Pakistan’s federal government and the International Monetary Fund (IMF) have yet to agree on the proposed Auto Policy 2026–2031, with the lender objecting to some provisions, sources said.
Officials plan to brief the Economic Coordination Committee (ECC) and the federal cabinet on those concerns before revising the draft.
Government representatives have already briefed the lender on proposals intended to reduce vehicle prices. Those measures include lower duties on conventional vehicles and tax incentives for electric models. Electric vehicles feature prominently in the proposed framework.
According to the draft document, the policy makes promoting electric vehicles a central objective. It proposes a dedicated incentive package and substantial tax reductions for the segment.
Battery electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs) and range-extended electric vehicles (REEVs) would receive equal status under the proposed framework.
Read: Pakistan IMF Review Starts Sept. 23 With $1.2bn at Stake
For conventional vehicles, the draft envisages customs duty reductions over five years. It sets out annual tax reductions from 2026 under the National Tariff Policy.
Pakistan’s wider discussions with the IMF cover reviews of two financing programmes. These comprise the 37-month, $7 billion Extended Fund Facility (EFF) and the separate $1.4 billion Resilience and Sustainability Facility (RSF).
The IMF approved the EFF in September 2024. Successful reviews could unlock about $1 billion through that programme and around $200 million through the RSF, for roughly $1.2 billion in combined financing.
After further consultations, the government plans to revise the draft. Officials would then finalise it with local automobile manufacturers, importers and the IMF, sources said.
