Pakistan accepts IMF’s ban on new SEZs, EPZs

ISLAMABAD: In a significant shift, Pakistan has agreed to the International Monetary Fund’s (IMF) condition barring the creation of new special economic zones (SEZs) or export processing zones (EPZs), Express Tribune reported on Wednesday.

The condition, part of the ongoing negotiations for a $7 billion Extended Fund Facility (EFF), also prohibits extending tax incentives for existing zones once they expire.

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This move disrupts the government’s plan to establish an export processing zone on land owned by the defunct Pakistan Steel Mills, a key initiative to boost industrial growth. The ban applies to both federal and provincial governments, though Khyber-Pakhtunkhwa has rejected the condition, citing the need for industrial development.

The Khyber Pakhtunkhwa government, however, has refused to accept this ban. The provincial government is of the opinion that with unemployment over 10 per cent and poverty affecting 40 per cent of the population, this decision could hinder future economic expansion.

There are also apprehensions on the China-Pakistan Economic Corridor (CPEC) front because Pakistan needs these exemptions on SEZs to attract future investments from China.

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Despite tough fiscal measures, including record tax hikes and electricity price increases, Pakistan has yet to secure a date for the approval of the IMF’s bailout package.