Business Recorder
ISLAMABAD: The government has assured the International Monetary Fund (IMF) that the second phase of duty reductions under the National Tariff Policy (NTP) will be legislated through the FY27 Finance Act, significantly lowering the weighted average tariff in line with commitments under the programme. According to the IMF’s third review under the Extended Fund Facility (EFF) and second review under the Resilience and Sustainability Facility (RSF), reducing government intervention in wheat and sugar markets is critical to removing distortions and promoting private investment, productivity, and efficiency. The Fund noted that these reforms would also strengthen price discovery, particularly amid heightened global food price volatility. READ ALSO: Most IMF conditions met by Pakistan: Aurangzeb The IMF emphasised that governance arrangements for strategic wheat reserves should remain robust, with procurement carried out through the private sector at prices aligned with international markets. Releases should be limited to emergency situations only. In the sugar sector, authorities are progressing toward a new national policy—expected by end-June 2026—that envisages removal of zoning and licensing restrictions, elimination of administered cane and sugar prices, and liberalisation of imports and exports under a phased and transparent framework. The Fund observed that immediate risks from fertiliser trade disruptions remain manageable, given Pakistan’s relative self-sufficiency in urea production. However, prolonged disruptions in DAP supply could affect the Kharif sowing season (June–July), while global fertilizer shocks may also impact food import prices. Authorities informed the Fund that, as part of a broader shift toward an export-led and private sector-driven economy, the government is taking steps to reduce its role in commodity markets. These measures, they said, would help mitigate risks of shortages in essential food items amid global uncertainty. The interim wheat policy for the 2025-26 Rabi season, introduced in November 2025, has already helped boost cultivation to a multi-year high. Procurement for strategic reserves will now be conducted through private sector operators at internationally aligned prices. Meanwhile, federal and provincial governments are finalising a long-term wheat policy — expected by end-May 2026 — to remove structural barriers to price discovery and inter-provincial trade. On sugar sector reforms, authorities have shared draft recommendations for a national policy with provinces, with final approval by the federal cabinet targeted for end-June 2026. The government also reiterated its commitment to reducing trade barriers under the NTP (2025–30) and the forthcoming auto policy. The new auto policy, currently in advanced stages, envisages the gradual elimination of additional customs duties (ACDs) and regulatory duties (RDs), along with a substantial reduction in customs duty (CD) rates by FY30. The Motor Vehicle Development Act— aimed at providing a legal framework for enforcing environmental and safety standards for both locally manufactured and imported vehicles— has been submitted to Parliament and is expected to be approved by the National Assembly before end-June 2026. Authorities further noted that, following the legalisation of commercial imports, the personal baggage scheme has been abolished, while criteria for gift and transfer-of-residence schemes have been tightened to prevent misuse. A comprehensive review of the Export Policy Order and Import Policy Order has identified 2,662 non-tariff barriers (NTBs). Of these, restrictions affecting 76 HS codes are set to be removed by end-May 2026, while the remaining NTBs will be reviewed in phases and presented to the Cabinet Committee on Regulatory Reform by end-September 2026. The Pakistan Bureau of Statistics (PBS) has also revised quarterly and annual import data for 2020–25 after reconciling discrepancies between Pakistan Single Window (PSW) and PRAL datasets. Revised monthly data will be released by end-August 2026, along with detailed explanations. Efforts are underway to standardise data definitions and strengthen coordination between PBS and PSW to ensure consistency in trade statistics. The IMF report also highlighted Pakistan’s increasing exposure to climate-related trade measures, particularly the European Union’s Carbon Border Adjustment Mechanism (CBAM). While currently limited in scope, potential expansion to sectors such as textiles could pose competitiveness challenges. To address this, the report stressed the need for improved measurement, reporting, and verification (MRV) systems, sector-specific decarbonisation strategies, and stronger coordination between trade and environmental authorities. Early action, it noted, would help safeguard market access, enhance export resilience, and position Pakistan to benefit from the global transition to low-carbon value chains. Copyright Business Recorder, 2026
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