ISLAMABAD – The federal government has allocated Rs354.81 billion to State-Owned Enterprises (SOEs) under the Public Sector Development Programme (PSDP) for the fiscal year 2025–26, marking an 80.3% increase from the Rs196.83 billion earmarked in the outgoing year.
The significant rise in allocations comes as the government maintains its commitment to fund SOEs for strategic and developmental functions, even as broader reform efforts remain ongoing.
In his FY25–26 budget speech, Finance Minister Muhammad Aurangzeb noted that loss-making SOEs continue to impose a substantial fiscal burden, estimated at over Rs800 billion annually. When government support through subsidies, grants, and equity injections is factored in, the total impact exceeds Rs1 trillion.
Aurangzeb highlighted the urgency of SOE reform as essential for fiscal discipline. “The government has taken several important steps regarding SOEs,” he said, including the completion of a categorisation process by a cabinet committee. The classification distinguishes entities for restructuring, privatisation, or adoption of the public-private partnership (PPP) model.
The finance minister reiterated that the government is committed to reducing the size of the public sector and intends to pursue privatisation and rightsizing of SOEs in FY26. He added that professional boards of directors have been installed in several entities to ensure operational autonomy and reduce political interference.
Aurangzeb said a “modern and dynamic privatisation strategy” is being implemented to enhance public sector efficiency, attract private investment, and reduce fiscal strain. Priority sectors include energy and financial services.
The government aims to complete key transactions in the coming fiscal year, including the long-delayed privatisation of Pakistan International Airlines (PIA) and the Roosevelt Hotel in New York.
