IMF urges Pakistan to strengthen tariff governance, reduce discretionary exemptions

The International Monetary Fund (IMF) in its Governance and Corruption Diagnostic Assessment Report on Pakistan, has called for strict implementation of the National Tariff Policy 2025–30.

The IMF asserted that reforms aimed at simplifying the tariff structure must continue.

According to the IMF report, the National Tariff Commission (NTC) needs to reduce its reliance on external consultants, while also limiting the influence of lobbying groups on its decision-making process.

The report further stresses the need to enhance the NTC’s technical capacity, strengthen its institutional credibility, and minimize external interference. The IMF also urged measures to curb rent-seeking trends and ensure greater transparency.

The assessment notes that weaknesses in customs enforcement are undermining the impact of tariff reforms.

It recommends removing flaws within the customs system, abolishing Section 18-A of the Fifth Schedule, and restricting the use of exemptions granted under Section 19 of the Customs Act.

To ensure a coherent tariff structure, the IMF advises significantly reducing discretionary tax exemptions.

Meanwhile, Pakistan has accepted a key condition set by the International Monetary Fund (IMF) to conduct a special audit of supplementary grants issued over the past ten years, Finance Ministry sources said, last week.

The 10-day technical discussions between Pakistan and the IMF have now concluded.

Officials also confirmed that Pakistan has agreed to another IMF requirement aimed at limiting the federal government’s discretionary authority to issue supplementary grants.

The IMF’s technical mission arrived in Pakistan on November 11 to review progress on budget-related targets. The talks focused on reforms in public finance management (PFM) and measures to enhance transparency in the budget process.