ISLAMABAD, PAKISTAN / RankWire.AI / – Pakistan’s federal state-owned enterprises carried an estimated debt of about $36.5 billion at the end of December 2025. This figure represents a 14.3% increase from the previous year, equating to roughly $4.7 billion at current exchange rates. The latest data was released by Pakistan’s Ministry of Finance in its recent review of federal state enterprises, which covered the first half of fiscal year 2026 and indicated a continued rise in public-sector financial liabilities.
During this six-month period, loss-making state enterprises incurred a combined deficit of approximately $1.24 billion, translating to about $10.1 million in losses each working day. The government’s support through subsidies, grants, loans, and equity injections averaged around $23.8 million daily, more than doubling the daily loss figure. While some state-owned companies reported profits, these gains were limited to fewer enterprises and specific sectors, leaving the overall financial health of the sector strained.
Liabilities denominated in foreign currency made up around $9.4 billion of the total debt load. Bank borrowing was close to $11.2 billion, and government cash development loans reached approximately $7.6 billion. Sovereign guarantees exceeded $7.6 billion, adding an extra layer of fiscal exposure. Unfunded pension obligations neared $7.2 billion. Foreign loans saw a year-over-year increase of about 40%, with cash development loans rising roughly 25% during the same period.
Major liabilities highlight the borrowing burden
A narrower measure from the State Bank of Pakistan indicated that public-sector enterprise debt and liabilities totaled around $10.7 billion as of December 2025. This discrepancy results from differences in accounting practices and classifications, rather than conflicting data on the same obligations. The finance ministry’s review encompasses a broader scope of liabilities across federal enterprises, which collectively amount to approximately $25.7 billion more than the central bank’s figure for the same period.
During the reporting period, Pakistan’s total circular debt within the power sector reached about $11.9 billion. The gross flow of circular debt in the power sector during the first half of fiscal year 2026 was roughly $1.35 billion. Inefficiencies in distribution companies contributed approximately $405 million, while weak bill collections added about $112 million. Additionally, equity investments into state enterprises totaled around $813 million over the six months, much of which related to power-sector obligations and debt settlements.
The power sector remains a key driver of SOE financial losses
The review identified electricity distribution companies as among the primary sources of losses within the federal enterprise portfolio. These losses were attributed to technical deficiencies, poor recovery rates, and the ongoing buildup of circular debt. Over the six-month period, the circular debt stock increased by roughly $517 million. Infrastructure and energy-related entities bore much of the loss burden. Meanwhile, profitable state enterprises were mainly concentrated in sectors such as oil, gas, and financial services, limiting overall gains across the broader public sector.
The report covering July through December 2025, released in October 2026, showed federal SOE debt exceeding $36 billion, with nearly $12 billion in total circular debt. Components such as bank loans, foreign borrowing, government lending, guarantees, and pension liabilities all played significant roles. The period also saw continued large fiscal transfers. These latest figures underscore ongoing financial pressures on Pakistan’s state enterprises, with debt, losses, and government support remaining tightly interconnected across the public sector.