Rs10 trillion black hole

The finance ministry's latest SOE monitoring report is an economic horror story. State-owned enterprises have accumulated a staggering Rs10.1 trillion in debt as of December 2025 - a 14.3% year-on-year increase. But even this figure conflicts with the SBP data, which puts the same debt at Rs2.95 trillion. That is no minor discrepancy - the gap is Rs7.1 trillion, or 242%.

Debt is also highly leveraged, and the numbers are moving in the wrong direction every second of every day. Loss-making SOEs bleed Rs2.8 billion every day, or Rs730 billion annually. Government support through subsidies, grants, loans and equity injections reaches Rs6.6 billion per day, or Rs1.7 trillion each year. Combined, these figures represent an annual burden of Rs2.5 trillion, Rs1.5 trillion more than the entire federal development budget.

The power sector is the worst offender. Distribution companies have become synonymous with inefficiency and general inability to even recover dues from their customers. Circular debt stood at Rs1.675 trillion at the end of June 2026, as distribution companies contributed Rs112 billion in inefficiencies and Rs31 billion in under-recoveries during the first six months of the year. The 10 state-owned power distribution companies collectively lost Rs299 billion and absorbed Rs551 billion in subsidies during FY25, a total drain of Rs850 billion.

But the solution is not in the government's promise to privatise nine distribution companies by December 2027. The IMF has rightly questioned whether the proposed sale model will actually stem losses, as unfunded pension liabilities of Rs2 trillion, foreign-currency exposure of Rs2.6 trillion and sovereign guarantees exceeding Rs2.1 trillion further compound the sovereign's balance-sheet vulnerability.

Finance ministry officials have also conceded that "financial engineering and debt reprofiling measures alone remain insufficient". Without operational reforms across the board, including at generation and distribution, pricing and theft control levels, the taxpayer will be left footing the bill for the next series of ineffective half-measures.