ISLAMABAD: Pakistan’s total contingent liabilities arising from public-private partnership (PPP) projects at the federal and provincial levels have surpassed Rs472 billion by the end of December 2025, with Sindh emerging as the largest contributor, according to the Ministry of Finance. The disclosure comes under the country’s first-ever Fiscal Risk Monitoring Framework for Contingent Liabilities of PPP Projects, developed in line with commitments made to the International Monetary Fund (IMF).
According to the Debt Management Office of the Ministry of Finance, total contingent liabilities linked to PPP projects stood at Rs472.3bn as of December 2025. These liabilities represent potential fiscal obligations that could materialize over the life of PPP contracts due to risks assumed by public sector entities, including revenue guarantees, cost escalations, interest rate changes, and termination-related payments.
Sindh accounts for more than 71 percent of the total contingent liabilities, amounting to Rs335.6bn. The province also holds the largest PPP portfolio in the country, with 17 projects, nearly half of the total 36 PPP projects currently underway nationwide. The scale of Sindh’s exposure reflects both the size of its infrastructure programme and the structure of risk-sharing arrangements embedded in its PPP contracts.
At the federal level, contingent liabilities linked to PPP projects total Rs90.6bn, representing 19.3 percent of the national aggregate. Punjab follows with Rs26.5bn, accounting for 5.6 percent, while Khyber Pakhtunkhwa’s exposure stands at Rs19.6bn, or 4.2 percent of the total. Balochistan, although it has five PPP projects included in the national portfolio, does not currently carry any reported contingent liabilities.
The report categorizes these obligations into direct contingent fiscal responsibilities and financial guarantees. Of the total Rs472.3bn, around Rs368.3bn relates to contingent fiscal responsibilities that could arise due to minimum revenue guarantees, cost escalation clauses, interest rate fluctuations, or terminal liabilities. The remaining Rs104bn is attributed to financial guarantees issued by the government in support of PPP projects.
Sindh’s risk exposure is particularly pronounced in the area of cost escalation and minimum revenue guarantees. Direct contingent liabilities for the province amount to Rs255.5bn, nearly 70 percent of the consolidated national total for such risks. Within this, cost escalation alone accounts for Rs146.6bn, while minimum revenue guarantees stand at Rs61bn. These figures are in addition to approximately Rs80bn in financial guarantees provided by the Sindh government.
For the federal government, PPP-related contingent liabilities of Rs90.6bn include Rs83.7bn linked to termination liabilities and Rs7bn in financial guarantees. Financial guarantees typically cover commitments such as viability gap financing, where the public sector supports project revenues to ensure financial sustainability for private partners.
The framework identifies a high probability that a significant portion of these liabilities could materialize. The report highlights elevated risks associated with Rs150bn each in cost escalation and termination liabilities, Rs104bn related to financial guarantees, and about Rs66bn stemming from minimum revenue guarantees, with Sindh again accounting for the largest share.
The development of this monitoring framework was a key stipulation under Pakistan’s IMF programme. In a written commitment to the Fund, Finance Minister Muhammad Aurangzeb stated that PPP-funded projects would be subjected to the same rigorous selection and appraisal criteria as traditionally funded public projects. He noted that the Risk Management Unit within the Ministry of Finance, working in coordination with relevant stakeholders, has established a standardized system to identify, quantify, and report PPP-related contingent liabilities at both federal and provincial levels.
The framework aims to address long-standing concerns that PPP contracts can create fiscal exposures not immediately reflected in budgetary or public debt figures. These risks may surface later through guarantee calls, revenue support mechanisms, indexation adjustments, or early termination payments. By consolidating these exposures into a single national dataset managed by the Ministry of Finance, the government seeks to enhance fiscal transparency, strengthen risk management, and improve long-term public financial planning.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.