ISLAMABAD: The government announced to take “strict action” against auto dealers across Pakistan on Saturday if they refused to bring down the prices of imported cars after the removal of regulatory duty earlier this year.

Pakistan’s automobile sector suffered financial losses in recent months after the country decided to limit imports and restrict the issuance of letters of credit (LCs) amid a massive reduction in forex reserves a rapid depreciation of national currency.

Many industry stakeholders announced to scale down production, and the overall market situation led to a surge in the prices of imported vehicles.

Pakistan’s commerce minister, however, pointed out earlier in the day that additional regulatory duty on luxury goods had ended on March 31, adding that car dealers should reduce their prices.

“Federal Minister for Commerce Syed Naveed Qamar warned car dealers of strict action if prices of imported vehicles are not reduced following the removal of regulatory duty,” said a statement issued by his office.

Asked about the shortage of imported parts for local assembling, he told the media that the issue would soon be resolved since the government was expecting a staff-level agreement with the International Monetary Fund (IMF) for the resumption of a $7 billion loan facility ahead of the annual budget next month.

Pakistan has been negotiating with the international lending agency to secure another tranche of nearly $1 billion under the loan program which has been stalled since November last year.

“He highlighted that restrictions on the opening of letters of credit will be lifted after the staff-level agreement,” the statement added. “He said that with the reopening of LCs, raw materials will be easily available for export-oriented industries.”