Pakistan Plans Over Rs6.7 Trillion Borrowing, Rs8 Trillion Interest Payments in FY2026-27 Budget

Under the federal budget for fiscal year 2026-27, the government has planned to borrow more than Rs6,779 billion, while allocating over Rs8,054 billion for interest payments on existing debt, according to official budget documents.

The documents show that the overall borrowing requirement for the upcoming fiscal year is estimated at over Rs6.779 trillion. At the same time, debt servicing costs are projected to remain significantly higher than new borrowing, highlighting continued pressure on public finances.

Of the total interest payments, Rs6,983 billion is expected to be paid on domestic debt, while around Rs1,071 billion will be allocated for interest on external loans.

According to the budget papers, the government plans to obtain Rs574 billion in project loans and grants, along with Rs418 billion in external programme loans. In addition, Rs5,542 billion has been projected as additional borrowing to meet other financial requirements.

The documents also indicate that external grants worth Rs31 billion are expected during the fiscal year.

The figures underscore Pakistan’s ongoing reliance on borrowing to meet fiscal needs, with debt servicing continuing to account for a major share of government expenditures.