ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved the issuance of a Rs659.6 billion guarantee for settlement of the Power Holding Company’s debt, and phasing out subsidy for Home Remittance Incentive Scheme (HRIS) by 2027.
The Council was informed that the central bank had asked for gradually abandoning the incentives for the remittances scheme.
The Ministry of Finance had allocated Rs100 billion for it as subsidy in the current fiscal year. The State Bank of Pakistan (SBP) recommended against abrupt cessation of HRIS due to the risk of major disruption in home remittances. Instead, a gradual rationalization plan should be put in place on the outcomes of FY26 and then any revisions is suggested.
In the normal scenario, where the momentum in home remittances is not severely impacted (beyond 10%) due to the recent revisions in HRIS, the government may consider phasing out the schemes beyond FY27 subject to an evaluation. The ECC met under the chairmanship of Senator Muhammad Aurangzeb, Federal Minister for Finance and Revenue, at the Finance Division.
On the Petroleum Division’s proposal, the ECC approved the allocation and pricing of gas from Mari Fields to fertilizer plants to ensure adequate and affordable supply of fertilizer 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 (NPPs), government-owned power plants (GPPs), OGDCL and SNGPL.
The committee endorsed the agreed framework among the entities concerned for the settlement of outstanding dues and waiver of specific financial claims to support fiscal balance and tariff rationalization.
The ECC also considered and approved another summary by the Power Division for issuance of a Rs659.646 billion government guarantee for circular debt financing of Rs1.225 trillion.
In another decision, the committee considered and approved a summary from the Finance Division for gradually phasing out the Home Remittance Incentive Scheme (HRIS). The ECC endorsed a phased, data-driven approach to ensure stability in remittance inflows and to avoid any abrupt disruption that could adversely impact the economy.
It was further decided that the government may consider completing the phase-out process beyond FY27, subject to a review of remittance performance and the outcomes of the FY26 revisions.
