Pakistan accepts IMF's condition to not establish new SEZs: Report

Despite Pakistan imposing a record Rs 1.8 trillion in new taxes and hiking electricity rates by up to 51 per cent, it has so far failed to secure a date for the approval of the $7 bn bailout package

Pakistan has accepted the IMF condition that it would not establish any new special economic or export processing zone in the country as it waits for the approval of a $7 billion bailout package from the international money lender, a media report said on Wednesday.

The Washington-based lender's condition will impact the government's plans to establish an export processing zone (EPZ) on a piece of land belonging to the closed Pakistan Steel Mills, The Express Tribune newspaper reported.

The report quoted government sources as saying that the IMF had asked Pakistan that it would not create any new special economic zone (SEZ) or EPZ and tax incentives already availed by the existing zones will not be extended after expiry.

While the condition will be applicable to both federal and provincial governments, Khyber Pakhtunkhwa has refused to accept it, the report said.

The IMF's conditions underscore how deeply it has captured Pakistan's economic and industrial policies, which could adversely impact its future growth prospects and the desire to bring Chinese industries to these zones, the newspaper reported.

Despite Pakistan imposing a record Rs 1.8 trillion in new taxes and hiking electricity rates by up to 51 per cent, it has so far failed to secure a date for the approval of the $7 billion bailout package.

Talks for the Extended Fund Facility (EFF) began in May this year and it culminated with a staff-level agreement in early July. But despite the lapse of two months, there is no clarity about the date of IMF's executive board meeting.

SEZs and EPZs are entitled to special facilities and tax incentives aimed at encouraging businesses to establish clusters of commercial activities.

Last month, China, Saudi Arabia and the UAE agreed to roll over Pakistan's $12 billion debt for one year.