ISLAMABAD: Pakistan has repaid a maturing $500 million Eurobond, signaling a stronger financial position after a period of economic instability. The successful repayment is seen as a sign of restored investor confidence and follows the implementation of tough economic reforms under an International Monetary Fund (IMF) program.
The 10-year Eurobond, issued in 2015, matured on September 30, 2025. Adviser to the finance minister, Khurram Schehzad, said the timely repayment demonstrated the country’s commitment to financial discipline. He also noted improving macroeconomic indicators, upgraded sovereign ratings, and strengthened external buffers. In recent months, Pakistan’s bonds have been trading at a premium.
Pakistan’s Improving Financial Outlook
The repayment is viewed as evidence of Pakistan’s progress in managing its finances. Several indicators point to a more stable outlook:
- Higher foreign reserves: Increased reserves provide greater financial stability.
- Sovereign ratings upgrades: Global credit rating agencies have acknowledged the improved economic position with sovereign rating upgrades.
- Debt metrics: Debt-to-GDP ratio has improved from 77% (FY20) to 70% (FY25).
- Competitive borrowing: With easing global borrowing costs and stronger fundamentals, the government expects to access markets on more competitive terms.
Broader Economic Context
The repayment also reflects Pakistan’s recovery from a severe balance of payments crisis and record inflation in recent years. The country secured a standby arrangement from the IMF in mid-2023 to avert a sovereign default. In early 2025, the government began negotiations for a longer-term IMF bailout.
The turnaround has been supported by stringent fiscal policies and structural reforms, including the “Uraan Pakistan” economic transformation plan. Several international financial institutions — including the IMF, the Asian Development Bank (ADB), and the World Bank — now project moderate economic growth for Pakistan in fiscal year 2025 and beyond.
Schehzad noted that stronger external buffers, upgraded sovereign ratings, and improved investor confidence — with bonds trading at a premium in recent months — underscored the progress.
Debt-to-GDP also fell from 77 percent in FY20 to 70 percent in FY25, while the external debt share of total public debt dropped from 38 percent to 32 percent.
“Looking ahead, easing global borrowing costs, alongside stronger fundamentals, position Pakistan to access markets on more competitive terms and continue building a more sustainable debt profile,” he added.
