ISLAMABAD: The federal government has significantly reduced the mark-up rate on development loans and advances for fiscal year 2025-26 to 11.89 percent, providing relief to provincial governments, public sector entities, and government employees.
According to an official notification issued by the Ministry of Finance, the final annual mark-up rate on cash development loans to provincial governments has been fixed at 11.89 percent for FY2025-26.
The revised rate will also apply to loans extended to local bodies, financial and non-financial institutions, other corporations, and capital outlays of the federal government in commercial departments.
The new mark-up rate represents a decline of 5.85 percentage points from the 17.74 percent rate applicable during FY2024-25. It is also significantly lower than the 17.84 percent rate charged in FY2023-24.
The Finance Ministry communicated the decision through an official letter addressed to the Controller General of Accounts (CGA), Islamabad.
The revised 11.89 percent annual mark-up rate will apply to the following categories:
Cash development loans provided to provincial governments.
Loans extended to local bodies, financial and non-financial institutions, and other corporations.
Capital outlays of the federal government in commercial departments.
The ministry further announced that the same 11.89 percent annual mark-up rate will apply to government advances provided to employees for the purchase of conveyances and house construction during FY2025-26.
The reduction is expected to ease the debt-servicing burden on provincial governments and public sector organisations that rely on federal development financing. It may also reduce borrowing costs for government employees seeking house-building and vehicle purchase advances.
