Government plans over Rs6.7 trillion new borrowing in budget 2026-27

The federal government has projected fresh borrowing exceeding Rs6.779 trillion during the fiscal year 2026-27 as part of its strategy to bridge the budget deficit and meet growing financial requirements

Islamabad: The federal government has projected fresh borrowing exceeding Rs6.779 trillion during the fiscal year 2026-27 as part of its strategy to bridge the budget deficit and meet growing financial requirements, according to official budget documents.

The documents reveal that a significant portion of the government’s expenditure will continue to be consumed by debt servicing, with more than Rs8.54 trillion allocated for the payment of interest on existing domestic and foreign loans in the upcoming fiscal year.

A detailed breakdown shows that the largest share of interest payments, amounting to Rs6.983 trillion, will be spent on domestic debt, while approximately Rs1.71 trillion has been earmarked for interest payments on external loans.

The budget papers further indicate that the government expects to receive Rs574 billion through foreign-funded project loans and grants to support various development initiatives across the country. In addition, the government plans to secure Rs418 billion in external programme loans to strengthen its financial resources.

To fulfill remaining fiscal needs and manage the budget deficit, authorities have proposed raising another Rs5.542 trillion through additional borrowing sources.