Fresh trouble brews for Pakistan as the IMF piles on 11 stringent new conditions to its $7 billion Extended Fund Facility, intensifying the squeeze on an already battered economy. Business Recorder’s latest insights reveal the depth of these demands, which strike at the heart of fiscal reforms.
Central to the overhaul are revisions to the Special Economic Zones Act and Special Technology Zones Authority Act. Tax holidays and exemptions face a phased elimination, transitioning to cost-plus incentives to promote fairness and revenue generation.
A controversial proposal to hand over 6,000 acres in Karachi to developers lease-free has sparked alarm, potentially clashing with IMF goals. October 2024 reviews criticized opaque tax breaks in key sectors—real estate, farming, industry, and power—fueled by a surge in SEZs.
The fund now requires a 10-year sunset for current zones and a freeze on new ones. Enhancing ease of doing business calls for a new regulatory registry, while all government purchases must go through the transparent e-PADS platform, backed by the World Bank.
Geopolitically, Pakistan projects stability, mediating in Middle East flare-ups. Yet, economic fragility exposed itself when UAE pulled $3.5 billion from reserves, triggering immediate strain.
Despite dipping inflation, sky-high rates deter growth in investments and trade. Pakistan’s external balances remain precarious, and these IMF stipulations underscore the urgent need for structural fixes to avert deeper crisis.
