ISLAMABAD: Pakistan’s Prime Minister Shehbaz Sharif on Thursday ordered an urgent overhaul of a top government body responsible for regulating customs duties on imports and exports, aiming to strengthen its legal, administrative and institutional powers amid growing calls to modernize the country’s trade policy.

Announcing its federal budget for 2025-26, Pakistan said it planned to cut the overall tariff regime by more than 4 percent over the next five years, as part of reforms aimed at shifting the country toward an export-led growth model. 

As per the National Tariff Policy 2025–30, the government plans to abolish additional customs duties, regulatory duties, and the fifth schedule of the Customs Act, 1969. The policy envisions a streamlined customs structure with just four duty slabs ranging from 0 to 15 percent, which would become the maximum rate. The move is part of Pakistan’s push not just to boost its exports and protect its local industry but also meet international obligations, including aligning with the government’s commitments under a $7 billion IMF program approved last year.

“Reorganization of the National Tariff Commission along modern lines is indispensable to fully meet the requirements of the new tariff regime,” a statement quoted Sharif as saying after he chaired a high-level review meeting on the NTC’s performance.

The PM’s proposed reforms aim to modernize the NTC so it can better support businesses, collect real-time market data and align with the country’s new tariff regime.

The premier directed that a third-party review be conducted to identify weaknesses in the Commission’s performance and make it “more effective.” He also stressed the importance of strengthening the NTC’s research and data-gathering abilities.

“The National Tariff Commission must have an effective capacity to gather all ground realities related to domestic business, imports, and exports market,” Sharif said. 

“The automated and effective research capacity of the National Tariff Commission can play a key role in resolving the problems faced by domestic business.”

He also ordered the immediate activation of the NTC’s Appellate Tribunal, which handles disputes on tariff decisions, a step aimed at improving transparency and efficiency.

The NTC plays a crucial role in Pakistan’s trade policy. In the 2025–26 federal budget, customs duties are projected to contribute around 6 percent of total tax revenue, according to the Pakistan Economic Survey 2024–25. While relatively small, these duties are politically sensitive and impact competitiveness for domestic industries that rely on protection from cheaper imports.

Pakistan’s economic managers are under pressure to balance protection of local industry with commitments under international trade agreements and IMF-backed fiscal targets. The government says the NTC must adapt to “modern requirements” and be given adequate training and resources to support economic stabilization and export-led growth.

“The government is committed to addressing the lack of training and resources for the National Tariff Commission and to aligning its work with modern requirements,” Sharif said at Thursday’s meeting. 

ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb on Thursday called for a rethinking of how federal funds are allocated to provinces, arguing that future disbursements should reflect human development indicators instead of just population size.

Speaking at an event organized by the Ministry of National Health Services in connection with World Population Day in the federal capital, Aurangzeb said Pakistan’s rapid population growth posed a serious challenge and must be addressed through coordinated, long-term policy interventions.

“As we move forward with revisiting and reviewing the NFC [National Finance Commission] award, the current allocation driver must be reconsidered,” he said while addressing the gathering.

“There are broader factors, such as human development indicators, which should be incorporated,” he added. “These can help shape a revised formula for how we divvy up resources between the federation and the provinces.”

The NFC is a constitutional mechanism that determines how financial resources are distributed from the federal government to Pakistan’s provinces. The existing formula primarily weighs population, though there are several influential voices within the government demanding that future formulas consider a broader range of development metrics.

The finance minister also noted Pakistan must confront two “existential issues” — climate change and population growth — if it wants to reach its long-term goal of becoming a $3 trillion economy by 2047.

“Just think about it: 40 percent of children under the age of five in this country are stunted,” he said. “If we don’t address this, there is no sustainable path forward.”

Aurangzeb noted the issue extended beyond food and sanitation, pointing to the need for birth spacing, women’s education and family planning awareness.

He also emphasized the scale of available resources for addressing these challenges.

Referring to Pakistan’s recently signed 10-year Country Partnership Framework with the World Bank, he said the agreement includes $20 billion in financing, with $600–700 million annually earmarked for population-related measures.

“We have a lot of funds already at our disposal, provided we find the right places to invest and prioritize them correctly,” he said.

Aurangzeb also argued that Pakistan’s total development spending across federal and provincial budgets exceeds Rs 4.2 trillion ($14.7 billion).

“The issue isn’t funding,” he said. “We must shift from infrastructure-heavy thinking to human capital investments.”