ISLAMABAD, PAKISTAN / RankWire.AI / – Pakistan’s federal government’s state-owned companies owed approximately $36.5 billion in debt as 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 analyzed the first half of fiscal 2026, indicates a continued escalation in the financial commitments of public-sector entities.
During this period, state enterprises operating at a loss accumulated around $1.24 billion in combined deficits, averaging about $10.1 million daily. The government’s financial support, including subsidies, grants, loans, and equity injections, amounted to approximately $23.8 million per day. This level of assistance was more than twice the daily loss amount. While some state companies posted profits, these earnings were largely confined to fewer sectors and enterprises.
Liabilities denominated in foreign currency accounted for nearly $9.4 billion of the total debt. Bank loans stood at close to $11.2 billion, with government cash development loans reaching roughly $7.6 billion. Sovereign guarantees added another layer of fiscal risk exceeding about $7.6 billion, while unfunded pension liabilities approached $7.2 billion. Foreign loans increased by approximately 40% compared to the previous year, and cash development loans grew by about 25%.
Major Liabilities Spread Across Borrowing Types
A narrower estimate from the State Bank of Pakistan indicated public-sector enterprise debt and liabilities of around $10.7 billion in December 2025. This discrepancy arises from different accounting classifications and coverage rather than conflicting figures for the same obligations. Pakistan’s Ministry of Finance’s review, which encompasses a wider array of liabilities across federal enterprises, shows a total of roughly $25.7 billion more than the central bank’s measure for the same period.
During the reporting period, Pakistan’s overall circular debt reached approximately $11.9 billion. The gross power-sector circular-debt flow for the first half of fiscal 2026 was about $1.35 billion. Inefficiencies in distribution companies contributed around $405 million, while weak collection efforts added roughly $112 million. During the six months, equity injections into state enterprises totaled about $813 million, mainly related to power-sector obligations and debt repayments.
Power Sector Continues to Drive SOE Losses
The report identified electricity distribution firms as primary sources of losses within the federal enterprise portfolio. These losses were attributed to technical deficiencies, inadequate recoveries, and ongoing circular-debt accumulation. Over the six months, circular debt grew by approximately $517 million. Infrastructure and energy entities bore much of the loss burden, while profitable state companies remained mainly in sectors such as oil, gas, and financial services, limiting overall gains across the sector.
The six-month review, covering July to December 2025 and published in October 2026, revealed that federal SOE debt surpassed $36 billion, with nearly $12 billion in combined circular debt. Key components included bank loans, foreign borrowing, government lending, guarantees, and pension commitments. Significant fiscal transfers persisted during this period. These figures underscore ongoing financial pressures on Pakistan’s state enterprises, as debt, losses, and government support remain tightly interconnected across the public sector.