Financial income drops by 92% to just Rs35.8bn within a year

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State-owned enterprises put heavy strain on public finances, daily govt spending far exceeds returns

A performance report on state-owned enterprises has highlighted significant financial risks, showing that the government spends more than Rs6.69 billion every day while receiving a return of only Rs291 million.

The report puts the government’s debt and broader financial liabilities at more than Rs17 trillion, equivalent to roughly two and a half times the federal tax revenue.

According to the report, state-owned enterprises require substantial government support while generating comparatively limited returns for the national exchequer.

Daily government expenditure on these entities exceeds Rs6.69 billion, whereas the government receives only around Rs291 million a day in return.

The report describes the overall financial risk as approximately Rs17 trillion, highlighting the scale of the burden carried by the public sector.

The financial position of state-owned enterprises has also deteriorated sharply during the first half of fiscal year 2025-26.

The report shows that financial income fell by 92%, dropping to just Rs35.8 billion from Rs427 billion during the corresponding period of the previous year.

It further notes that several enterprises face financial difficulties and are unable to sustain their operations without government support.

The report highlights a significant gap between the returns generated by state-owned enterprises and the cost of financing them.

Return on investment stands at only 1.26%, while the cost of equity ranges between 18% and 20%, according to the findings.

The figures indicate that the returns generated by the enterprises remain substantially below the cost of equity associated with their operations.

Also Read: State-owned enterprises post 7% drop in profits

The report has also raised concerns over the financial exposure of the oil sector, particularly its Rs1.9 trillion circular debt. It states that no provision has been made for additional losses associated with this circular debt, creating the risk of further financial pressure.

The projected additional losses in the oil sector could range from Rs453 billion to Rs649 billion, according to the report.

The report provides a breakdown of the government’s financial exposure to state-owned enterprises and related obligations. On-balance-sheet debt stands at Rs10,099 billion, while government guarantees amount to Rs2,123 billion.

In addition, the unfunded pension liability has reached Rs3,382 billion, adding another significant obligation to the government’s financial burden.

The report places the financial performance index of the state-owned enterprises at 1.04 times.

Taken together with the enterprises’ low investment returns, high cost of equity, debt exposure, government guarantees and unfunded pension obligations, the figures underline the scale of financial risks associated with the public sector.

The report’s findings highlight the growing pressure on Pakistan’s national finances as state-owned enterprises continue to depend on government support while generating relatively limited financial returns.

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