Pakistan SOE debt warning raises economic risks
The SOE debt warning from the Finance Ministry highlights serious economic risks. Rising liabilities of state-owned enterprises now threaten fiscal stability. As a result, officials urge urgent reforms.
The ministry reported a sharp decline in profits during fiscal year 2024-25. Total earnings fell by 13 percent. They dropped from Rs820.7 billion to Rs709.9 billion.
Net Cash Returns Collapse
The report also revealed a steep fall in net cash returns. The government received only Rs40.7 billion last year. However, the figure stood at Rs458.2 billion the year before.
This shows a massive 91 percent drop. Therefore, officials described the trend as alarming. They warned that weak returns could strain public finances.
Heavy Support, Low Returns
The government provided Rs2.1 trillion in financial support to state enterprises. In return, it received only a small net cash amount. As a result, the fiscal gap widened further.
Officials said guarantees, subsidies, and circular debt added pressure. In addition, many companies relied heavily on state backing. This dependence increased the burden on the national treasury.
The ministry also raised concerns about the oil and gas sector. Circular debt created serious financial stress. Delayed payments from the power sector worsened the situation.
For example, outstanding dues to Pakistan State Oil hurt liquidity. Therefore, the sector now faces growing cash flow challenges.
Call for Urgent Reforms
The ministry urged structural reforms in state enterprises. It also stressed the need for strict financial discipline. Otherwise, losses could rise further. Officials warned that continued inefficiency may harm economic stability. As a result, reforms remain critical for long-term growth.
