IMF Pushes Pakistan to Lift Ban on Used Car Imports Under New \$7 Billion Loan Conditions

Islamabad:The International Monetary Fund (IMF) has introduced **11 new conditions** as part of negotiations with Pakistan for the release of the **third tranche of a \$7 billion loan program**, one of which includes lifting the ban on the **commercial import of used vehicles**.

Currently, Pakistan allows the import of vehicles that are up to three years old. However, the IMF is now pressing the government to **legislate the removal of this restriction and permit the import of cars up to five years old**, with the legislation to be submitted to Parliament by the **end of July 2025**. The stated objective is to **liberalize trade and improve consumer access** to affordable vehicles.

According to the Pakistani government, it has already met performance benchmarks for **seven out of the 11 conditions** by the end of December 2024, and discussions are ongoing to adjust older requirements.

### Industry Reaction

Chairman of the All Pakistan Motor Dealers Association, **H.M. Shahzad Akbar**, welcomed the potential policy shift, saying it would lower the prices of imported Japanese cars, making them more affordable for consumers. “More imports mean higher tax and duty revenue for the government, and it could revive public interest in car purchases,” he stated.

He also noted that the IMF has urged Pakistan to **reduce regulatory duty, sales tax, and federal excise duty** on imported cars — measures that would boost both consumer affordability and sector-wide competitiveness. “This would not only help keep the auto industry alive but also pressure local manufacturers to **improve quality and performance**,” he added.

Car dealer **Farooq Patel** echoed the sentiment, highlighting that the biggest winners would be the **general public**, who would gain access to **more affordable and reliable vehicles**. He said the local auto market had stagnated due to high prices and declining sales.

However, he also raised concerns about **economic drawbacks**, particularly the potential for a **surge in dollar outflows**. “Cheaper Japanese imports could hurt local manufacturers, leading to a drop in demand for Pakistani-assembled cars and a weakened auto parts industry,” he warned.

Patel emphasized the importance of supporting the **domestic auto sector**, urging consumers to **buy locally produced cars** to help Pakistan develop a robust auto industry similar to neighboring countries.

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**Key Points:**

* IMF wants Pakistan to allow **commercial import of used cars up to 5 years old**.
* Legislation must be passed by **July 2025**.
* IMF also recommends **reducing taxes and duties** on auto imports.
* Car dealers say it will benefit consumers but **may hurt local manufacturers**.
* Concerns raised over **foreign exchange outflows** and **impact on local auto parts industry**.

This shift in import policy could **reshape Pakistan’s auto sector** if implemented — balancing consumer benefit with potential economic trade-offs.