Pakistan and IMF: Paving the Way for Economic Liberalisation

Pakistan and the IMF have agreed to a significant tariff reduction plan, cutting the weighted average applied tariffs from 10.6% to around 6% over five years. This plan aims to lower protectionism, fostering competition and economic liberalization amidst a global trend of closed borders.

In a landmark move, Pakistan and the International Monetary Fund (IMF) have come to an agreement to reduce the weighted average applied tariffs to approximately 6%. This translates to a reduction of 43% in the protection level for local industries over the next five years, as reported by local media.

The IMF had consistently expressed concerns about the high protection available to local industries in Pakistan, which has the third-highest trade-weighted average tariffs in South Asia at 10.6%. With the execution of the full liberalization plan, the country will have the lowest weighted average tariffs in the region.

The reductions, commencing in July, will be managed via two policies: the National Tariff Policy and the Auto Industry Development and Export Policy (AIDEP) 2026-30. These strategies aim to foster a more competitive economy by significantly lowering tariffs, especially within the automobile sector.

(With inputs from agencies.)