informed. 'This is more than just debt reduction; it is decisive, forward-looking economic management, aimed at building a resilient, credible, and fiscally sustainable Pakistan.' Copyright Business Recorder, 2025
Express Tribune
29-06-2025
- Business
- Express Tribune
Pakistan's public debt spiral
The budget plans to take on new debt of Rs11 trillion. This will be added to the already crippling level of existing debt, which stands at Rs76 trillion. photo: file Listen to article Those who look carefully at Pakistan's 2025-26 budget will not fail to notice a startling detail: the total expenditure on debt servicing and foreign loan repayments amounts to a little less than half – 43% to be precise – of all government expenditure. This is by far the largest single line item in the budget. Compare this to other major expenditures: federal government expenses are 12%, development expenditure is 6%, and defence and services are 8%. Other vitally important sectors such as education, health care, and social services barely make it out of the low single digits. Further, the budget plans to take on new debt of Rs11 trillion. This will be added to the already crippling level of existing debt, which stands at Rs76 trillion. So by the time 2026 comes around, Pakistan's total debt would have reached Rs87 trillion. At current exchange rates, this is approximately $300 billion. Compare this to a GDP of $400 billion, and you get a debt-to-GDP ratio of 75%. This is well above Pakistan's own legal threshold set by the Fiscal Responsibility and Debt Limitation Act of 2005, which limits this ratio to 60%. So Pakistan's total debt, already over the legal limit, is set to increase even more. This will naturally lead to an inexorable increase in debt servicing costs, which, other things being equal, will squeeze even further the already paltry amounts available for other critical sectors such as health, education, social support, and infrastructure. All this is worrying by itself. But what is of even greater concern is that there seems to be no appreciation by the government of the danger posed by ever-increasing debt – and no attempt to even outline an escape route from this downward path to inevitable insolvency. It is clear that, should this addiction to ever-increasing debt continue unabated, the time will come when almost all of the government's revenues will go to debt servicing. Eventually, the sovereign country of Pakistan and its 250 million people will toil not for their own improvement but for the exclusive benefit of their lenders. To be sure, there are ways out of this debt sinkhole. But these require competent leadership at the political level, which unfortunately does not exist – not outside, nor inside Adiala jail. So, a solution will have to wait until such leadership comes into existence. Pakistan's situation, while serious, is not unique. Many other developing countries are stuck in the same predicament: they have too much debt, much of their income is spent on paying interest on this debt, and not much is left over for the truly important aspects of development. Fortunately, as a consequence of the global nature of the problem, there are international efforts to address this issue. One of these was initiated – perhaps surprisingly – by the late Pope Francis. The Pontiff was disturbed that poor countries and their people were drowning in a whirlpool of debt from which it seemed there was no escape. He was keen that the problem be addressed by some of the best minds in economics. To this end, he instructed the Pontifical Academy of Social Sciences to engage the services of the Initiative for Policy Dialogue at Columbia University to prepare a report on the issue, outlining how this global problem could be addressed. The report, with the somewhat unwieldy title of "A Blueprint for Tackling the Debt and Development Crises and Creating the Financial Foundations for a Sustainable People-Centred Global Economy", was released last week. Its lead author is the Nobel Prize-winning economist Joseph Stiglitz, who is professor of economics at Columbia University. The report begins with the following sentence: "The developing world is facing dramatic debt and development crises. A debt crisis should not be narrowly defined as a matter of countries defaulting on their obligations to creditors. For many nations, the real default is not a legal or financial one, but a social and development one: They are defaulting on their people, their environment, and their future." It goes on to say: "To meet obligations to their external creditors, debt-distressed countries are sacrificing investments in education, healthcare, infrastructure, and climate resilience. Core aspects of national sovereignty are put into question as economic policy serves creditors rather than citizens. National politics is delegitimised if fiscal and financial policies are in the service of finance rather than in the service of development." The 30-page document makes for compelling reading. It assesses the scale and nature of the problem and goes on to analyse the issues from multiple perspectives. These include, for example, structural flaws in the financial system, principles for debt resolution, reforming global governance, and rethinking sovereign debt markets. It critiques the International Monetary Fund (IMF)'s lending and surcharge policies and calls for the elimination of the Fund's regressive surcharges. It recommends setting up an international bankruptcy court for sovereign debt, or at minimum, a robust mediation mechanism. Finally, it proposes some urgent actions and concludes that debt crises are not simply technical problems — they are moral and political crises that reflect power imbalances and structural injustices. To end the cycle of debt dependency and underdevelopment, the world must create new financial rules grounded in equity, justice, and sustainability. There is usually a long and difficult road from a policy document such as this to the goals it seeks to achieve. This report is a valiant and necessary first step to tackle a critical problem that besets many developing countries. It is important because it holds out the promise that, if the global financial community can get together and set narrow self-interests aside, there is hope to improve the well-being of billions of people whose lives are benighted by a cyclone of ever-increasing debt. The writer is a Chairman of Mustaqbil Pakistan and holds an MBA from Harvard Business School
Business Recorder
11-06-2025
- Business
- Business Recorder
Rs8.2trn will be spent on debt servicing
ISLAMABAD: The country will spend around Rs 8.206 trillion on debt servicing including interest payments and retiring the principal as and when due during next financial year 2025-26 which is 46.7 percent of total budget outlay of Rs 17.573 trillion. The government has earmarked Rs 8.206 trillion in the budget 2025-26 a mark-up against Rs 9.775 trillion for the current fiscal year which was later revised to Rs8.945 trillion. Next fiscal year the country will pay Rs1.009 trillion as mark-up on foreign debt against the revised estimates of Rs 1.038 trillion. Public debt recorded at Rs76,007bn by end-March The budget allocates Rs 7.197 trillion on domestic mark up in 2025-26 against Rs8.736 trillion in 2024-25 which was revised down to Rs 7.906 trillion. Pakistan's total public debt was recorded at Rs 76,007 billion end-March 2025, registering an increase of Rs4,761 billion (6.7 percent) during first nine months of current fiscal year, as it was Rs 71,246 billion on June 30, 2024. Copyright Business Recorder, 2025
Express Tribune
05-06-2025
- Business
- Express Tribune
NEPRA approves Rs50b write-off for KE
Listen to article The National Electric Power Regulatory Authority (NEPRA) approved on Thursday a write-off amount of Rs50.013 billion for K-Electric (KE) under the Multi-Year Tariff (MYT) period of FY2017 to FY2023. While still an acknowledgment, it is much less than what KE had asked for despite meeting NEPRA's strict guidelines on what constitutes prudent cost recovery. The approved amount is part of the broader claim of Rs76 billion submitted by KE, for which NEPRA hearings were held in December 2024 and April 2025. Ensuring the write-off amount pertaining to unrecovered dues comprised an extensive process of meeting stringent conditions, including verification of essential documents, multiple recovery efforts, disconnections, and KE's Board certifying that all reasonable and best possible recovery efforts were undertaken. The approved write-offs are strictly based on criteria laid out in KE's NEPRA-approved write-off policy and have undergone rigorous internal and external audits, including physical surveys and consumer-level documentation checks. During the hearings, KE officials had stressed that these unrecovered amounts were not a result of inefficiency but a reflection of ground realities, such as the presence of unplanned settlementsslumsleading to operational challenges in areas where recoveries are no longer possible due to demolition, migration, or theft. Hearing discussions also included matters like the circular debt, which KE highlighted it had no contribution to. Interveners and commenters shared their statements and opinions regarding KE's write-off claims. Sheikh M Tehseen, President of the Federal B Area Association of Trade & Industry (FBATI), mentioned that KE's financial sustainability and investment plans were dependent on write-off claims, while emphasising that under the current tariff framework, any such claims should be resolved fairly, recognising that 100% recovery in a city like Karachi is unrealistic. Similarly, the President of the SITE Association of Industry, in his letter, had expressed support for a timely resolution of KE's write-off claims, emphasising the need to maintain KE's operational stability while protecting industrial stakeholders from additional financial burden, and urging NEPRA to ensure a balanced decision that supported uninterrupted industrial operations and served the greater public interest. The Secretary General of the Overseas Investors Chamber of Commerce & Industry (OICCI) highlighted KE's investments since privatisation and wrote about its performance as a benchmark for future investors, mentioning that NEPRA's decision would set the mood for the privatisation of DISCOs. He stated that a fair evaluation and subsequent decision would support foreign direct investment (FDI) and restore investor confidence in the energy sector. The last few days have witnessed approvals and decisions by NEPRA for KE's critical matters, including the determination of its transmission, distribution, and supply tariffs, with the write-off decision being the latest in this series.
