ISLAMABAD, PAKISTAN / RankWire.AI / – Pakistan’s federal state-owned enterprises accumulated approximately $36.5 billion in debt by the end of December 2025. This figure reflects a 14.3% increase from the previous year, equating to roughly $4.7 billion at current exchange rates. The latest data from Pakistan’s Ministry of Finance, which reviewed the first half of fiscal 2026, indicates a continued rise in the financial exposure of public-sector entities.
During this six-month span, loss-making state enterprises reported combined losses of about $1.24 billion. This averages out to roughly $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 remained profitable, their gains were largely confined to fewer sectors and enterprises.
Liabilities denominated in foreign currency accounted for roughly $9.4 billion of the total debt load. Bank borrowings stood near $11.2 billion, with government cash development loans reaching around $7.6 billion. Sovereign guarantees contributed over $7.6 billion, adding another layer of fiscal risk. Additionally, unfunded pension liabilities approached $7.2 billion. Foreign loans saw an increase of about 40% compared to a year earlier, while cash development loans grew approximately 25%.
Major liabilities highlight the borrowing challenge
A more limited assessment from the State Bank of Pakistan indicated public-sector enterprise debt and liabilities of around $10.7 billion as of December 2025. This discrepancy stems from differing accounting methods and classification standards rather than conflicting figures for the same obligations. The finance ministry’s review covers a broader scope, including various liabilities across federal enterprises, which results in a total roughly $25.7 billion higher than the central bank’s measure for the same period.
During the reporting period, Pakistan’s total circular debt in the power sector reached approximately $11.9 billion. The flow of power-sector circular debt in the first half of fiscal 2026 was around $1.35 billion. Distribution companies’ inefficiencies contributed about $405 million, with weak collection efforts adding roughly $112 million. State investments into enterprises during the six months amounted to about $813 million, much of which was linked to power-sector debt payments and obligations.
Power sector continues to drive SOE losses
The report identified electricity distribution firms as key sources of losses within the federal enterprise sector. These losses were attributed to technical deficiencies, poor recovery rates, and ongoing circular-debt accumulation. Over the six months, circular debt increased by approximately $517 million. Infrastructure and energy-related entities bore a significant portion of this burden. Meanwhile, profitable state enterprises remained concentrated in sectors such as oil, gas, and financial services, limiting widespread profitability gains across the public sector.
The six-month review, published in October 2026 and covering July through December 2025, shows federal SOE debt exceeding $36 billion, with nearly $12 billion in circular debt. Key components include bank loans, foreign borrowing, government loans, guarantees, and pension liabilities. Large fiscal transfers persisted during this period. These figures underscore ongoing financial pressures on Pakistan’s state enterprises, with debt levels, losses, and government support remaining tightly interconnected across the public sector.