Pakistan to remove up to 70 trade barriers in FY27 budget after IMF review of 2,662 non-tariff restrictions

Pakistan plans to remove up to 60–70 non-tariff barriers (NTBs) in the 2026-27 budget after a review by the International Monetary Fund identified 2,662 restrictions affecting the country’s import and export regime, according to a news report. 

Officials said the exercise, conducted through a review of the Export Policy Order and Import Policy Order, involved consultations with multiple ministries, including health, environment, interior and defence, before agreement was reached with the International Monetary Fund on removing selected outdated barriers.

The first phase of removal is expected to begin from June 2026 and will target restrictions linked to 76 Harmonised System (HS) codes across sectors, including automobiles, pharmaceuticals, steel, agriculture, consumer goods and mobile phones.

Sources said these barriers include foreign exchange prioritisation limits for imports, licensing requirements, delays in opening letters of credit, regulatory duties, discretionary clearance delays and approvals by authorities such as the Pakistan Telecommunication Authority for mobile devices.

Restrictions affecting the automobile sector include those on completely knocked down units, semi-knocked down kits, completely built units and high-end vehicles, while import curbs on smartphones and consumer electronics are also expected to be eased.

The government is also considering the removal of NTBs affecting imports of dairy products, packaged food, edible oil, textiles, steel bars and medicines. In agriculture, restrictions imposed through sanitary and phytosanitary standards and administrative controls are expected to be reviewed.

Officials said Pakistan has assured the International Monetary Fund that the remaining barriers—estimated at around 2,600—will be reviewed in phases over the next three years, with priority given to the most distortionary measures. These will be presented to the Cabinet Committee on Regulatory Reform for removal or simplification by November 2026.

The move is part of a broader trade liberalisation plan under the ongoing $7 billion programme with the International Monetary Fund, which also includes implementation of the National Tariff Policy 2025–2030.

Under this framework, the government has committed to reducing the weighted average tariff from 10.7% to around 9.5% in the upcoming budget, with a longer-term target of bringing it down to 7.4% by 2030 and below 6% in line with reform commitments.

Sector-specific measures include reducing average tariffs in the auto sector to 5.99% by 2030 and phasing out regulatory duties on imported vehicles, currently at 40%, through annual reductions over four years.

Officials said the easing of NTBs is expected to reduce compliance costs and improve trade flows, although concerns have been raised that affected industries were not fully consulted during the process.

Multilateral lenders, including the International Monetary Fund and the World Bank, have been urging Pakistan to liberalise trade, while policymakers have previously relied on both tariff and non-tariff measures to manage imports amid foreign exchange constraints.

The removal of these restrictions is expected to ease import procedures across multiple sectors and align Pakistan’s trade regime with its international commitments.