Pakistan to legislate new tariff cuts, liberalise wheat, sugar sectors under IMF commitments
Pakistan has assured the International Monetary Fund (IMF) that the second phase of tariff reductions under the National Tariff Policy will be legislated through the FY2026-27 Finance Act, alongside broader reforms aimed at liberalising wheat, sugar and auto markets.
According to the IMF’s third review, the tariff reforms are expected to significantly reduce the weighted average tariff in line with programme commitments. The Fund stated that reducing government intervention in wheat and sugar markets was necessary to remove distortions, improve price discovery and encourage private investment and efficiency, particularly during periods of global food price volatility.
The IMF said procurement for strategic wheat reserves should remain limited to emergency situations and be carried out through private sector operators at internationally aligned prices.
Authorities informed the Fund that the interim wheat policy for the 2025-26 Rabi season, introduced in November 2025, had helped cultivation reach a multi-year high, while a long-term wheat policy aimed at removing structural barriers to price discovery and inter-provincial trade was expected by the end of May 2026.
In the sugar sector, the government is preparing a national policy expected by the end of June 2026 that proposes the removal of zoning and licensing restrictions, the elimination of administered cane and sugar prices, and phased liberalisation of imports and exports.
The IMF also noted that Pakistan’s fertiliser supply risks remained manageable because of relative self-sufficiency in urea production, although prolonged disruptions in DAP imports could affect the upcoming Kharif sowing season.
Authorities further told the Fund that reforms under the National Tariff Policy 2025-30 and the upcoming auto policy would gradually eliminate additional customs duties and regulatory duties while substantially reducing customs duty rates by FY2030.
The Motor Vehicle Development Act, aimed at introducing environmental and safety standards for locally manufactured and imported vehicles, has been submitted to Parliament and is expected to be approved before end-June 2026.
The government also informed the IMF that the personal baggage scheme had been abolished following legalisation of commercial imports, while gift and transfer-of-residence schemes had been tightened to prevent misuse.
According to the report, a review of the Export Policy Order and Import Policy Order identified 2,662 non-tariff barriers, with restrictions affecting 76 HS codes set to be removed by end-May 2026 and the remaining barriers to be reviewed in phases by end-September 2026.
