The Central Monitoring Unit (CMU) reported that the total debt of State-Owned Enterprises (SOEs) reached Rs10.1 trillion by the close of December 2025. This figure represents an increase of Rs1.3 trillion, or 14.3%, compared to the debt level recorded in the preceding year.
Furthermore, the CMU noted that the total SOE debt of Rs10.1 trillion is significantly higher than the Rs7.1 trillion reported by the State Bank of Pakistan (SBP), marking a 242% increase. The SOE debt exposure surpasses Rs10 trillion, which includes Rs2.6 trillion in liabilities denominated in foreign currency.
These foreign liabilities of Rs2.6 trillion, the CMU stated, expose the sovereign to risks such as exchange rate pass-through, refinancing pressure, sensitivity to imported inflation, and external account volatility. The cumulative annual impact from losses and necessary support amounts to Rs2.5 trillion, a sum exceeding the federal development budget for this fiscal year by Rs1.5 trillion.
Daily financial support swelled to Rs6.6 billion, while the estimated loss per working day for SOEs rose to Rs2.8 billion. The government provided Rs2.1 trillion in cash development loans to SOEs as of December last year, alongside Rs3.1 trillion in loans from banks and a 40% hike in foreign loans, which reached Rs2.6 trillion.
Moreover, the cost associated with unfunded pension liabilities stood at Rs2 trillion, representing an 11% increase. Pakistan's combined circular debt escalated to Rs3.3 trillion, with the circular-debt flow attributable to DISCO inefficiencies amounting to Rs112 billion.
During the first half of the 2026 fiscal year, the underlying circular debt flow climbed to Rs374 billion, while the circular debt stock increased by Rs143 billion over the six-month period. The Ministry of Finance confirmed that financial engineering and debt re-profiling measures alone are insufficient to address circular debt.
The finance ministry stated, "This deterioration demonstrates that financial engineering and debt re-profiling measures alone remain insufficient in the absence of deep-rooted operational reforms across generation, transmission, distribution, tariff rationalisation, governance enforcement, theft control and recovery mechanisms." The CMU recommends implementing structured Public Service Obligation (PSO) frameworks to enhance fiscal transparency.
