Govt considers levy on gasoline-powered cars to promote EVs
The federal government is likely to impose a five-year levy on vehicles powered by petrol and diesel in the upcoming fiscal year 2025-26 budget to promote electric vehicles (EVs) and has decided to establish an EV Fund to support the transition toward electric mobility.
Sources said that if approved and implemented, this levy could generate annual revenue of Rs25-30 billion, amounting to Rs125-150 billion over the next five years. The collected revenue would be used to finance the new five-year Electric Vehicle Policy for 2026-30 and would be imposed on both imported and locally manufactured petrol and diesel driven vehicles.
Meanwhile, the International Monetary Fund (IMF) has raised concerns about the government's proposal to provide idle electricity for Bitcoin mining and artificial intelligence operations, according to sources in the Finance Ministry.
The IMF has sought an explanation for not being consulted on the use of electricity for Bitcoin mining and AI, as well as on electricity tariffs. A virtual discussion is scheduled with the IMF delegation specifically regarding electricity supply for Bitcoin mining.
The IMF has also asked for clarification on the allocation of electricity for cryptocurrency operations, particularly since crypto remains unregulated in Pakistan.
The IMF has insisted that all decisions under the loan programme be made with prior consultation. Sources confirm that Pakistan's economic team is facing tough questions during budget negotiations, and further hard discussions with the IMF regarding electricity supply initiatives are anticipated.
According to sources, many key economic targets in the budget proposals have already been finalised in consultation with the IMF, while discussions on other areas are ongoing and expected to conclude in the coming days. It has also been proposed to offer incentives for the local manufacturing of laptop and smartphone batteries and chargers.
Sources added that virtual consultations with the global lender are ongoing regarding budget proposals for the upcoming fiscal year, with an outcome expected soon. The draft budget will likely be finalised next week.
Both Pakistan and the IMF have agreed to continue virtual talks on all outstanding matters.
In the federal budget for fiscal year 2025-26, the government is likely to set a GDP target of 4.2%, an inflation target of 7.5%, an agricultural growth target of 4.5%, an industrial growth target of 4.4%, and a services sector growth target of 4%.
The Annual Plan Coordination Committee (APCC) will convene on June 2 to finalise the Public Sector Development Program (PSDP) and the annual development plans. Later that same week, a key meeting of the National Economic Council (NEC), chaired by the prime minister, will be held where approval will be sought for the PSDP, annual development plans, and the Medium-Term Budgetary Framework proposed by the APCC. If adjustments or increases in funding for development projects are required, the NEC will approve them.
The Economic Survey, detailing the performance of the current fiscal year, will be released on June 9. The federal budget will be presented in parliament the following day, June 10, after its approval by the federal cabinet in a special session.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
an hour ago
- Express Tribune
Govt approves Rs1tr uplift budget
The government on Monday approved a Rs1 trillion federal development budget and set the economic growth target at 4.2% for the next fiscal year, as Planning Minister Ahsan Iqbal said that the development budget cuts could compromise economic growth and delay strategic projects. The Annual Plan Coordination Committee (APCC) approved a record Rs4.1 trillion national development outlay, primarily backed by a Rs2.8 trillion financing envelope from the four provinces. Despite limited resources, the Sindh government secured Rs86 billion from the federal Public Sector Development Programme (PSDP), leveraging its alliance with the ruling coalition. "The Pakistan Peoples Party took advantage of being an ally of the government that is dependent on its vote for the budget," said a cabinet minister. Planning Minister Ahsan Iqbal, speaking after chairing the APCC meeting, said the Rs1 trillion PSDP includes Rs120 billion earmarked for the N-25 Quetta-Chaman-Karachi expressway. He confirmed that the committee had also approved a 4.2% growth target and a 7.5% inflation target for the fiscal year 2025-26. These recommendations will now be submitted to the National Economic Council for final approval, said Iqbal. He identified top-priority projects for the upcoming year, including the Diamer Basha Dam, the Karakoram Highway, the Hyderabad-Sukkur Motorway, and the N-25 Expressway from Karachi to Quetta. However, he expressed concern that the remaining Rs880 billionafter accounting for the expresswaywould be inadequate, potentially compromising future economic growth. He added that enhancing the development budget would be impossible without a significant increase in tax revenues. "The water sector is our priority but due to limited resources and with current allocation, it will take 20 years to complete the Diamer Basha dam project," said Iqbal. He maintained, however, that the government would strive to allocate maximum resources to ensure its completion within the next three to four years. Ironically, despite increasing threats from India over water security, the federal water sector allocation has been slashed by 45%or Rs119 billionbringing it down to Rs140 billion for FY2025-26. The planning minister reiterated that the commodity-producing sectors are expected to grow by 4.4%, led by a 4.5% recovery in agriculture and 3.5% growth in large-scale manufacturing. Exports are projected at $35 billion, while foreign remittances are expected to exceed $39 billion. "I am thankful to overseas Pakistanis who, despite calls to the contrary, sent $10 billion in additional remittances over the past two years," he added. The Rs1 trillion federal PSDP was finalised by a committee formed by Prime Minister Shehbaz Sharif. According to the APCC working paper, this year's development outlay is Rs300 billionor 8%higher than the previous year's budget. The four provincial governments are set to increase development spending by 28% from their own resources – enabled by substantial revenues under the 2010 National Finance Commission (NFC) award. Despite the record outlay, the Rs1 trillion federal PSDP is actually Rs400 billion lower than the originally approved budget for the current fiscal year. To fund this, the federal government plans to borrow Rs270 billion externally. The four governments plan to spend Rs2.8 trillion, higher by Rs609 billion or 28% over this year's original budget. Provincial governments will borrow Rs802 billion, while state-owned companies will spend another Rs288 billion outside the federal budget. Punjab leads provincial spending with a proposed Rs1.19 trillion allocation41% higher than last year. Khyber-Pakhtunkhwa (K-P) follows with Rs440 billion, reflecting a 63% increase. Sindh will spend Rs887 billion, up 7%, and Balochistan plans to spend Rs280 billion, marking an increase of Rs32 billion. KP's Finance Advisor, Muzzammil Aslam, criticised the federal government for allocating disproportionately less funding to his province compared to Sindh. "Only Rs3 billion were allocated to K-P, while Sindh received Rs47 billion. Punjab got Rs15 billion," he said. In response, Iqbal clarified that Rs70 billion has been allocated for K-P's merged districts and that the federal government is cutting back on spending for projects that fall under provincial jurisdiction. The APCC decided not to include any new provincial-nature projects in the PSDP due to fiscal limitations and imposed a moratorium on the approval of projects costing up to Rs1 billion until the International Monetary Fund (IMF) programme concludes. Despite these constraints, 30-40% of PSDP funds are still being directed to provincial-nature projects, which the planning ministry said has significantly hampered progress on large-scale national initiatives. In contrast, funding for the National Highway Authority (NHA) has increased by Rs49 billion, or 27%, to Rs229 billion. However, to accommodate the political priorities of coalition partners, the government has proposed sharp reductions in water and power sector budgets. The power sector's funding is down 41%or Rs72 billionto Rs104 billion. The federal education ministry's budget is reduced by 27% to Rs20 billion, while the Higher Education Commission will face a 32% cut, reducing its budget to Rs45 billion. Still, the government has retained Rs50 billion for parliamentarians' schemes under the Sustainable Development Goals Achievement Programme. Currently, 1,071 development projects with a total cost of Rs13.4 trillion are under implementation. These projects require an additional Rs10.2 trillion to be completed, and the planning ministry estimates it would take more than a decade to finish them all. Iqbal stated that the ministry has identified 183 slow-moving or problematic projectsmostly under the DDWPthat should be capped or closed by June 2025. "By capping or closing these projects, around Rs1 trillion could be saved, freeing up Rs100 billion immediately for fast-moving projects," he said.
Express Tribune
an hour ago
- Express Tribune
Butchers in high demand ahead of Eid
With Eidul Azha less than a week away, the demand for skilled butchers in Islamabad Capital Territory (ICT) has surged significantly, driven by the spike in sacrificial animal slaughter during the Islamic festival. While some residents have already purchased sacrificial animals, many are still in search of suitable livestock. In this scenario, the role of butchers is considered to be vital for chopping the meat. Keeping in view their importance and demand, professional butchers have also increased rates of preparing meat as compared to last year. Khawar Shehzad, a butcher who also runs a meat shop in Islamabad's sector I-10, said that Eidul Azha is a special Islamic festival following the slaughtering of animals at a mass level, highlighting that everyone looked for professional butchers to chop their meat, which sparked high demand. "On Eidul Azha everyone looks for a professional and skilled butcher for cutting their meat in a quality way; it is our peak season," he said. Shehzad shared his slaughtering rates for this year, noting that cow slaughtering on the first day of Eid is priced at Rs25,000, while the rate drops to Rs20,000 on the second day. By the third day, the cost ranges between Rs15,000 to Rs18,000, depending on demand. The charges for goat and sheep sacrifices range from Rs6,000 to Rs7,000, he added. Other butchers, like Asmat Ullah, also quoted these same prices, emphasising high demand. While the residents of Islamabad Capital Territory (ICT) are excited regarding the upcoming Eidul Azha festival, but they have also voiced concerns about rising animal prices and the steep charges for butchers. Tariq Mahmood, a resident of the same sector who purchased his animal for slaughtering on Eid, said that he was trying to get the booking of a professional butcher for his meat preparation, who has high rates and high demand, adding, "If I can't book one, I'll go with a seasonal one." According to Tariq, the seasonal butchers are more or less equally efficient and skilled, sharing his previous year's experience. Despite the facts that the demand for professional and skilled butchers is notably high, people somehow managed to find the suitable person to sacrifice their animal. To help meet the growing demand, many butchers from across the country also travel to Islamabad during Eid. These visiting butchers often charge slightly lower rates and offer a practical solution to the shortage of skilled labour in the city during the Eid. Their presence also provided them an opportunity to enhance their earning more than they typically have in their hometowns.
Express Tribune
2 hours ago
- Express Tribune
Inflation rate jumps tofive-month high of 3.5%
Market analysts caution that IMF-related measures in the upcoming FY2026 budget—particularly new taxes and adjustments in energy prices—may lead to a renewed spike in inflation. PHOTO: FILE Pakistan's annual inflation rate accelerated to 3.5% in Maythe highest level in five monthsdue to a sudden spike in food prices ahead of the budget, breaking the downward spiral that had persisted for a year and a half. The Pakistan Bureau of Statistics (PBS) reported on Monday that the prices of a basket of essential goods and services rose at an average rate of 3.5% last month. This is the highest reading seen in the past five months and was contrary to official expectations. Nonetheless, it remains far below the fiscal year's inflation target of 12%. In its monthly economic outlook report, the Ministry of Finance had projected inflation to remain between 1.5% and 2% in May. The actual rate was more than double that forecast and fell within the ministry's expectations for June, ahead of the federal budget. For June, the ministry has projected that inflation could rise to between 3% and 4%. With the fresh inflation figure, the gap between headline inflation and the State Bank of Pakistan's (SBP) key policy rate has widened to 7.5%. The banking sector continues to benefit from elevated interest rates, at the expense of the rest of the country. Last month, the Monetary Policy Committee cut the policy rate by 100 basis points to 11%, citing a sustained decline in inflation. Despite the high rates, the money supply grew by 4.7% in May. For the upcoming fiscal year, the government has set a 7.5% inflation target, allowing further room for interest rate cuts. Average inflation during the first 11 months (JulyMay) of the current fiscal year slowed to 4.6%, significantly below the annual target of 12%. This lower average inflation rate will form the basis upon which the increase in pensions and salaries of the government employees will be determined. The government is considering an increase of 6% to 10% in wages and pensions, in line with the reduced average inflation. Core inflationexcluding food and energyeased in both urban and rural areas, dropping to 7.3% in cities and 8.8% in rural areas, according to PBS. Average core inflation remains about 3% below the policy rate, providing further space for the SBP to reduce interest rates. However, under International Monetary Fund (IMF) policy, the government switched the benchmark for borrowing costs from core to headline inflation nearly four years ago. Urban inflation rose to 3.5%, driven by rising food costs. In rural areas, prices turned positive again, with inflation recorded at 3.4% in May. PBS compiles inflation data from 35 cities and tracks 356 consumer items. In rural regions, data is collected from 27 centres and includes 244 items. The PBS data showed that food prices resumed their upward trend. Urban food inflation was recorded at 5.3%, and rural food inflation at 2.1%. Chicken prices soared 52% last month, followed by a one-third increase in pulses, a 30% rise in fresh fruits, 26% in butter, 22% in powdered milk, and 21% in sugar. The government failed to honour its promise of keeping sugar prices under check, following last year's decision to allow exports. The rise in sugar prices is also boosting tax revenues, as the government has linked the 18% sales tax on sugar to the fortnightly inflation rate. Meat prices increased by 12%, while fresh milk rose by 10%. Onion prices remained 54% lower compared to a year ago, while tomato prices dropped 32%, wheat 24%, and tea 18%. Non-perishable food items saw a 5.1% increase in inflation last month. Electricity charges were 29% lower year-on-year, while petrol remained 8% cheaper despite increased taxation. Although global crude oil prices have remained largely stable, the depreciation of the rupee led the government to pass on a Rs3.5 per litre impact on petrol and Rs1 per litre on diesel. Global crude prices are not expected to rise significantly, and overall commodity prices are projected to decline by 15% this year.
