Islamabad, Pakistan:
Pakistan has successfully repaid a $500 million Eurobond on schedule, a move the government is highlighting as concrete evidence of improving fiscal discipline, strengthening foreign reserves, and a more resilient economic outlook following years of crisis.
The bond, originally issued in 2015 with a 10-year tenor to raise funds from global investors, matured on September 30 this year.
Khurram Schehzad, Adviser to the Finance Minister, announced the repayment on the X platform, stating: “Timely debt servicing remains business as usual, reflecting the country’s commitment to financial discipline.”
He characterized the development as encouraging, noting that it coincides with a period where “external buffers and liquidity have improved, sovereign ratings have been raised, and investor confidence is rising,” pointing to Pakistan’s bonds recently trading at a premium.
Key Metrics of Improvement
Schehzad detailed several key macroeconomic improvements, signaling a move towards a more sustainable debt profile:
- The debt-to-Gross Domestic Product (GDP) ratio has improved from 77% in FY20 to 70% in FY25.
- The external debt’s share in total public debt has declined from 38% to 32% in FY25, significantly reducing the country’s foreign exchange (FX) vulnerability.
- Debt growth has also “moderated sharply in FY25” compared to previous years.
Looking ahead, the Adviser suggested that these stronger fundamentals, coupled with easing global borrowing costs, position Pakistan to access international markets on more competitive terms, allowing it to continue building a durable debt profile.
From Crisis to Stability
This punctual repayment comes after Pakistan navigated a prolonged economic crisis over the past few years, marked by critically low foreign exchange reserves and a looming default risk in 2023. That crisis was narrowly averted only after the International Monetary Fund (IMF) released a crucial loan tranche, augmented by significant financial support from friendly nations including China, the UAE, and Saudi Arabia.
Since averting default, Pakistan has implemented tough, IMF-prescribed reforms to stabilize its economy. The positive trajectory has been acknowledged globally, with major credit rating agencies like Fitch, Moody’s, and S&P Global all raising Pakistan’s sovereign credit rating this year, validating the government’s claim of improved financial health.
