Islamabad: The Finance Division has addressed concerns regarding recent media interpretations of the decline in net fiscal flow as an indicator of deteriorating financial health of State-Owned Enterprises (SOEs). According to Press Information Department, fiscal flow and SOE financial performance are distinct measures. Fiscal flows reflect transactions between the Government and SOEs, including government support and receipts from taxes, dividends, levies, and other payments, while SOE financial performance is evaluated based on profitability and other indicators.

During the first half of the fiscal year 2025-26, profitable SOEs generated Rs423.3 billion in aggregate profits, with losses of loss-making SOEs contained at Rs342.8 billion. This containment demonstrates progress under the ongoing SOE reform and monitoring framework. During this period, SOEs contributed Rs839.8 billion in inflows to the Government, against outflows of Rs804.0 billion, resulting in a positive net fiscal flow of Rs35.8 billion. The rise in government outflows was influenced by equity injections and financing linked to restructuring and circular-debt management, while dividends saw a 26% increase and tax contributions from SOEs rose by 10%.

The Finance Division emphasized that movements in net fiscal flow should be contextualized in terms of the timing and composition of Government-SOE transactions, rather than being viewed as a standalone measure of SOE profitability or financial performance. Furthermore, evaluating SOE reform solely through a six-month fiscal-flow comparison overlooks the ongoing structural reforms. Several entities have been privatized or are in the process of winding up, and numerous distribution companies are included in the privatisation programme with significant investor interest.

Governance reforms are enhancing independent and professional boards, business-plan accountability, performance monitoring, and transparent oversight across the portfolio. The Government aims for a reduced SOE footprint, improved governance, greater transparency, enhanced commercial discipline, and reduced fiscal risk. It remains attentive to challenges within the SOE portfolio, addressing them through restructuring, closure, privatisation, and stronger performance management based on the specific circumstances of each entity.