Federal Government Sets 11.89% Mark-Up Rate for Fiscal Year 2025-26:

The Ministry of Finance has fixed the final mark-up rate for specified federal development loans and advances at 11.89% per annum for fiscal year 2025-26. The same 11.89% rate applies to loans and advances for the purchase of conveyance and house building.

What the 11.89% Mark-Up Rate Covers:

The final rate of mark-up is 11.89% per annum for fiscal year 2025-26.

The rate applies to cash development loans provided to provincial governments, loans to local bodies, financial and non-financial institutions and other corporations, and federal government capital outlays in commercial departments.

For loans and advances used to purchase conveyance and for house building, the notification separately confirms the same final mark-up rate of 11.89% per annum for FY 2025-26.

The notification records a decline from 17.84% in FY 2023-24 and 17.74% in FY 2024-25 to 11.89% in FY 2025-26. Borrowers should still confirm the applicable loan agreement, accounting treatment and repayment schedule with the relevant authority. The Notification Describes;

Government of Pakistan
Ministry of Finance
No. 8(2)GS-I/2018-0002
Islamabad, the 23rd July, 2026.

Subject:           Rate of Mark-Up Chargeable on Development Loans and Advances by the Federal Government for the Fiscal Year 2025-26.

Dear Sir,

                              I am directed to state that the following final rates of mark-up chargeable on the following categories have been fixed by the Federal Government:

• Cash development loans to the Provincial Governments;
• Loans to local bodies, financial and non-financial institutions and other corporations; and
• Capital outlays of the Federal Government in the commercial departments.

Fiscal Year	Final Rates of Mark-Up (Per Annum)
2023-24	17.84%
2024-25	17.74%
2025-26	11.89%

2.                          In the case of loans and advances for the purchase of conveyance and house building, the final rate of mark-up, namely 11.89% per annum, has been fixed for fiscal year 2025-26.

AAO (Borrowing).

A Clearer Borrowing Cost for FY 2025-26:

The notification gives borrowers and public institutions a clear final mark-up benchmark for fiscal year 2025-26. At 11.89% per annum, the rate is lower than the 17.84% recorded for FY 2023-24 and the 17.74% recorded for FY 2024-25. The change matters for public-sector borrowing, institutional loans and eligible advances for conveyance and house building.

The rate applies to the categories listed in the memorandum, but it should not be treated as a universal interest rate for every government-related loan. The relevant loan sanction, repayment agreement, accounting rules and any later clarification remain important. In particular, borrowers should verify whether their loan falls within one of the listed categories and how the mark-up is calculated over the outstanding balance.

Departments and accounts offices should update their records for FY 2025-26 and apply the notified rate consistently. Individual borrowers should request a written calculation if they need to confirm instalments, outstanding liability or the impact on a conveyance or house-building advance. Overall, the order provides a lower and clearly stated annual mark-up rate while leaving operational calculation to the applicable loan documentation and government financial procedures.

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Frequently Asked Questions

What is the final mark-up rate for FY 2025-26?

The final mark-up rate is 11.89% per annum for the categories specified in the notification.

Does 11.89% apply to conveyance and house-building advances?

Yes. The notification specifically fixes 11.89% per annum for conveyance purchase and house-building loans and advances for FY 2025-26.

Which loans are covered?

The listed categories include cash development loans to provincial governments, loans to local bodies and institutions, other corporations, federal commercial-department capital outlays, and the specified conveyance and house-building advances.