Islamabad, Pakistan – Web Desk: Pakistan and the International Monetary Fund (IMF) are expected to reach an agreement on budget targets as negotiations for the federal budget 2026–27 enter their final stage in Islamabad.
According to officials, both sides are close to consensus on key fiscal targets, although differences remain over taxation policy for electric vehicles (EVs).
The IMF has proposed an 18% General Sales Tax (GST) on electric vehicles, while the Pakistani government has suggested a significantly lower rate of 1%, arguing that reduced taxation is necessary to promote the adoption of new energy vehicles.
The government has shared a draft of its 2026–2031 auto policy with the IMF, prioritizing the growth of electric vehicles, including two- and three-wheelers, buses, trucks, pickups, and tractors.
Officials say the policy aims to reduce tariffs in the auto sector to around 6% by 2030, boost local manufacturing, increase exports, and create employment opportunities. The long-term plan also seeks to transform Pakistan’s auto industry into a technology-driven and export-oriented sector.
The auto industry in Pakistan was severely impacted between 2022 and 2024 due to economic instability, inflation, and import restrictions, leading to a sharp decline in vehicle production.
The government has set an ambitious target of turning Pakistan into a global automotive manufacturing hub by 2031.
