Abdul Ghani

The federal government’s fiscal support to state-owned enterprises (SOEs) increased sharply by 37 percent during fiscal year 2025, reaching Rs2.08 trillion, according to the Federal State-Owned Enterprises Annual Aggregate Report FY2025.

The report states that total government support amounted to Rs2,078.5 billion in FY2025, compared with Rs1,512.9 billion in the previous fiscal year, reflecting higher financial assistance across multiple categories, including equity injections, loans, subsidies and grants.

Equity injections recorded the most significant increase during the year. The government provided Rs728.9 billion in equity support to SOEs, primarily to strengthen the financial positions of key enterprises. These injections included payments related to the power sector and measures to address accumulated obligations.

Government loans to SOEs also rose substantially. The report shows that loans increased by 34 percent, climbing from Rs263.3 billion in FY2024 to Rs354.1 billion in FY2025. These loans were extended to support operational requirements and restructuring needs of various enterprises.

In contrast, grants and subsidies registered declines during the period. Grants fell by 27 percent to Rs269.2 billion, while subsidies decreased by 7 percent to Rs726.3 billion. Despite these reductions, the combined volume of fiscal transfers remained elevated, driven by increases in other forms of support.

Sovereign guarantees showed a marked rise. The value of guarantees increased from Rs1,419 billion in FY2024 to Rs2,164 billion in FY2025, representing a 52 percent increase. The report notes that this rise reflects accounting recognition of self-liquidating guarantees on stock.

The report further highlights the scale of fiscal resources allocated to SOEs relative to federal revenues. During FY2025, the federal government collected Rs12.97 trillion in tax revenue. Of this amount, approximately Rs2.08 trillion, or about 16 percent, was channeled back to SOEs through equity injections, loans, grants and subsidies.

This means that roughly Rs1 out of every Rs6 collected in taxes was directed toward supporting state-owned enterprises during the fiscal year.

Alongside fiscal support, the report documents that SOEs also contributed to the national exchequer through dividends, taxes, levies, royalties and interest payments. Total contributions from SOEs were recorded at Rs2,119.2 billion, reflecting a 7.5 percent increase compared with the previous year.

Dividends paid by SOEs increased significantly to Rs149.6 billion from Rs82.8 billion, while tax revenues collected from these entities rose by 17 percent to Rs436.9 billion. However, non-tax revenues declined by 10 percent to Rs1,264.9 billion.

The report compiles these figures as part of the government’s annual assessment of fiscal exposure and financial flows between the state and its enterprises operating across sectors such as power, oil and gas, infrastructure, transport, manufacturing and financial services.

Credit: INP-WealthPk