The federal government has fixed the exchange rate at Rs. 290 per US dollar for the upcoming 2025-26 federal budget, projecting a 3.6 percent depreciation for the Pakistani rupee amid expectations of external stability under the ongoing International Monetary Fund (IMF) program.
This exchange rate will be applied to all budget estimates, including foreign debt servicing, defense imports, foreign missions, and the Public Sector Development Program (PSDP). The same rate was used for the current year’s budget, though actual performance proved more stable, with revised estimates for the outgoing fiscal year now being calculated at Rs. 280 per dollar. The interbank rate on Monday stood at Rs. 281.56.
The defense budget is set to increase by 18 percent to over Rs. 2.5 trillion. External debt interest payments are projected at Rs. 1.2 trillion, with total debt servicing estimated at Rs. 8.7 trillion, though this figure may be revised downward following the recent interest rate cut.
Despite the State Bank of Pakistan’s (SBP) projection of Rs. 299 per dollar for the next fiscal year, the finance ministry has opted for the more conservative Rs. 290 rate.
The IMF forecasts that Pakistan’s gross reserves will reach $17.7 billion in 2025-26, covering 2.8 months of imports. Inflation is projected at 7.7 percent, supported by the stable exchange rate forecast.
Pakistan’s external debt stood at $130.3 billion at the end of March 2025, down $800 million from the previous year, primarily due to lower long-term liabilities. However, the country will need approximately $25 billion in 2025-26 to meet maturing external obligations.
According to the latest SBP data, total debt and liabilities rose to Rs. 89.8 trillion by the end of March, up 10.1 percent year-on-year, while government debt increased by 13 percent to Rs. 73.7 trillion.
