IMF Restricts Pakistan From Offering Incentives or Creating New Special Economic Zones
Islamabad: Pakistan has agreed to **23 conditions set by the International Monetary Fund (IMF)** related to energy, finance, social sectors, structural reforms, monetary policy, and currency management as part of its loan program.
Under the agreement, Pakistan will **cut development schemes**, increase **excise duties by 5% on fertilizers and pesticides**, introduce **excise duty on high-priced sugary products**, and **standardize GST rates at 18% on selected items** to broaden the tax base. The government has also assured the IMF that the **sugar sector will be fully deregulated**, **electricity tariff adjustments will continue**, and systemic losses will be reduced.
Other key commitments include:
* Installation of a **nationwide Point-of-Sale (POS) system** for 40,000 large retailers within two years,
* Harmonization of **sales tax procedures across all provinces**,
* No new subsidies on **electricity or gas** across provinces,
* No additional **foreign contracts for RLNG**,
* OGRA will advise on **tariff determination within 40 days**.
The IMF has prohibited the government from:
* Offering **financial incentives or guarantees** to investment projects or companies,
* Providing **fuel subsidies** or cross-subsidy schemes,
* Setting targets for **sectoral loans** or allocating new credit,
* Extending or introducing **State Bank securities purchases**,
* Introducing any **new loan schemes** during the program.
Additionally, the IMF has blocked Pakistan from **creating new Special Economic Zones (SEZs)**, granting incentives to new or existing zones, or renewing existing benefits. Any investment under the **SEIFC** framework must comply with the **Standard Public Investment Management Framework**, and the government will not provide additional tax or financial incentives.
The agreement comes as Pakistan faces a rising **current account deficit**, which could reach **$3.3 billion**, alongside increasing pressure on the IMF-supported program.
