Budget 2026-27: What will be cheaper and more expensive in Pakistan amid IMF-backed reforms?
ISLAMABAD – Pakistan is expected to present its budget 2026-27 next week as public anxiety grows over a possible new wave of inflation. Reports of fresh taxes under IMF-backed reforms added to concerns in an already strained economy, where households still face high prices and reduced purchasing power.
The situation has been further complicated by recent global and regional tensions, including disruptions related to the US-Iran conflict that have pushed fuel prices higher, raising fears that another round of cost increases could follow the announcement of the new budget.
Summary Table: Projected Price Impacts in Pakistan Budget 2026-27
| category | More expensive | Relief |
| Fuel – Energy | Petrol, diesel, high petroleum levy and carbon levy. Electricity and Gas Rates (Subsidy Rationalization) | — |
| EV vehicles | Solar Panels (18%) GST, Electric Vehicles (EV) (GST 1% → 18%) Hybrid Vehicles (GST 18-25%) | Some reports suggest possible incentives for local EV/hybrid assembly. |
| Imported goods | Many consumables, raw materials (higher customs/regulatory duties, sales tax) | Industrial raw materials and inputs (tariff reduction planned) |
| Tax on individuals | General cost of living (indirect taxes and ripple effects) | Salaried Class (Higher Exemption Limit + Lower Slab Expected) |
| business | Advance taxes, withholding on supplies/contracts | Exporters and Export Sectors (Possible Advance Tax Relief + Incentives) |
| Other | Aggregate inflationary pressures from energy/fuel | Govt Salary/Pension for low earners (slight increase expected) BISP (higher stipend) |
In the latest talks, the IMF briefed Pakistan’s budget negotiators on a sharp cut in import-related taxes that could change prices in several sectors in the coming fiscal year. The new budget could bring relief in regulatory duties, additional customs duties and import tariffs on a wide range of goods as part of a broader national tariff policy aimed at aligning with IMF targets and improving industrial competitiveness.
One of the biggest expected changes includes relief on imported vehicles as well as a major reduction in duty on raw materials used by export industries, potentially making hundreds of inputs cheaper for manufacturers. The telecom sector is also set for relief, with 5G machinery and equipment likely to see tax cuts.
The government has already drafted the tariff reform plan on the instructions of the Prime Minister. Under this, additional customs duties may be reduced in 3,149 tariff lines, while reduction in regulatory duties may affect more than 1,900 tariff lines of imported goods.
The restructuring also targets agriculture and industrial production, with expected duty cuts on imported agricultural machinery, equipment and parts not produced locally. Export-oriented industries are likely to benefit from lower input costs, which can lower production costs and increase competitiveness.
In a major policy shift, the authorities are also considering scrapping the remaining 2% additional customs duty on 518 tariff lines in the 15% slab.
For high-duty categories, further reductions are on the table: additional customs duty in the 20% slab covering 2,166 tariff lines could be reduced from 4% to 2%, while 468 high-duty tariff lines could be reduced from 6% to 4%.
Pakistani officials said the reforms were designed to make local industries more competitive as well as meet IMF requirements — but if approved, they could trigger a massive reduction in import costs across the economy, and change prices in the coming months.
A possibility of ‘double relief’ for the salaried class earning Rs 1-2 lakh per month in Budget 2026-27
The post Budget 2026-27: What will be cheaper and more expensive in Pakistan amid IMF-backed reforms? appeared first on Daily Pakistan English News.
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