Pakistan Interest Payments Budgeted at Rs8.054 Trillion

ISLAMABAD, October 29, 2026 — Pakistan’s federal budget sets aside Rs8.054 trillion for interest payments in fiscal year 2026–27. This budget estimate is close to Rs8 trillion and may rise if borrowing costs increase, according to ProPakistani.

The Finance Division’s budget statement confirms the Rs8.054 trillion estimate. It includes Rs6.983 trillion for domestic debt interest and Rs1.071 trillion for foreign debt interest. However, this is a budget allocation, not a report of the amount already paid. See the official budget statement.

Domestic debt accounts for most interest costs

Domestic debt payments make up most of the budgeted interest bill. The government allocated about Rs6.983 trillion for domestic debt interest and Rs1.071 trillion for foreign debt interest.

Together, the two amounts total about Rs8.054 trillion. That makes interest payments one of the largest items in the federal budget. The Associated Press of Pakistan also reported that the budget includes around Rs8.05 trillion for debt servicing and markup payments.

Higher policy rate may add pressure

ProPakistani reported that the State Bank of Pakistan raised its policy rate by 0.5 percentage points, from 11.5% to 12%. As a result, the cost of some government borrowing could rise.

However, the full effect depends on how the rate change affects government borrowing and refinancing. ProPakistani cited officials who said interest costs could increase slightly. The final amount will depend on financing conditions during the year.

Debt costs limit room for other spending

The government must pay interest before it can use the same funds for other priorities. Therefore, a large interest bill can leave less room in the budget for development and public services.

ProPakistani reported that the federal fiscal deficit is projected at Rs7 trillion this fiscal year. Meanwhile, it cited projections of Rs7.1 trillion for FY2027–28 and Rs7.5 trillion for FY2028–29.

The Rs8.054 trillion figure is a budget estimate for FY2026–27. In short, Pakistan’s interest payments are budgeted at about Rs8 trillion, while the eventual cost may change with borrowing rates and financing needs.