Govt Claims State Owned Companies Are Not Doing As Bad As People Think

The Finance Ministry has argued that falling net fiscal flow from state-owned enterprises (SOEs) does not necessarily signal a worsening of their financial health or performance. A recent press release emphasized that fiscal flows and SOE financial performance are distinct metrics. Fiscal flows capture transactions between the government and SOEs, including government support and income through taxes, dividends, levies, and other payments.

In the first half of fiscal year 2025-26, profitable SOEs earned a total of Rs. 423.3 billion, while loss-making SOEs experienced losses amounting to Rs. 342.8 billion. The ministry highlighted that containing these losses represents significant progress in the ongoing SOE reform and monitoring framework. During the period, SOEs contributed Rs.

839.8 billion in inflows to the government, while government outflows amounted to Rs. 804 billion, resulting in a net fiscal flow of Rs. 35.8 billion. This increase was primarily due to equity injections and financing related to restructuring and circular debt management. Dividend payments increased by 26 percent, and tax contributions from SOEs grew by 10 percent.

The ministry urged that changes in net fiscal flow should be interpreted within the context of the timing and nature of government and SOE transactions, rather than as a standalone indicator of profitability or financial performance. The ministry also pointed out that evaluating SOE reforms using a six-month comparison of fiscal flows would overlook the structural reforms already being implemented.

In Pakistan, several SOEs have undergone or are undergoing restructuring and privatization, including the Utility Stores Corporation, the Pakistan Agricultural Storage and Services Corporation, First Women Bank Limited, and Pakistan International Airlines. In the power sector, nine distribution companies are part of the privatization program and are at different stages of the transaction process.

The Finance Ministry noted that broader SOE restructuring and privatization efforts have attracted strong local and international investor interest for the first batch. Additionally, governance reforms are strengthening independent and professional boards, business plan accountability, performance monitoring, and transparent, data-driven oversight across the SOE portfolio.

The ministry emphasized that the reform process aims to reduce the SOE footprint, enhance governance and accountability, improve transparency and commercial discipline, and gradually diminish fiscal risks through restructuring, closure, privatization, and stronger performance management tailored to each entity's circumstances.