IMF Imposes New Structural Benchmarks for Trade Liberalization in Pakistan’s Upcoming Budget

Islamabad:The International Monetary Fund (IMF) has set new structural benchmarks for Pakistan in the upcoming budget to enhance trade liberalization. These include lifting all quantitative restrictions on the import of used motor vehicles that are less than five years old and imposing a carbon levy of Rs. 5 per liter.

To ensure compliance with these structural benchmarks by December 2025, the IMF has instructed Pakistan to prepare a comprehensive plan based on detailed analysis. This plan will aim to phase out all incentives related to Special Technology Zones and other industrial parks and zones by 2035.

Although the IMF staff report does not specifically mention China, the ban on incentives for Special Economic Zones (SEZs) will likely restrict China’s influence in the long term.

Furthermore, the IMF has made it mandatory for Pakistan to fully implement the laws related to agricultural income tax. This includes developing a comprehensive plan to process tax returns, identify and register taxpayers, launch awareness campaigns, and improve implementation.

In addition, the IMF has mandated the government to legislate the *Captive Power Levy Ordinance* into permanent law and to issue notifications for the annual electricity tariff rebasing and gas tariff adjustments starting from July 1, 2025.

The IMF’s report, issued on Saturday from Washington D.C., emphasizes that Pakistan must ensure the approval of the fiscal year 2025-26 budget by the Parliament in accordance with the agreements made with the IMF staff in order to meet the targets set under the Extended Fund Facility (EFF) and the recently agreed Resilience and Sustainability Facility (RSF).

These steps reflect Pakistan’s ongoing commitment to implementing fiscal reforms in line with IMF requirements, aiming for sustainable economic growth and stability.