Pakistan Shelves EPZ Plan Due to IMF Opposition

Islamabad, Sep 12 (PTI) The Pakistan government has shelved a plan to establish a new Export Processing Zone (EPZ) due to opposition by the IMF, highlighting the global lender's growing influence over the cash-strapped country's economic decision-making.

According to The Express Tribune newspaper, the Ministry of Industry and Production had initially pushed for the creation of the EPZ to promote copper exports from Siah Diq in Balochistan province, bordering Iran and Afghanistan.

A proposal to designate the Siah Diq copper mine area as an EPZ was brought before the Economic Coordination Committee (ECC) during its meeting held on Wednesday and chaired by Finance Minister Muhammad Aurangzeb.

However, the Ministry of Finance opposed the plan due to an International Monetary Fund (IMF) stipulation under the USD 7 billion Extended Fund Facility (EFF), and the proposal was dropped.

Pakistan and the IMF signed a staff-level agreement in July but it has not been yet approved by the lender's board.

The ECC is the high-level body that makes key economic decisions before they are put before the cabinet for final approval.

The newspaper reported that the government accepted the IMF's condition that Pakistan is prohibited from establishing any new special economic or export processing zones, and all existing incentives will expire by 2035, regardless of the operational status of projects.

This condition is a significant hurdle for the government, which had planned to establish an EPZ on the land of the closed Pakistan Steel Mills (PSM).

Jamil Qureshi, Secretary of the Special Investment Facilitation Council (SIFC), had stated earlier on Wednesday that there were no restrictions on the creation of new EPZs, emphasising their importance in boosting exports. However, hours after his statement on X, the government withdrew the summary of the EPZ.

Government sources revealed that the IMF has mandated that no new Special Economic Zones (SEZ) or EPZs can be created at either the federal or provincial levels. But Khyber-Pakhtunkhwa refused to accept this condition, according to reports.

In the same meeting, the ECC approved an additional Rs1 billion in funds for hosting the heads of government from the Shanghai Cooperation Organisation (SCO) in Islamabad on October 15-16.

The Ministry of Foreign Affairs informed the ECC that the event, a significant diplomatic gathering, could not be held within its regular budget of Rs1.7 billion. The total cost of the summit is estimated at Rs1.5 billion, and the Ministry of Finance had already provided Rs500 million.

The ECC allocated Rs300 million for accommodating foreign leaders, Rs200 million for transportation and Rs100 million for stationery. It allocated Rs200 million for publicity, while Rs400 million would be paid to an event management company, the paper added.