The federal cabinet on Wednesday approved a financial restructuring plan aimed at addressing the long-standing issue of circular debt in the power sector, targeting Rs. 1.275 trillion over the next six years.
A statement issued by the Prime Minister’s Office after the cabinet meeting said the plan would eliminate the circular debt over six years without adding any pressure to the national budget. The cabinet described this as a major milestone towards energy sector reform, adding it would restore financial stability in the power sector and boost investor confidence.
Under the plan, Rs. 683 billion in debt held by the Power Holding Company would be refinanced, while overdue payments to independent power producers would be cleared.
Federal budget
Discussing the proposed federal budget for FY2025-26, Prime Minister Shehbaz Sharif praised Finance Minister Muhammad Aurangzeb, his finance team, and Federal Board of Revenue (FBR) Chairman Rashid Mehmood Langrial for consulting allied parties and stakeholders in budget preparations.
He claimed Pakistan had persuaded the International Monetary Fund (IMF) against imposing taxes on the agriculture sector, including levies on fertilizers and pesticides, arguing the sector was already under pressure. The IMF agreed to the request, he said.
Sharif clarified that individuals earning between Rs. 600,000 and Rs. 1,200,000 annually would now pay only 1% in income tax, compared with 5% last year. He said his administration had avoided the policy missteps that had pushed the country to the brink of default in an apparent dig at the former Pakistan Tehreek-e-Insaf (PTI) government. “We have pulled back the country from a financial fiasco, and now it is moving forward,” he added.
The premier also highlighted the government’s increased allocation for the Public Sector Development Program (PSDP). He said the government had expanded fiscal space to meet the armed forces’ equipment needs as part of its ongoing fight against terrorism. The cabinet also praised the finance minister and his economic team for presenting a public-friendly budget for the upcoming fiscal year.
Regional conflict
During the meeting, the prime minister voiced concern over the escalating armed conflict between Iran and Israel, noting the situation posed a serious threat to both regional and global peace. He reiterated Pakistan’s complete solidarity with Iran and its people against Israeli aggression, adding Islamabad strongly condemned Israeli attacks that had caused the deaths of hundreds of Iranian civilians and injured many others. Urging the global community to intervene and secure an immediate ceasefire, he hoped for lasting peace in the region.
Sharif told the cabinet he had spoken to Iranian President Masoud Pezeshkian to convey Pakistan’s solidarity and to condemn the Israeli attacks. He said he had also spoken with Turkish President Recep Tayyip Erdogan on the evolving situation.
The prime minister also discussed the ongoing Israeli aggression in Gaza, saying the suffering there was heart-wrenching. He noted over 50,000 Palestinians had been killed, questioning when the world’s conscience would wake up to the ongoing brutality.
Sharif announced that Deputy Prime Minister Ishaq Dar would represent Pakistan at the Organization of Islamic Cooperation (OIC) foreign ministers’ meeting in Türkiye on June 21-22.
Approvals
The premier credited the recent victory in Pakistan’s conflict with India to the professionalism of the armed forces and the support of 240 million Pakistanis. He commended Bilawal Bhutto-Zardari and his delegation for effectively presenting Pakistan’s case against India’s unilateral and illegal aggression during their visits to the United States and Europe.
He also lauded Chief of Army Staff Field Marshal Asim Munir for affirming Pakistan’s resolve to defend its borders and national interests in an address to the Pakistani community in the US.
During the meeting, the cabinet approved the appointment of Kamaluddin Tipu as chairperson of the Commission for the Protection of Journalists and Media Professionals, following a recommendation by the Ministry of Human Rights. It also approved an exemption under Section 21 of the Public Procurement Regulatory Authority Ordinance 2002, allowing the National Power Parks Management Company Limited to procure services for the acquisition of the Rousch Power Plant.
Additionally, the cabinet ratified decisions taken by the Cabinet Committee on Legislative Cases in a meeting held on May 21.