Cabinet approves six-year strategy to resolve circular debt

ISLAMABAD: Prime Minister Shehbaz Sharif chaired a meeting of the federal cabinet on Wednesday, where several key decisions were taken for Pakistan’s economic and institutional progress.

Prime Minister Sharif lauded Chief of Army Staff Field Marshal Syed Asim Munir for his recent address to the Pakistani diaspora in the United States.

He praised the army chief’s strong commitment to defending Pakistan’s borders and national interests, calling his message a source of pride for the nation.

The cabinet approved Pakistan’s largest-ever financial scheme aimed at restoring stability in the power sector by eliminating circular debt.

The plan targets the resolution of Rs1,275 billion in circular debt over the next six years without placing additional pressure on the national budget.

Also read: Banks seek SBP regulatory waivers for Rs1.275 trillion circular debt financing

As part of the scheme, Rs683 billion will be refinanced through the Power Holding Company, and the dues to Independent Power Producers (IPPs) will be cleared.

This reform reflects the government’s commitment to long-term institutional sustainability, easing fiscal burdens, and restoring investor confidence in the energy sector.

The prime minister described the decision as a significant success for Pakistan’s economy and a critical step toward a more stable future.

The cabinet also expressed appreciation for Finance Minister Muhammad Aurangzeb and his economic team for presenting a “people-friendly” budget for the upcoming fiscal year.

Minister for Religious Affairs Sardar Yousaf was also lauded for the “exceptional” arrangements made for Hajj pilgrims this year.

The cabinet approved the appointment of Kamaluddin Tipu as Chairperson of the Commission for the Protection of Journalists and Media Professionals, on the recommendation of the Ministry of Human Rights.

Additionally, the cabinet granted an exemption under Section 21 of the Pakistan Public Procurement Regulatory Authority Ordinance 2002 to the National Power Parks Management Company Limited for procurement services related to the acquisition of the Rousch Power Plant.

The cabinet also ratified the decisions made during the meeting of the Cabinet Committee on Legislative Cases held on May 21, 2025.