ISLAMABAD, PAKISTAN / RankWire.AI / – Pakistan’s federal state-owned enterprises had accumulated approximately $36.5 billion in debt by the end of December 2025. This figure reflects a 14.3% rise from the previous year, equating to an increase of about $4.7 billion when calculated at current exchange rates. The latest data from Pakistan’s Ministry of Finance, which analyzed the first half of fiscal 2026, indicates that public-sector financial exposure continues to grow.
During this period, loss-making state entities reported total losses of roughly $1.24 billion. On average, this amounts to around $10.1 million daily. Daily government support through subsidies, grants, loans, and equity injections was approximately $23.8 million, more than doubling the daily loss figure. While some state companies turned a profit, these earnings were concentrated among fewer enterprises and sectors.
Liabilities denominated in foreign currencies made up about $9.4 billion of the total debt. Bank loans stood at nearly $11.2 billion, with government cash development loans reaching around $7.6 billion. Sovereign guarantees exceeded $7.6 billion, adding another layer of fiscal risk. Unfunded pension liabilities approached $7.2 billion. Foreign loans increased by roughly 40% from the previous year, and cash development loans rose by about 25%.
Major liabilities reflect the borrowing burden
A narrower estimate from the State Bank of Pakistan indicated public-sector enterprise debt and liabilities of approximately $10.7 billion in December 2025. This discrepancy arises from different accounting coverage and classification standards, not conflicting data on obligations. The finance ministry’s review encompasses a wider range of liabilities across federal enterprises, resulting in a total of about $25.7 billion more than the central bank’s measure for the same period.
Pakistan’s total circular debt reached nearly $11.9 billion during the reporting period. Power-sector circular-debt flow alone was about $1.35 billion in the first half of fiscal 2026, with distribution companies contributing roughly $405 million due to operational inefficiencies and around $112 million stemming from weak collections. During the same timeframe, government injections into state enterprises amounted to roughly $813 million, much of which related to power-sector obligations and debt repayments.
The power sector remains a key driver of SOE losses
The report pinpointed electricity distribution companies as significant sources of losses within the federal enterprise sector, citing technical deficits, poor revenue recovery, and ongoing circular-debt accumulation. Over the six months, circular debt increased by approximately $517 million, with infrastructure and energy-related entities bearing much of this burden. While some profitable state enterprises exist, mainly in oil, gas, and financial services, their gains are limited relative to the broader portfolio’s losses.
The six-month review, covering July through December 2025 and published in October 2026, highlights that federal SOEs’ debt exceeds $36 billion, with nearly $12 billion in total circular debt. Key components include bank loans, foreign borrowing, government lending, guarantees, and pension liabilities. Large fiscal transfers also persisted throughout this period. The latest figures underscore ongoing fiscal pressures faced by Pakistan’s state enterprises, with debt, losses, and government support remaining closely interconnected across the public sector.