News
Pakistan's State-Owned Enterprise Debt Reaches Rs10.1 Trillion as Circular Debt Stays a Fiscal Risk
By Mariam Khan
Real Estate Analyst
3 min read
A Finance Ministry monitoring report puts the debt of state-owned enterprises (SOEs) at Rs10.1 trillion as of end-December 2025, up 14.3 percent year on year. The report also records combined circular debt of around Rs3.3 trillion, with continuing losses and under-recoveries in electricity distribution companies. It puts fiscal support to SOEs at the equivalent of about Rs1.7 trillion a year, and foreign-currency liabilities at Rs2.6 trillion. Official figures are published by the Ministry of Finance.
Why This Is Not a Direct Property Story but Still Matters
The report is about public-sector finances, not housing. Its relevance to real estate comes through the government's capacity to spend and its need to raise revenue. Rs1.7 trillion a year in support to SOEs is money that is not available for other uses, and persistent pressure of this kind can feed into tariffs, taxes and development budgets. The report does not say how any of this will be passed on, so these links are possible effects and not announced measures.
Why the Rs3.3tr Circular Debt Is the Part Closest to Construction
Distribution company losses and under-recoveries are the source of the power-sector burden. They keep electricity tariffs and fuel adjustments under pressure, which we have followed in our coverage of DISCOs seeking an additional Rs1.7267 per unit for October and of the IMF's concerns over circular debt. Electricity is a major input for cement, steel and other materials, so a power sector that does not recover its costs can affect the cost of building.
Why the 14.3 Percent Rise and the Rs2.6tr Foreign-Currency Liabilities Stand Out
A 14.3 percent annual rise is a faster pace of borrowing than the report suggests the sector's earnings can easily support, though the report as relayed gives no profit figures. The Rs2.6 trillion in foreign-currency liabilities adds exchange-rate exposure: a weaker rupee raises their cost in rupee terms. The figures are as of December 2025, so they are not a picture of the current position.
Why Reform and Privatisation Are Linked to This Debt
Pressure from SOE and power-sector losses is one reason the government has been pushing distribution company reform. We covered the timeline agreed with the IMF for DISCO privatisation. Whether privatisation lowers losses, and how quickly, is not shown by this report.
What This Means for Developers, Investors and Buyers
The report is a reason for caution and not a forecast. Developers and investors should allow for the possibility of further tariff and tax pressure, and for limited public development spending, while recognising that none is confirmed here. The signals to watch are the next fuel cost and tariff decisions, budget allocations for infrastructure, and progress on distribution company reform.