As part of the upcoming federal budget for fiscal year 2025–26, the government is reportedly considering a significant five-year levy on all petrol and diesel-powered vehicles. This bold move is a key component of a broader national strategy to transition towards cleaner transportation and reduce Pakistan’s dependence on fossil fuels.
According to official sources, the proposed levy would apply to both imported and locally manufactured vehicles that run on conventional petrol or diesel. If implemented, the plan is expected to generate Rs24 billion annually, with an estimated total revenue of Rs122 billion over the five-year period.
The proceeds from this new levy will reportedly be allocated to a newly proposed Electric Vehicle Fund. This dedicated fund is designed to support the implementation of the forthcoming Electric Vehicle Policy 2026–30, which is currently under final review by the Ministry of Industries and Production. The comprehensive policy is anticipated to include a range of incentives such as subsidies for EV adoption, infrastructure development initiatives like charging stations, and research and development efforts to further boost the widespread use of electric vehicles across the country.
Boosting Local Tech Manufacturing and Macroeconomic Targets
In tandem with this green push, the government is also proposing incentives aimed at encouraging the local manufacturing of laptops, smartphone batteries, and chargers. This initiative seeks to reduce Pakistan’s reliance on imports in the tech hardware sector and foster domestic innovation and production capabilities.
The budget proposals have been prepared in close consultation with the International Monetary Fund (IMF), as Pakistan continues to operate under a strict reform agenda tied to its Extended Fund Facility (EFF). Sources confirm that the IMF has emphasized the importance of maintaining tight fiscal and monetary policies in the next financial year to ensure macroeconomic indicators remain on track.
Among the key economic targets proposed in the upcoming budget are:
- GDP growth: Expected to be set at 4.2%, reflecting cautious optimism as the economy shows signs of gradual recovery.
- Inflation target: Proposed at 7.5%, a notable reduction from the double-digit levels observed in the past two years.
- Agriculture sector growth: Expected to reach 4.5%, driven by anticipated improvements in crop yields and better water management practices.
- Industrial sector growth: Given a target of 4.4%, with potential support measures for manufacturing and export-oriented industries.
- Services sector growth: Projected at 4%, remaining a key pillar of the economy, with hopes of increased activity in finance, telecommunications, and retail.
The government is expected to present the federal budget on June 10. Policy experts believe that the proposed EV levy and other economic reforms signal a notable shift in national economic priorities, with a growing focus on sustainability, technological innovation, and fulfilling international financial commitments.
