Abdul Ghani

The total debt burden of Pakistan’s state-owned enterprises (SOEs) increased during fiscal year 2025, while sovereign guarantees and unfunded pension liabilities also recorded significant growth, according to the Federal State-Owned Enterprises Annual Aggregate Report FY2025.

The report shows that aggregate debt of SOEs rose by 4 percent to Rs9.57 trillion in FY2025, compared with Rs9.19 trillion in the previous fiscal year.

The increase was primarily driven by higher government-backed borrowing and foreign re-lent loans. Cash Development Loans (CDL) outstanding climbed from Rs1.77 trillion to Rs2.15 trillion, reflecting additional borrowing for capital expenditure and working capital support. Similarly, foreign re-lent loans increased from Rs1.75 trillion to Rs2.16 trillion during the year.

Bank loans remained largely unchanged, declining marginally to Rs2.80 trillion from Rs2.81 trillion. Other debt, including leases and right-of-use liabilities, decreased from Rs533.4 billion to Rs277.2 billion. Accrued interest obligations stood at Rs2.18 trillion at the end of the fiscal year, compared with Rs2.33 trillion a year earlier.

The report also highlights a substantial rise in sovereign guarantees linked to SOEs. Total guarantees increased by 52 percent to Rs2.16 trillion, up from Rs1.42 trillion in FY2024. These guarantees are recorded as off-balance-sheet commitments. Unfunded pension obligations of SOEs rose sharply during the year. The report shows that total unfunded pensions reached Rs2.03 trillion, compared with Rs1.44 trillion previously, representing a 41 percent increase.

In addition to debt and pension liabilities, the report provides data on circular debt within the power and gas sectors. Combined circular debt declined to Rs3.93 trillion from Rs4.52 trillion in the previous fiscal year. Power sector circular debt decreased from Rs2.44 trillion to Rs1.89 trillion, while circular debt in the gas sector remained broadly stable at around Rs2.04 trillion.

The overall liabilities position of SOEs stood at Rs31.74 trillion at the end of FY2025, down from Rs32.57 trillion a year earlier. Total assets were recorded at Rs37.99 trillion, while total equity increased to Rs6.25 trillion. The debt-to-equity ratio for the SOE portfolio was reported at 153 percent, indicating the proportion of debt relative to equity.

The report compiles these figures as part of its annual assessment of financial exposure associated with SOEs across sectors such as power, oil and gas, infrastructure and transport, financial services, manufacturing and others. The data reflects the consolidated debt profile, liabilities, guarantees and long-term obligations of federal SOEs for the fiscal year ended June 2025.

Credit: INP-WealthPk