Pakistan’s Finance Division has rejected a media report suggesting that state-owned enterprises (SOEs) had accumulated Rs10.1 trillion in debt through new borrowing, clarifying that the reported figure represents a broader stock of interest-bearing obligations rather than fresh loans obtained from banks. The ministry said the comparison behind the report was not based on equivalent datasets and could create the incorrect impression that SOEs had raised approximately Rs1.3 trillion in new bank financing during the reporting period.
In a clarification issued on Thursday in response to a report titled “SOEs’ debt soars to Rs10.1 trillion,” the Finance Division explained that the Rs10.1 trillion figure reported by its Central Monitoring Unit (CMU) is a consolidated measure used for fiscal-risk monitoring. The measure covers interest-bearing obligations of federal SOEs and is intended to provide the government with a wider view of their financial liabilities. According to the ministry, it should not be treated as a direct indicator of fresh bank borrowing by state-owned entities.
The ministry also distinguished the CMU figure from data published by the State Bank of Pakistan (SBP). The SBP series cited in the earlier report covers a narrower category, specifically borrowing by public sector enterprises from the banking system. The Finance Division said SBP data places public sector enterprise bank debt at Rs2.954 trillion, while the broader CMU measure puts combined SOE debt at Rs10.1 trillion. The two figures therefore cover different types of obligations and serve different purposes.
According to the breakdown provided by the Finance Division, the approximately Rs10.1 trillion recorded by the CMU consists of several categories of interest-bearing liabilities. Cash Development Loans account for Rs2.098 trillion, while Foreign Re-lent Loans amount to Rs2.581 trillion. Bank and private loans account for Rs3.102 trillion, with accrued markup and rollover costs adding another Rs2.181 trillion. Other interest-bearing obligations, including lease and right-of-use liabilities, account for approximately Rs0.135 trillion.
The Finance Division stressed that bank and private loans represent only around Rs3.1 trillion of the total CMU figure. The remaining amount largely consists of government lending, foreign re-lent loans, accumulated markup, rollover costs and other existing interest-bearing obligations. As a result, the ministry said combining the full CMU figure with the narrower SBP banking-sector credit series and treating them as directly comparable would be methodologically incorrect.
The ministry also addressed the reported increase in consolidated SOE debt from approximately Rs8.8 trillion to Rs10.1 trillion. It clarified that the Rs1.3 trillion increase in the overall stock should not be interpreted as Rs1.3 trillion in newly raised debt. According to the Finance Division, fresh or additional loans taken during the period amounted to approximately Rs164 billion, significantly below the increase suggested by a comparison of the two headline figures.
The remaining increase in the consolidated debt stock was attributed to changes in legacy government lending and foreign re-lent loans, as well as accumulated markup, rollover costs and other existing obligations. The ministry therefore described the interpretation that SOEs had raised Rs1.3 trillion in new loans as misleading because it did not distinguish between newly contracted financing and changes in the value or composition of existing liabilities.
The Finance Division said the CMU framework is deliberately designed to provide the government and the Cabinet Committee on State-Owned Enterprises (CCoSOE) with greater visibility into the overall indebtedness of state-owned enterprises and the fiscal risks associated with those obligations. The broader approach allows authorities to account for different forms of interest-bearing liabilities rather than focusing exclusively on loans obtained through the banking system.
The clarification means that the Rs10.1 trillion figure should be understood as a comprehensive measure of SOE interest-bearing obligations rather than a measure of new bank borrowing. The Finance Division maintained that differences in scope, coverage and purpose between the CMU and SBP datasets need to be considered when assessing changes in public-sector enterprise debt and the potential fiscal risks facing the government.
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