Pakistan sets Rs290 per dollar exchange rate for FY27 budget

The federal government has set an exchange rate of Rs290 per US dollar for the fiscal year 2026-27 budget, implying a nominal depreciation of around 3.5% from the current interbank level and providing the basis for calculating foreign loan disbursements, repayments and grants, The Express Tribune reported. 

The Finance Ministry has issued an office memorandum directing all relevant ministries and divisions to use the rate while preparing their budget allocations for the next fiscal year.

Pakistan officially follows a flexible exchange rate regime, meaning the budgetary rate is an accounting assumption rather than a fixed currency target.

The Rs290 rate will be used to calculate foreign debt servicing, defence-related overseas procurement, allocations for Pakistan’s diplomatic missions and the foreign-funded component of the Public Sector Development Programme.

The budget exchange rate indicates depreciation of Rs 10, or 3.5%, although the rupee has remained broadly stable and gradually strengthened against the dollar over the past year.

The government has announced that the federal budget will be presented on June 10, subject to final endorsement by Prime Minister Shehbaz Sharif.

The current fiscal year’s budget was also prepared using an exchange rate of Rs290 per dollar, but the government has decided to calculate revised estimates for the outgoing year at Rs280 per dollar, sources said.

The rupee closed at Rs278.42 against the dollar in the interbank market on Thursday, appreciating by three paisa.

The exchange rate assumption will also affect the foreign procurement component of the defence budget.

The International Monetary Fund has projected Pakistan’s defence budget at Rs2.66 trillion, although government sources said a higher allocation remained possible because of hostilities along international borders.

For FY2026-27, the federal and four provincial governments plan to secure $3.2 billion, or around Rs927 billion, in foreign project loans.

The amount represents about 22% of the proposed national development budget of Rs4.3 trillion, reflecting continued reliance on foreign creditors for project financing.

The federal government has projected Rs267 billion in foreign project loans, while the four provinces expect to receive a combined Rs660 billion.

The IMF has estimated Pakistan’s gross external financing requirement at $21.2 billion for FY2026-27 and $30 billion for FY2027-28.

Sources said Prime Minister Shehbaz Sharif reviewed the external financing position this week to assess whether the requirements had been adequately incorporated into the budget and whether the government would be able to arrange $30 billion in the following fiscal year.

The Finance Ministry assured the Prime Minister’s Office that the country’s external financing needs were fully covered and described the $30 billion requirement for FY2027-28 as an IMF projection.

For FY2026-27, the government has projected a current account deficit of around 0.7% of gross domestic product, equivalent to approximately $3.6 billion.

Exporters have recently urged the prime minister to allow greater flexibility in the exchange rate, according to sources.

Interest payments on external debt are projected to reach about Rs1.1 trillion, or nearly $4 billion, during the next fiscal year.

Overall debt-servicing allocations may reach around Rs7.8 trillion.

Pakistan’s external debt position remained broadly manageable during the current fiscal year after the State Bank of Pakistan purchased dollars from the domestic market to rebuild foreign exchange reserves.