Finance ministry says Rs10.1trn SOE debt is not fresh bank borrowing

The Finance Ministry clarified on Thursday that the Rs10.1 trillion debt reported by the Central Monitoring Unit (CMU) of the Finance Division for state-owned enterprises (SOEs) does not represent new bank borrowing. This figure is a consolidated stock of interest-bearing obligations of federal SOEs, compiled for fiscal-risk monitoring purposes, and is not a measure of fresh bank borrowing.

The ministry debunked a media report that inaccurately suggested SOEs had taken on Rs1.3 trillion in new loans. The Central Bank of Pakistan (SBP) data, cited in the report, measures a narrower scope of borrowing by public sector enterprises directly from the banking system, amounting to Rs2.954 trillion. In contrast, the CMU's broader measurement includes combined SOE debt at Rs10.1 trillion, encompassing various loan types and accrued obligations.

The ministry emphasized that the two datasets are not on a like-for-like basis and should not be compared. The breakdown of the CMU-reported stock includes Rs2.098 trillion in Cash Development Loans (CDLs), Rs2.581 trillion in Foreign Re-lent Loans (FRLs), Rs3.102 trillion in bank/private loans, Rs2.181 trillion in accrued markup/rollover costs, and Rs0.135 trillion in other interest-bearing obligations.

The ministry clarified that bank and private loans constitute only around Rs3.1 trillion of the total debt, with the remainder primarily comprising government lending, foreign re-lent loans, accumulated markup, rollover costs, and other existing obligations.