ISLAMABAD: Overwhelmingly led by Sindh, the country’s total contingent liabilities arising out of public-private partnership (PPP) projects — both at the Centre and the four provinces — exceeded Rs472 billion by the end of last month, according to the Ministry of Finance.
In its first of the kind “Fiscal Risk Monitoring Framework for Contingent Liabilities of PPP Projects”, in line with commitments made to the International Monetary Fund (IMF), the ministry’s Debt Management Office reported a total of Rs472.3bn in such liabilities as of Dec 2025.
More than 71pc (Rs335.6bn) of the total pertained to contingent liabilities of the Sindh government, which has the largest portfolio of 17 PPP projects — almost half of 36 across the country.
Total liabilities exceeded Rs472bn by end of last month
The federal government’s total contingent liabilities against PPP projects amounted to Rs90.6bn, or 19.3pc of the cumulative amount, followed by Punjab at Rs26.5bn (5.6pc) and Rs19.6bn (4.2pc of the total) of the Khyber Pakhtunkhwa government.
Balochistan has no such liabilities, although its five projects were among the 36 total PPP project portfolio across the country.
In its latest written commitment to the IMF, the government had promised to improve the risk monitoring framework of public-private partnerships, including those at the provincial level.
“We will subject PPP-funded projects to the same rigorous selection criteria applied to projects funded through other sources”, Finance Minister Muhammad Aurangzeb said, adding that Risk Management Unit (RMU) in the Ministry of Finance, in coordination with other stakeholders, was in the process of establishing a monitoring framework for quantifying contingent liabilities related to PPPs for publishing estimates by end-December 2025.
Contingent liabilities are those contractual obligations of the state for which public sector entities have assumed risks against these PPP projects and are calculated in nominal values calculated over the life of the contract.
Of the total liabilities, Rs368.3bn pertain to contingent fiscal responsibilities that may accrue due to minimum revenue guaranteed by the respective governments against a specific project, cost escalation, interest rate fluctuations or terminal liabilities, while another Rs104bn have been pitched as financial guarantees.
Cost escalation
The report suggests Sindh’s direct contingent liabilities because of cost escalation, minimum revenue guarantee and terminal liabilities stand at Rs255.5bn, accounting for close to 70pc of the Rs368.3bn consolidated national amount. Sindh’s largest risk exposure for contingent liabilities stems from cost escalation estimated at Rs146.6bn, followed by Rs61bn for minimum revenue guaranteed by the provincial government to private partners.
This is in addition to about Rs80bn in financial guarantees.
The federal government’s total PPP liabilities of Rs90.6bn include Rs83.7bn on account of termination liabilities and Rs7bn in financial guarantees. Financial guarantees are instruments issued against a financial commitment agreed to be undertaken by the public sector like viability gap financing support.
The report highlighted ‘high’ risk of these contingent liabilities becoming actually due on account of Rs150bn each for cost escalation and termination liabilities, Rs104bn on account of financial guarantees and about Rs66bn for minimum revenue guarantees, led by Sindh with Rs61bn.
IMF stipulation
The framework is required under the IMF programme to establish a consistent system for identifying, quantifying, and reporting contingent liabilities arising from PPP projects at both federal and provincial government levels.
This is because the PPP contracts can create fiscal exposures that do not immediately appear in budget or debt statements, but could materialise later through guarantee calls, revenue support mechanisms, indexation adjustments or termination-related payments.
The framework provides a uniform methodology to classify and quantify both direct and contingent liabilities and to consolidate these into a single national PPP fiscal exposure dataset managed by the RMU of the Ministry of Finance.
Published in Dawn, January 6th, 2026
