Pakistan SOEs: The Ministry of Finance of Pakistan has raised alarms over the growing debt levels of state-owned enterprises (SOEs), warning of significant threats to the country’s financial stability and economic growth. The ministry’s report, released on February 14, 2026, revealed a drastic decline in net cash returns from these entities to the government, falling to just Rs41 billion.
The report starkly illustrated the inefficiency of SOEs, noting that for every Rs1 of fiscal support provided by the government in the fiscal year 2024-25, the return was a mere one paisa. This period marks the first full fiscal year under Prime Minister Shehbaz Sharif’s administration, challenging official narratives of improvement in these enterprises, especially within the power sector.
Debt levels have surged due to operational inefficiencies, market volatility, and outdated infrastructure, raising the government’s contingent liabilities. The finance ministry’s report criticized the power distribution companies’ reliance on activity-based planning rather than value-based approaches, undermining structural reforms.
The report’s release comes ahead of an International Monetary Fund (IMF) mission expected to review Pakistan’s compliance with SOE-related conditions. The finance ministry highlighted the significant risks faced by SOEs across various sectors, including oil and gas, power, and ICT, exacerbated by their dependence on government guarantees and subsidies.
Net fiscal flow from SOEs plummeted from Rs458.2 billion in the previous fiscal year to just Rs40.7 billion in 2025, reflecting a sharp decline in fiscal efficiency. The government had extended Rs2.1 trillion in fiscal support and Rs2.2 trillion in sovereign guarantees, showing a substantial increase from the previous year.
The ministry emphasized the critical credit risks associated with SOEs, particularly in the oil sector, where companies like Oil & Gas Development Company Limited face liquidity constraints due to overdue payments. The power sector’s business plans were criticized for lacking analytical rigor and financial planning, hindering effective restructuring.
Published in SouthAsianDesk, February 15th, 2026
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