How Much Interest Does Pakistan Pay in 2026-27?
The Rs 8,054 billion debt-servicing bill, and what it means for the budget
By the ISN Media desk • June 2026 • Approx. 5-min read
This is a short, factual answer about Pakistan's debt-servicing bill in the 2026-27 budget. The figures are Budget Estimates from the Government of Pakistan, in billions of rupees. For the full analysis, see the 43 percent, how debt interest consumes Pakistan's budget.
How much interest does Pakistan pay in 2026-27?
Pakistan will pay about Rs 8,054 billion in interest in 2026-27, which is roughly 43 percent of all federal spending and the single largest item in the budget. Of that total, about Rs 6,983 billion is interest on domestic debt and about Rs 1,071 billion is interest on foreign debt. The interest bill is larger than defence and the entire development programme combined, and it is the reason the budget runs a large deficit.
What the figure includes
The interest bill, sometimes called mark-up in Pakistan's budget documents, is the cost of servicing debt the government borrowed in earlier years. It pays for no new project, salary or service; it is simply the price of past borrowing. It is distinct from repaying the principal of the debt, which is handled separately through fresh borrowing.
One year of interest, beside defence, development and the social sectors.
Domestic versus foreign
Most of the interest, about Rs 6,983 billion, is owed at home, to banks through treasury bills, bonds and Islamic instruments. Only about Rs 1,071 billion is owed abroad. This matters because it means the central problem is the high rate at which the government borrows from its own banking system, rather than mainly a shortage of foreign currency, as explained in why is Pakistan's debt mostly domestic.
Why it is so large
The interest bill is large because the debt is large and the rates at which it is borrowed have been high, and because much of the domestic debt is short-term and must be refinanced frequently at prevailing rates. The single most powerful lever to reduce it is a lower interest rate, which depends on sustained lower inflation. It cannot be cut in a single budget, because it is a legal obligation on debt already owed.
Frequently asked questions
How much interest does Pakistan pay in 2026-27? About Rs 8,054 billion, roughly 43 percent of all federal spending and the largest item in the budget. About Rs 6,983 billion is domestic and about Rs 1,071 billion foreign.
Is interest the largest item in the budget? Yes. At Rs 8,054 billion it is larger than defence (about Rs 3,000 billion) and the development programme (about Rs 1,000 billion) combined.
What is mark-up in Pakistan's budget? Mark-up is the term used in Pakistan's budget documents for interest, the cost of servicing existing debt. It does not include repaying the principal, which is handled through fresh borrowing.
Is most of the interest owed abroad? No. About Rs 6,983 billion is owed at home and only about Rs 1,071 billion abroad, so the core problem is the cost of domestic borrowing.
Can the interest bill be reduced quickly? No. It can only be eased over time through lower interest rates, sustained lower inflation and longer debt maturities, because it is an obligation on debt already borrowed.
Did the interest bill rise this year? It fell slightly, by about 2 percent from Rs 8,207 billion, on the assumption that interest rates will ease, not because the debt itself shrank.
How does the interest bill compare with the centre's revenue? At about Rs 8,054 billion, interest consumes close to two-thirds of the roughly Rs 11,751 billion the centre keeps after paying the provinces, so most of the centre's own revenue is committed to interest before any service is funded.
Sources and notes
- Government of Pakistan, Federal Budget 2026-27: interest figures are Budget Estimates in billions of rupees, rounded for readability.
ISN MEDIA