State Firms' Net Return to Treasury Falls 91% Even as Profits Hold Up, Finance Ministry Report Shows

Pakistan's state-owned enterprises returned 91% less cash to the federal treasury in July-December 2025 than they did a year earlier, according to the Finance Ministry's biannual SOE report, even though the sector's aggregate profit fell by a comparatively modest 7%. The net fiscal flow from SOEs to the state — government support paid in, minus dividends and other contributions paid back out — dropped to just Rs35 billion, from Rs427 billion in the same half of the previous fiscal year.

Two different numbers, two different stories

The report, released to fulfil a condition attached to Pakistan's IMF programme, splits the picture into profit-making and loss-making firms. Profitable SOEs earned a combined Rs423.3 billion in the first half of FY26, down 7% from Rs457.2 billion a year earlier. Loss-making SOEs lost a combined Rs342.8 billion over the same period. Both numbers moved in a familiar direction, but it's the net fiscal flow figure — the one capturing what the state actually gets back after paying in — that collapsed.

That collapse happened for two reasons at once: government support to SOEs rose 31% to Rs804 billion, up from Rs616 billion a year earlier, while the contributions SOEs paid back to the state fell 20%. The accumulated losses sitting on the books of the 23 loss-making SOEs have now reached Rs6.523 trillion.

Who's losing money, and how much

The National Highway Authority topped the loss table at Rs124.5 billion, ahead of two power distribution companies — Quetta Electric Supply Company at Rs35.3 billion and Sukkur Electric Supply Company at Rs34.9 billion. Pakistan Railways lost Rs29.4 billion, Peshawar Electric Supply Company lost Rs23.7 billion, and PIA Holding Company lost Rs21.5 billion. The distribution companies on that list sit inside the same circular debt dynamic that has driven repeated tariff increases this year, where losses at the distco level ultimately get recovered from paying customers or absorbed as government support.

The Finance Division's pushback

The Finance Division disputed the way some coverage framed the net fiscal flow decline, arguing in a statement that a falling net fiscal flow and a deteriorating SOE sector are "distinct measures" that shouldn't be conflated — the ministry's own figures put the net fiscal inflow at a positive Rs35.8 billion rather than a negative one, and noted that profitable SOEs still outearned loss-making ones in gross terms. That distinction is technically accurate: the sector as a whole stayed cash-flow positive to the state, just by a much thinner margin than the year before. Whether a 91% thinner margin counts as stability or as an early warning sign is largely a matter of which half of the report a reader focuses on.

Why the IMF cares

SOE reform has been a recurring line item in Pakistan's Extended Fund Facility conditions, alongside measures like the 174 legislative amendments the Fund has pushed for elsewhere in the programme and the broader review now underway over a combined $1.2 billion in EFF and RSF financing. A biannual SOE report is itself one of the structural benchmarks Pakistan committed to publishing, precisely because the Fund treats the gap between government support and what SOEs return to the budget as a proxy for whether reform of the sector — privatisation, governance changes, tariff rationalisation — is actually taking hold or merely being promised. On that measure, the first half of FY26 shows support rising faster than returns, which is the opposite of the direction the programme is meant to bend the numbers in.

Build Better Pakistan's Economy Desk tracks Pakistan's state-owned enterprise reporting and IMF structural benchmarks as they're published.