Food sector debt soars past Rs325bn as arrears pile up nationwide

ISLAMABAD: Pakistan’s food sector is sinking deeper into a financial quagmire, with circular debt swelling past Rs325.6 billion despite government pledges to rein in liabilities, according to official documents from the Trading Corporation of Pakistan (TCP) seen by The News.

As of Sept 30, 2025, federal and provincial agencies together owe TCP Rs88.28 billion in principal and a staggering Rs237.32 billion in accumulated markup — meaning nearly three-quarters of the total debt stems from interest charges rather than original obligations. The data underscores the government’s failure to recover dues and stem inefficiencies plaguing Pakistan’s food supply system.

The National Fertilizer Marketing Ltd. (NFML) is the single largest defaulter, with liabilities exceeding Rs126.78 billion, followed by the Utility Stores Corporation (USC) at Rs110 billion. Both fall under federal control, underscoring what officials describe as “chronic financial mismanagement” within state-run enterprises.

Among the provinces, Punjab tops the list with Rs17.59 billion, followed by Khyber Pakhtunkhwa (Rs13.24 billion), Sindh (Rs9.59 billion), and Balochistan (Rs9.50 billion). Gilgit-Baltistan and Azad Jammu & Kashmir owe Rs6.72 billion and Rs2.26 billion, respectively.

Other debtors include the Pakistan Navy (Rs231.86 million), Directorate General Procurement Army (Rs1.70 billion), PASSCO (Rs6.15 billion), the Ministry of National Food Security and Research (Rs2.85 billion), and the Ministry of Industries and Production (Rs18.75 billion).

The TCP report paints a grim picture: the debt, instead of shrinking, has steadily expanded, driven largely by non-payments, weak recoveries, and unchecked interest accumulation. Insiders say the markup alone now constitutes nearly 73 percent of the total debt, reflecting years of financial indiscipline.

The unchecked circular debt in the food sector mirrors the pattern seen in Pakistan’s power and gas sectors—a sign of systemic fiscal fragility. Unless the government enforces strict accountability and payment discipline, they say, the food sector could soon face a liquidity crisis, undermining food security and market stability.