IMF Accepts Pakistan’s Request to Cut Regulatory Duties in Next Budget

The International Monetary Fund (IMF) has accepted Pakistan’s demand to reduce customs and regulatory duties under the new tariff policy 2025–30, as part of the ongoing negotiations for the federal budget 2025–26. The discussions also include a shift in the country’s vehicle import and energy policies aimed at cutting pollution and supporting electric mobility. The government has assured the IMF it will lift the ban on the import of 5-year-old used vehicles in the upcoming budget, a significant move toward liberalizing the automotive sector. Simultaneously, the IMF has asked Pakistan to open commercial imports of vehicles and remove non-tariff barriers to ease the flow of goods. As part of the green shift, Pakistan will implement a new electric vehicle (EV) policy with the goal of having 30% of all new vehicles on the road powered by electricity by 2030. A subsidy scheme will be launched to support battery-powered vehicles, alongside a nationwide rollout of EV charging infrastructure. To discourage pollution from fuel-based vehicles, the government plans to introduce a carbon levy of Rs. 5 per liter on petrol and diesel vehicles starting July 2025. This levy will be collected for two years, until June 2027. Additionally, a supplementary sales tax on petrol and diesel-powered vehicles is under consideration. The government has also agreed to reduce tariffs in the automobile sector and offer incentives for local manufacturers as part of reforms. The proposed petroleum levy may be increased by Rs. 100 per liter in the next budget, though final figures are yet to be confirmed. According to officials, these combined measures are expected to cut pollution from smog-emitting vehicles by up to 30 percent by 2030. The reforms aim not only to meet environmental goals but also to align Pakistan’s import regime with global trade benchmarks.