I am paying tax to the foreign country on the interest I earned, do I still need to report the interest on my tax return?

[KarenJ]

Yes, if you are a US citizen or US resident, you must declare your worldwide income on your US tax return.  However, when you enter the tax under 1099INT, you can click on the box on that screen that says My form has info in more than just box 1 and enter the foreign tax paid in Box 6. 

You will receive a foreign tax credit to help offset double taxation.