The Finance Division has said weaker net fiscal flows from state-owned enterprises (SOEs) do not mean their financial performance has deteriorated, pointing to Rs. 423.3 billion in combined profits during the first half of Fiscal Year 2025-26.
In a statement issued Wednesday, the Finance Division explained that fiscal flows and the financial performance of SOEs measure different things. Fiscal flows mainly capture transactions between the government and SOEs, including taxes, dividends, levies, government support and other payments.
Profitable SOEs posted aggregate earnings of Rs. 423.3 billion during the six-month period, while loss-making entities recorded combined losses of Rs. 342.8 billion.
The Finance Division said keeping losses of loss-making SOEs under control was an important sign of progress under the government’s SOE reform and monitoring framework.
SOEs provided Rs. 839.8 billion to the government during the period, while government outflows to SOEs stood at Rs. 804 billion. This resulted in a positive net fiscal flow of Rs. 35.8 billion.
According to the Finance Division, higher government outflows were largely linked to equity injections and financing for restructuring and circular debt management. Meanwhile, SOE dividend payments increased by 26 percent and their tax contributions rose by 10 percent.
The division said net fiscal flows should not be treated as a standalone measure of SOE profitability because they can change depending on the timing and nature of government and SOE transactions.
It also cautioned against judging SOE reforms solely through a six-month comparison of fiscal flows, saying several structural measures are already underway.
Utility Stores Corporation has ceased operations, while Pakistan Agricultural Storage and Services Corporation is being wound up. First Women Bank Limited and Pakistan International Airlines have also been privatized.
In the power sector, nine distribution companies have been included in the privatization program and are currently at different stages of the transaction process. These are Faisalabad Electric Supply Company, Gujranwala Electric Power Company, Islamabad Electric Supply Company, Lahore Electric Supply Company, Multan Electric Power Company, Hyderabad Electric Supply Company, Sukkur Electric Power Company, Peshawar Electric Supply Company and Hazara Electric Supply Company.
The Finance Division said the wider restructuring and privatization program was also attracting interest from local and international investors, particularly for the first batch of entities.
The government is also working on governance reforms covering independent and professional boards, business-plan accountability, performance monitoring and data-driven oversight of SOEs.
The Finance Division said the broader reform effort aims to reduce the state’s footprint in commercial activities, improve governance and transparency, strengthen financial discipline and gradually lower fiscal risks.
Depending on the condition of each entity, the government said it is pursuing different approaches, including restructuring, closure, privatization and tighter performance management.
