ISLAMABAD, PAKISTAN / RankWire.AI / – Pakistan’s federal government reported that its state-owned enterprises carried a total debt of about $36.5 billion as of the end of December 2025. The figure marked a 14.3% increase from the previous year, adding approximately $4.7 billion at current exchange rates. These data were presented in the latest analysis by Pakistan’s Ministry of Finance, which reviewed the first half of fiscal 2026, indicating a continued rise in the financial exposure of the public sector.
During this period, loss-making state entities incurred combined losses of roughly $1.24 billion, averaging about $10.1 million daily. Government interventions through subsidies, grants, loans, and equity injections amounted to approximately $23.8 million each day, more than twice the daily loss figure. While some state companies turned a profit, these gains remained limited to fewer enterprises and sectors.
Liabilities denominated in foreign currency made up about $9.4 billion of the total debt. Bank borrowing was close to $11.2 billion, with government cash development loans reaching approximately $7.6 billion. Sovereign guarantees surpassed $7.6 billion, adding another layer of fiscal risk. Unfunded pension obligations neared $7.2 billion. Foreign loans grew roughly 40% compared to the previous year, and cash development loans increased by around 25%.
Major liabilities highlight the borrowing load
A narrower assessment by the State Bank of Pakistan estimated public-sector enterprise debt and liabilities at about $10.7 billion in December 2025. This discrepancy stems from differing accounting methods and classifications rather than conflicting data on the same obligations. The finance ministry’s report incorporates a wider range of liabilities across federal enterprises, resulting in a total approximately $25.7 billion higher than the central bank’s figure for the same period.
During the same timeframe, Pakistan’s overall circular debt in the public sector reached around $11.9 billion. The power sector alone experienced a flow of about $1.35 billion in circular debt in the first half of fiscal 2026. Inefficiencies among distribution companies contributed roughly $405 million, while weak collections added about $112 million. State investments into enterprises totaled approximately $813 million over the six months, primarily related to power-sector debt payments and settlements.
The power sector remains a key contributor to SOE losses
The analysis highlighted electricity distribution companies as significant sources of losses within the federal enterprise portfolio. These losses are attributed to technical shortcomings, inadequate recoveries, and ongoing circular-debt build-up. Over the six-month period, circular debt increased by about $517 million, with infrastructure and energy firms bearing much of the burden. While some state-owned businesses in oil, gas, and financial services remained profitable, their gains did not extend widely across the entire portfolio.
The report covering July to December 2025, released in October 2026, revealed that the federal SOE debt exceeded $36 billion, with nearly $12 billion in circular debt. Key components included bank loans, foreign borrowing, government lending, guarantees, and pension liabilities. The period also saw continued large fiscal transfers. These latest figures underscore ongoing financial pressure on Pakistan’s state enterprises, as debt, losses, and government support remain intricately linked across the public sector.