Government Allocates Rs355bn for SOEs in FY26 PSDP as Reform Push Accelerates
June 11, 2025 : The federal government has earmarked Rs354.81 billion for State-Owned Enterprises (SOEs) under the Public Sector Development Programme (PSDP) for fiscal year 2025–26 — marking a significant 80.3% increase from the Rs196.83 billion allocated in the previous year.
Despite ongoing deliberations around structural reforms, the substantial funding underscores the government’s continued support for SOEs deemed strategic or developmental in nature.
Presenting the federal budget, Finance Minister Muhammad Aurangzeb highlighted that SOEs currently exert an annual financial burden of over Rs800 billion on the national exchequer — a figure that crosses Rs1 trillion when subsidies, grants, and equity injections are factored in.
“This is why SOE reforms are of utmost importance for fiscal discipline,” Aurangzeb noted. He emphasized that a series of measures are already underway to address inefficiencies and reduce the strain on the national economy.
A key aspect of the reform initiative involves categorizing SOEs into three groups — entities to be restructured, privatized, or transitioned into public-private partnerships (PPPs). According to the finance minister, this categorization has now been completed by the designated cabinet committee.
The government intends to pursue the rightsizing and privatization of these entities in FY26. Aurangzeb said a comprehensive privatization plan is being implemented to transform loss-making SOEs into competitive, profit-driven institutions.
One major area of focus is the energy sector. The finance minister confirmed that the government will move forward with the privatization of power distribution companies, noting that newly constituted professional boards are now operating free of political interference.
Additionally, key transactions scheduled for completion in FY26 include the long-anticipated privatization of Pakistan International Airlines (PIA) and the Roosevelt Hotel in New York.
Aurangzeb said the broader aim of the reform and privatization agenda is to boost public sector efficiency, enhance transparency, reduce fiscal burden, and attract private investment — particularly in energy and financial services.
“This is a modern and dynamic approach,” the finance minister asserted. “Our goal is to open up competition, improve service delivery, and reduce the role of the government in non-essential sectors while creating space for private enterprise.”
