Misuse: Pakistan, IMF agree to scrap car import schemes for overseas Pakistanis

Dubai: Pakistan and the International Monetary Fund (IMF) have reportedly agreed to abolish two vehicle import schemes available to overseas Pakistanis and tighten regulations on a third, as part of reforms aimed at reducing misuse and improving transparency in the import regime.

Under the understanding reached during ongoing review talks, the Pakistan government will discontinue the Baggage Scheme and the Gift Scheme, while the Transfer of Residence (TOR) scheme, which allows expatriates returning to Pakistan to bring a personal vehicle, will remain but with stricter eligibility conditions, according to reports in The News.

The IMF has reportedly set an October deadline for the Economic Coordination Committee (ECC) to approve the changes. The move comes as Pakistan and the IMF work toward completing the second review under the $7 billion Extended Fund Facility (EFF) and securing a $400 million tranche from the Resilience and Sustainability Facility (RSF).

Currently, Pakistanis living abroad can import vehicles under three schemes: Personal Baggage, Gift, and Transfer of Residence. Officials say these have been widely misused, with most cars imported through third countries such as the UAE or other GCC countries before being shipped to Pakistan.

Stricter rules ahead

In the last fiscal year (2024—25), nearly 40,000 vehicles were imported under these schemes, prompting the IMF to press Islamabad to overhaul them. The global lender has recommended raising the minimum stay abroad requirement and tightening documentation to verify eligibility.

While the Ministry of Commerce of Pakistan has opposed scrapping the schemes entirely, citing their value for overseas Pakistanis, the Ministry of Industries supports discontinuing all but the TOR scheme, especially after the government recently lifted restrictions on the commercial import of five-year-old used vehicles.

Auto industry and IMF talks

Local carmakers have long pushed for an end to these schemes, arguing that used imports depress demand for locally assembled cars. However, industry critics point out that profits of local assemblers continue to rise despite concerns over pricing and quality.

Meanwhile, Pakistan and the IMF are still negotiating over the release of the Governance and Corruption Diagnostic (GCD) assessment report, a key pending condition under the loan programme. The government has already formed a task force to improve its anti-corruption framework, including new rules requiring senior civil servants to declare their assets and those of their spouses.