(Digital Report) Negotiations between Pakistan and the International Monetary Fund (IMF) regarding the federal budget for fiscal year 2026-27 have entered their final stage today. According to sources, there is a strong possibility that both sides will reach an agreement on budget targets, which is expected to make the budget presentation process smoother.
The federal government has also shared a draft of the new five-year Auto Policy (2026-2031) with the IMF, focusing particularly on the promotion of electric vehicles (EVs). The government has recommended lower tax rates on electric four-wheelers, three-wheelers, motorcycles, buses, trucks, pickup vehicles, double cabins, and tractors to encourage the use of new energy vehicles.
Sources said the IMF proposed imposing 18% GST on electric vehicles, while the government has recommended only 1% GST to encourage investment and new technology in Pakistan’s auto sector.
The new auto policy also emphasizes boosting local industry, exports, and employment opportunities. The government aims to transform Pakistan into a global auto manufacturing hub by 2031 while addressing shortcomings in previous policies and introducing modern regulations.
Between 2022 and 2024, the auto industry was severely affected by inflation, economic instability, and import restrictions, leading to a sharp decline in vehicle production. Under the new policy, fresh tax and subsidy frameworks will be introduced to promote a technology- and export-oriented auto industry.
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