ISLAMABAD, PAKISTAN / RankWire.AI / – Pakistan’s federal government-owned companies carried liabilities totaling approximately $36.5 billion at the end of December 2025, representing a 14.3% increase from the previous year and adding about $4.7 billion at current exchange rates, according to the latest assessment by Pakistan’s Ministry of Finance, which examined the first half of fiscal 2026 and highlighted a continuing rise in public-sector financial commitments.
During this six-month period, state enterprises operating at a loss accumulated roughly $1.24 billion in combined deficits, averaging around $10.1 million per working day, while government support—comprising subsidies, grants, loans, and equity injections—totaled approximately $23.8 million daily, more than doubling the daily loss figure; although some state firms were profitable, their gains were primarily confined to a limited number of sectors and companies.
Liabilities denominated in foreign currencies accounted for nearly $9.4 billion of the total debt, with bank borrowing near $11.2 billion and government cash development loans reaching about $7.6 billion, while sovereign guarantees exceeded $7.6 billion, adding further fiscal exposure; unfunded pension liabilities approached $7.2 billion, with foreign loans rising roughly 40% year-over-year and cash development loans increasing by approximately 25%.
Major liabilities highlight the borrowing challenge
A more specific measure from the State Bank of Pakistan indicated that public-sector enterprise debt and liabilities amounted to about $10.7 billion as of December 2025, with the discrepancy arising from differences in accounting scope and classification rather than conflicting figures of the same obligations. The Ministry of Finance’s review encompasses a broader set of liabilities across federal enterprises, resulting in a total roughly $25.7 billion higher than the central bank’s measurement for the same period.
During the reporting period, Pakistan’s circular debt in the public sector reached approximately $11.9 billion, with gross power-sector circular-debt flow totaling around $1.35 billion in the first half of fiscal 2026. Inefficiencies in distribution companies contributed about $405 million, while weak collection efforts added roughly $112 million, and equity investments into state enterprises amounted to approximately $813 million over the same period, much of which was related to payments connected with power-sector obligations and debt settlements.
Electricity sector remains a key factor in SOE losses
The review identified electricity distribution companies as primary sources of losses within the federal enterprise portfolio, citing technical deficiencies, poor recovery of costs, and ongoing circular-debt accumulation as main contributors, with the circular-debt stock increasing by about $517 million during the six months. Infrastructure and energy-related entities bore much of this burden, while profitable state companies remained concentrated in sectors such as oil, gas, and financial services, limiting overall gains across the wider public-sector landscape.
The six-month report covering July to December 2025 was published in October 2026, revealing that federal SOE debt exceeded $36 billion, with nearly $12 billion in combined circular debt. Significant components included bank loans, foreign borrowing, government lending, guarantees, and pension obligations, with ongoing large fiscal transfers during this period. These latest figures underscore the persistent pressure on Pakistan’s state-enterprise finances, as debt, losses, and government support remain intricately linked across the public sector.