- The HRIS phase-out is gradual and contingent on the FY26 review.
- SBP’s caution prevails; without abrupt interruption of the HRIS.
- The Mari gas movement stabilizes the availability and price of fertilizers.
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet approved a government guarantee of Rs 659.6 billion to clear the debt of Power Holding Limited (PHL) and phase out subsidies under the Home Remittance Incentive Scheme (HRIS) by 2027. The news reported.
The government guarantee of Rs 659,646 crore will be issued to PHL to cover loans and payments to IPPs as part of the circular debt financing of Rs 1,225 trillion. The committee said the measures are aimed at ensuring the financial sustainability of the power sector, expediting the settlement of outstanding dues and reducing costs for consumers.
The Council was informed that the central bank had requested the gradual withdrawal of incentives for the remittance scheme.
The Finance Ministry had allocated Rs 100 billion as subsidy in the current fiscal year. The State Bank of Pakistan (SBP) has advised against abrupt cessation of HRIS due to the risk of major disruption in domestic remittances. Instead, a gradual rationalization plan should be implemented on FY26 results and then suggest any revisions.
In the business-as-usual scenario, where domestic remittance momentum is not severely affected (more than 10%) due to the recent HRIS revisions, the government could consider phasing out the schemes beyond FY27, subject to an assessment. The CCE met under the chairmanship of Senator Muhammad Aurangzeb, Federal Minister of Finance and Revenue, in the Finance Division.
On the proposal of the Petroleum Division, the ECC approved the allocation and pricing of gas from Mari Fields to fertilizer plants to ensure adequate and affordable supply of fertilizers on a structural basis.
The ECC took up a summary submitted by the Power Division for rationalization of tariffs and payment adjustments for nuclear power plants (NPP), state-owned power plants (GPP), OGDCL and SNGPL.
The committee approved the framework agreed between interested entities for the settlement of outstanding installments and the forgiveness of specific financial rights to support fiscal balance and tariff rationalization.
The ECC also considered and approved another summary of the Power Division for issuance of government guarantee of Rs 659,646 million for circular debt financing of Rs 1,225 trillion.
In another decision, the committee considered and approved a Finance Division summary for phasing out the HRIS. The ECC endorsed a gradual and data-driven approach to ensure the stability of remittance flows and avoid any abrupt disruption that could negatively impact the economy.
Additionally, it was decided that the government could consider completing the phase-out process beyond FY27, subject to a review of remittance performance and the results of FY26 reviews.
Among the administrative decisions, the ECC approved more than Rs 960 million for the Ministry of Home Affairs and requested a report from the CDA on the future of personnel of persons with disabilities. A Ministry of Maritime Affairs summary on the use of the PIBT was postponed.
