Govt considers levy on gasoline-powered cars to promote electric vehicles
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The government is considering a five-year levy on all vehicles powered by petrol and diesel to promote electric vehicle (EV) adoption in the country. It has also decided to establish an 'EV Fund' to support the growth of electric transportation.
The EV Fund will be set up to facilitate electric vehicle adoption, and a levy is proposed on all petrol and diesel vehicles—both imported and locally manufactured—for the next five years. If approved and implemented, this levy could generate annual revenue of Rs25–30 billion, amounting to Rs125–150 billion over five years. The collected revenue would be used to finance the new five-year Electric Vehicle Policy for 2026–30.
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.
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Express Tribune
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The Annual Plan Coordination Committee (APCC) will today (Monday) approve the national development budget outlays for the federal government, four provincial governments and the special areas of Pakistan. Planning Minister Ahsan Iqbal will chair the meeting, which will also recommend 4.2% economic growth and 7.5% inflation targets for the next fiscal year. The federal PSDP has been finalised by a committee constituted by Prime Minister Shehbaz Sharif aimed at accommodating the needs of the coalition partners. The APCC will approve a cumulative Rs4.1 trillion outlay for development, which will be Rs300 billion or 8% higher than this fiscal year's original budgets approved by the National and four provincial assemblies. There has been a reduction in the federal PSDP, but the four provincial governments will cumulatively spend 28% higher than this year's budget from their own resources. Provinces are rich, thanks to the ill-planned National Finance Commission award of 2010. The APCC will approve Rs1 trillion federal PSDP, down by Rs400 billion compared to this fiscal year's original budget approved in June last year. The federal government will borrow Rs270 billion from abroad to fund this Rs1 trillion spending. The four governments plan to spend Rs2.8 trillion, higher by Rs609 billion or 28% over this year's original budgets. The provincial governments will also borrow Rs802 billion from abroad to fund their projects. Another Rs288 billion will be spent by the government-owned companies outside the federal budget. Punjab is on a spending spree, as it plans to spend Rs1.19 trillion, which is higher by Rs346 billion or 41% over this fiscal year's budget. Khyber-Pakhtunkhwa will follow Punjab with Rs440 billion spending, also higher by 63%. Sindh government plans to spend Rs887 billion, higher by Rs60 billion or 7%. The Balochistan government is proposing Rs280 billion for development, which is higher by Rs32 billion over the originally approved budget. 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Despite challenges, the government has also retained a Rs50 billion allocation for the parliamentarians' schemes under the umbrella of the Sustainable Development Goals Achievement Programme. Around 1,071 development projects with a cumulative cost of Rs13.4 trillion are currently under implementation. They need another Rs10.2 trillion for completion, which the Planning Ministry states would take more than 10 years to complete. Compared to the original Rs1.4 trillion approved federal PSDP in the budget, the actual spending as of the end of May remained at Rs596 billion, which is hardly 43% of the parliament's approved budget. The government admits that Pakistan, withan IMF programme, undergoes some limitations and thus the challenge ahead is to leverage the limited resources in a way to achieve maximum returns from each project to satisfy goals and objectives outlined in the national economic transformation plan, the 5Es-based five-year plan and the "Uraan Pakistan Programme" while overcoming challenges. There are also implementation issues, and during recent reviews, the planning ministry had identified 183 projects, mostly at the DDWP level, as problematic and slow-moving. It has been recommended to cap or close all these projects by June 2025. By capping or closing such projects, around Rs1 trillion could be saved and fiscal space could be created for fast-moving ongoing projects as well as new high-impact priority projects, according to a proposal to the APCC.
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PSX sees mild recovery
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