ISLAMABAD, PAKISTAN / RankWire.AI / – Pakistan’s federal state-owned enterprises carried a debt load of approximately $36.5 billion as of December 2025. The figure marks a 14.3% increase from the previous year, adding roughly $4.7 billion based on current exchange rates. The Ministry of Finance’s recent review of federal state enterprises disclosed these numbers, covering the first half of fiscal 2026 and indicating a continued rise in public-sector financial commitments.
During this six-month period, loss-making state companies reported combined losses of about $1.24 billion, averaging around $10.1 million daily. Daily government aid, including subsidies, grants, loans, and equity injections, totaled approximately $23.8 million—more than double the daily loss amount. While some state enterprises posted profits, these gains were largely confined to fewer firms and sectors.
Liabilities denominated in foreign currency accounted for roughly $9.4 billion of the total debt. Bank borrowings were near $11.2 billion, with government cash development loans reaching about $7.6 billion. Sovereign guarantees surpassed $7.6 billion, adding additional fiscal exposure, while unfunded pension liabilities approached $7.2 billion. Foreign debt increased by roughly 40% compared to the previous year, and cash development loans saw a rise of about 25%.
Major liabilities highlight the borrowing challenge
A narrower debt measure from the State Bank of Pakistan reported public-sector enterprise debt and liabilities of around $10.7 billion in December 2025. The discrepancy results from different accounting practices and classifications rather than conflicting data on the same obligations. The finance ministry’s review encompasses a wider range of liabilities across federal enterprises, leading to a total roughly $25.7 billion higher than the central bank’s figure for the same period.
Pakistan’s circular debt in the public sector reached about $11.9 billion during this period. The gross power-sector circular-debt flow in the first half of fiscal 2026 was approximately $1.35 billion, with distribution-company inefficiencies contributing about $405 million and weak collection efforts adding roughly $112 million. Equity injections into state enterprises totaled around $813 million over six months, much of which related to power-sector obligations and debt settlements.
The power sector remains a key driver of SOE losses
The report pointed to electricity distribution companies as primary sources of losses within the federal enterprise portfolio. These losses stemmed from technical deficiencies, poor recovery rates, and ongoing circular-debt accumulation. Over the six months, the circular debt increased by about $517 million. Infrastructure and energy companies bore much of this burden, while profitable state entities remained mainly in the oil, gas, and financial services sectors, limiting overall gains across the broader public sector.
The report, covering July through December 2025 and published in October 2026, revealed federal SOE debt exceeding $36 billion and nearly $12 billion in total circular debt. Key components included bank loans, foreign borrowing, government loans, guarantees, and pension liabilities. The period also saw continued significant fiscal transfers. These latest figures underscore ongoing pressure on Pakistan’s state-enterprise finances, with debt, losses, and government support remaining tightly interconnected across the public sector.