Pakistan to reduce tariffs to 6% over five years

Pakistan has reached an agreement with the International Monetary Fund (IMF) to reduce its tariff rates. Tariffs will be cut to a weighted average of 6% over the next five years. This change will reduce protection for local industries by 43%. The goal is to increase foreign competition in the economy. Currently, Pakistan has the third-highest tariffs in South Asia, averaging 10.6%. After these cuts, Pakistan will have the lowest tariffs in the region. The agreement was finalized during a virtual meeting on Thursday, according to local media. The tariff cuts will be made under two policies. The National Tariff Policy aims to lower the average tariffs to 7.4% by 2030. A separate policy, the Auto Industry Development and Export Policy (AIDEP), will focus on reducing tariffs in the auto sector to help achieve the final target of 6% beginning in July. Pakistan's move comes as many countries are tightening their trade policies. The government plans to seek approval for these changes from the federal cabinet by the end of June. The new tariffs will be included in the 2025-26 budget, which will be presented in Parliament in June.