Government plans to raise Rs8.7 trillion in debt to repay loans

The government plans to raise Rs8.7 trillion in new domestic debt over the next three months to repay maturing loans. Of this, Rs6.85 trillion will go towards settling obligations to financial institutions, primarily through Treasury bills and Pakistan Investment Bonds. The strategy aims to reduce reliance on high-cost, short-term debt by shifting to lower-cost, long-term bonds. This approach is expected to enhance financial stability and decrease the frequency of debt auctions, allowing the government to focus on economic reforms. Recent data shows a decline in the government's reliance on short-term T-bills, now at 21% of the debt mix. Increased foreign funding and a significant profit transfer from the State Bank of Pakistan have enabled the government to initiate this debt restructuring effort.