It's capitulation, to say the least. The government's tendency to repeatedly cave in to the IMF's pressure is now costing it its sovereignty. The decision to accept the Fund's condition – that no new special economic zones or export processing zones will be established, and tax incentives already availed by the existing zones will not be extended – will melt down whatever potential the economy is possessed with. Moreover, it will ruin industrialisation and adversely impact growth prospects, as well as the CPEC schema under which nine SEZs were planned across the country. Last but not least, the ruling dispensation has also reportedly signed on the dotted lines to impose Rs1.8 trillion new taxes along with an increase in electricity prices to the tune of 51%. This disastrous roadmap is untenable.
The IMF has been quite unfair to Pakistan. Its recent maneuvering is uncalled for, and its refusal to list Islamabad's case on the Board's roll-call is disgusting. An immediate victim of new harsh conditionalities will be the foreign investment that Pakistan was eagerly looking for, as such undesired regulations are extremely hurting. Likewise, the processing zone that was on the anvil in Karachi on the Steel Mills' piece of land will also wither away in thin air, and the rolling back of 10-year exemptions promised on income tax for developers and entrepreneurs will lead to closure of working units, leading to massive unemployment. The new IMF condition has also resulted in a severe difference of opinion between the federation and provinces, and Khyber-Pakhtunkhwa has refused to accept the ban on setting up new economic zones.
International lenders, it seems, are carried away with making their presence felt. They must keep in mind that industrialisation is the way to go for backward states, and scuttling growth merely for the purpose of book-keeping in loans and subsidies is a misnomer. Pakistan has been on the receiving end in terms of terrorism, and it needs a better deal to stay afloat in the region. Meddling with infrastructure and taxation policies is a bad prescription.
Read the full story at the express tribune website.
