The Ministry of Finance and Revenue on Thursday clarified that the Rs10.1 trillion debt figure reported by the Central Monitoring Unit (CMU) of the State Bank of Pakistan (SBP) represents the consolidated stock of interest-bearing obligations of federal State-Owned Enterprises (SOEs) and should not be construed as fresh borrowing from banks.
Clarifying a media report on Federal SOE debt stock, titled “SOEs’ debt soars to Rs10.1 trillion”, it said that it has compared the consolidated debt stock reported by the Central Monitoring Unit (CMU), Finance Division, with State Bank of Pakistan (SBP) data in a manner that is not on a like-for-like basis.
The comparison may create the incorrect impression that the increase in the CMU-reported stock represents an equivalent amount of fresh borrowing by SOEs, said a press release issued by the Ministry of Finance and Revenue.
The SBP series referred to in the media report is a narrower measure focused on borrowing/credit of public sector enterprises from the banking system. CMU, in contrast, reports the comprehensive consolidated stock of interest-bearing obligations of federal SOEs for fiscal-risk monitoring.
The two data sets therefore have different scope, coverage and reporting purposes and should not mixed together, it said adding that the SBP PSE bank debt is Rs 2.954 trillion while SOE combined debt is Rs 10.1 trillion as reported by CMU which has broader scope.
Rs10.1 trillion is not bank borrowing. Bank/private loans account for approximately Rs3.1 trillion of the consolidated stock. The balance principally comprises government lending, foreign re-lent loans, accrued markup/rollover costs and other interest-bearing liabilities.
Accordingly, treating the entire CMU figure as comparable to the SBP banking-sector series is methodologically incorrect.
The increase in consolidated SOE debt stock from approximately Rs8.8 trillion to Rs10.1 trillion does not mean that SOEs raised Rs1.3 trillion of new debt during the reporting period. Fresh/additional loans during the period amounted to approximately Rs164 billion only.
The movement in the overall stock also reflects changes in legacy government lending and foreign re-lent loans, together with accumulated/accrued markup, rollover costs and other existing interest-bearing obligations. The headline and comparison are misleading because they conflate a comprehensive fiscal-risk stock measure with a narrower banking-sector credit measure and may incorrectly portray the movement in the stock as fresh borrowing.
The Rs10.1 trillion figure should instead be understood as CMU's consolidated measure of federal SOE interest-bearing obligations. The broader CMU framework is deliberately designed to provide the government and the Cabinet Committee on State-Owned Enterprises (CCoSOE) with fuller visibility of SOE indebtedness and associated fiscal risks.
The Rs10.1 trillion reported by CMU is the consolidated stock of federal SOE interest-bearing obligations and is not a measure of fresh bank borrowing. Approximately Rs3.1 trillion represents bank/private loans, while fresh/additional loans during the reporting period were approximately Rs164 billion.
The balance includes government loans, foreign re-lent loans, accrued markup/rollover costs and other interest-bearing obligations. Direct comparison with the narrower SBP banking-sector series is therefore not methodologically valid.
