The SOEs debt of Pakistan’s state-owned enterprises has climbed to Rs10.1 trillion, according to a finance ministry monitoring report, a figure far above the Rs2.95 trillion shown in State Bank of Pakistan data.
The report, covering July to December 2025, says the debt rose by Rs1.3 trillion over the year, an increase of 14.3 percent. Foreign currency liabilities alone account for Rs2.6 trillion of the total, as reported by The Express Tribune.
SOEs Debt: Why the Numbers Differ So Much
The gap between the two sets of figures is Rs7.1 trillion, or about 242 percent. The report does not reconcile the two sets of numbers, but the finance ministry’s Rs10.1 trillion figure covers a wide range of liabilities, including government cash development loans, bank borrowing, unfunded pension obligations, sovereign guarantees and circular debt. The State Bank’s figure is far lower, which suggests it measures a narrower set of obligations.
The main components in the finance ministry report are as follows. Government cash development loans stand at Rs2.1 trillion, up 25 percent. Bank loans to SOEs total Rs3.1 trillion. Unfunded pension liabilities are Rs2 trillion, up 11 percent. Sovereign guarantees are Rs2.1 trillion, and circular debt stands at Rs3.3 trillion. These categories overlap in some respects, so they should not be simply added together to reach the headline figure.
Daily Losses and Fiscal Support
The report puts the daily cost of the sector in stark terms. State-owned enterprises lost about Rs2.8 billion for every working day, which comes to roughly Rs730 billion a year. On top of that, the government provided around Rs6.6 billion a day in fiscal support, or about Rs1.7 trillion a year.
Taken together, the annual burden reaches about Rs2.5 trillion. According to the report, that is Rs1.5 trillion more than the federal development budget, a comparison that shows how much public money is absorbed by loss-making entities instead of roads, dams, schools or hospitals.
Power Distribution Companies at the Centre
Much of the pressure comes from the power sector. Distribution companies, known as DISCOs, recorded losses driven by technical inefficiencies and under-recoveries, meaning they collected less than they billed. The circular debt generated by DISCO operations was Rs112 billion in the first half of the period reviewed.
Circular debt, the chain of unpaid bills between power producers, distributors and the government, has been a recurring feature of Pakistan’s economic crises. Even when it is cleared through financing arrangements, it tends to build up again if collections and losses do not improve.
Why Reforms Matter
The report is blunt about the limits of the current approach. It says that financial engineering and debt re-profiling alone are not enough, and that operational reforms are needed across power generation, transmission and distribution. In other words, moving debt from one place to another does not solve the problem if the underlying enterprises keep losing money.
The timing is significant. Pakistan is under an IMF programme that places strict limits on fiscal support and requires reform of state-owned enterprises. Higher-than-expected SOE debt adds to pressure on the budget, at a moment when the government is also being asked to protect spending on social sectors such as health and education.
Economists have long argued that privatisation, better governance and tariff reform are needed to stop the drain. The new numbers give that argument fresh weight, especially as the finance ministry itself is now publishing a figure more than three times higher than the central bank’s.
For taxpayers and businesses, the debate is not abstract. The cost of keeping loss-making entities afloat is ultimately met through taxes, higher electricity tariffs and borrowing. Closing the gap between official data sets would at least give policymakers and the public a clearer view of the true size of the problem.
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