Pakistan Halts New Economic Zones Amid IMF Conditions

Pakistan has accepted the IMF's condition to halt the establishment of new special economic or export processing zones while awaiting approval for a USD 7 billion bailout package. This move impacts plans for an EPZ on Pakistan Steel Mills land. Khyber Pakhtunkhwa has refused the condition.

Pakistan has agreed to the International Monetary Fund's (IMF) stipulation that no new special economic or export processing zones will be established as it seeks a USD 7 billion bailout package, according to reports on Wednesday.

The condition, set by the Washington-based lender, affects the government's current plans, including developing an export processing zone (EPZ) on land belonging to the defunct Pakistan Steel Mills, The Express Tribune reported. Government sources indicated that the IMF also prohibited the extension of tax incentives for existing zones. Notably, Khyber Pakhtunkhwa has refused to comply with these directives.

The IMF’s requirements highlight the significant influence it wields over Pakistan's economic strategies, which might hinder future growth and the integration of Chinese industries into these zones. Despite imposing a record Rs 1.8 trillion in new taxes and increasing electricity rates by up to 51%, Pakistan has yet to secure a date for the bailout package's approval.