Pakistan's interest bill heads to Rs 8 trillion this year, about Rs 22 billion a day, and past Rs 10 trillion by 2031

Pakistan's government is projected to spend Rs 8.054 trillion on interest on its domestic and foreign debt in the current fiscal year (July 2026 to June 2027), ProPakistani reported on Thursday, citing official projections. That is roughly Rs 22 billion every day, or about Rs 33,000 for every person counted in the 2023 census (241.5 million), and it already exceeds what the federal government spends on defence and on development.

Why the bill could rise further

The projection was made before the State Bank's Monetary Policy Committee raised the policy rate by 50 basis points to 12% from 11.5%. Most of Pakistan's debt is domestic and much of it reprices with short-term rates, so a higher policy rate feeds straight into the interest bill. The rate and its history are on our SBP policy rate page, and the 12-month benchmark banks lend at is on the KIBOR page.

The path to Rs 10 trillion

The Ministry of Finance projects interest payments of about Rs 8.68 trillion by FY2029, and the IMF's projections, as reported by ProPakistani, go past Rs 10 trillion by FY2031:

The IMF's figure for this year is lower than the Rs 8.054 trillion in the government projection, a gap of about Rs 770 billion; the two were made at different times and on different interest rate assumptions.

What is left for everything else

Under the NFC Award the federal government passes a large share of the taxes it collects to the provinces. Until recently the Centre fell into deficit as soon as it paid interest; since last fiscal year it has been left with about Rs 3 trillion of net revenue after debt service. The federal fiscal deficit is projected at Rs 7 trillion (4.9% of GDP) this year, Rs 7.1 trillion (4.5%) in 2027-28 and Rs 7.5 trillion (4.2%) in 2028-29. The consolidated deficit comes down to just over Rs 5 trillion only because provinces are expected to run surpluses of Rs 1.5 trillion to Rs 2 trillion a year, an arrangement officials quoted by ProPakistani called ad hoc and not a lasting fix. The federal government has also borrowed more than Rs 1.035 trillion under Article 164 of the Constitution.

What it means for you

Interest is paid before schools, hospitals, roads or tax relief. When it takes this much of the budget, it shows up for ordinary people as high petrol levies, slow tax relief on salaries and thin development spending. On the other side, government borrowing at these rates is why National Savings and bank deposit rates stay high: see what your savings earn with our National Savings calculator, and what your salary is taxed with the income tax calculator.