ECC green-lights new EPZ in Balochistan

Pakistan on Wednesday approved the establishment of a new Export Processing Zone (EPZ) in Balochistan with 80% Chinese ownership, a move authorities claim has the endorsement of the International Monetary Fund (IMF).

The Economic Coordination Committee (ECC) of the Cabinet, chaired by Finance Minister Muhammad Aurangzeb, greenlit the establishment of the Siah Dik Copper Project in District Chagai, Balochistan. The committee declared three mineral leases, spanning 4,208 acres near Saindak, as a Private Export Processing Zone.

The KoheSultan Mining Company Limited will own the zone, with an 80% stake held by the China Metallurgical Group Corporation and the remaining 20% by Siakoh Mineral Development Corporation, a local firm. The decision will facilitate the development and export potential of the region's mineral sector.

A few weeks ago, the government had decided to withdraw the proposal to establish the new EPZ to comply with an IMF condition to phase out existing Special Economic Zones (SEZs) and EPZs by 2023 and to refrain from creating new ones. However, finance ministry officials stated that the IMF has permitted zones approved in the past two years to proceed. Under the IMF programme, Pakistan is prohibited from establishing new SEZs or EPZs, and all incentives for existing ones will expire by 2035, regardless of project operational status.

The ECC also approved various measures with a cumulative fiscal impact of Rs48 billion.

Among these, Rs14 billion was allocated for the Prime Minister's National Programme for Solarisation of Agricultural Tubewells. Additionally, a Rs10 billion supplementary budget was approved to settle liabilities for imported urea. Although the total subsidy requirement stands at Rs25 billion, half of this is to be borne by the provinces.

While approving subsidies for urea and tubewells, the ECC deferred a proposal to float Rs1 billion in bonds for vocational training. The Ministry of Federal Education and Professional Training had sought sovereign guarantees for the Pakistan Skills Impact Bond (PSIB), but the ECC chairman directed the ministry to resubmit a more comprehensive plan.

The ECC also approved Rs1.9 billion in supplementary grants for repairing and maintaining government facilities.

The Ministry of Information and Broadcasting received an additional Rs536 million for "crucial digital initiatives." This approval came amid bitter criticism from the government's main ally, the Pakistan Peoples Party, over internet restrictions and bans on social media platforms. Another Rs2 billion, or $7.3 million, was approved for the Digital Economy Enhancement Project (DEEP), managed by NADRA. However, critics have pointed out that such initiatives are undermined by the government's social media restrictions.

The ECC approved an Rs8.2 billion restructuring plan for Pakistan Revenue Automation Limited (PRAL), including Rs3.7 billion for the current fiscal year.

It also sanctioned Rs523.1 million for the Special Investment Facilitation Council (SIFC) to cover salaries and seminar expenses. Additional approvals included Rs21.3 million for repairs to the Islamabad High Court and Rs1.1 billion to settle outstanding claims by the Zarai Taraqiati Bank Limited (ZTBL) under the Prime Minister's Fiscal Package for Agriculture during the COVID-19 pandemic.

For the 7.07 MW Railii-II Hydropower Project, the ECC approved a security package and government guarantees under the Power Generation Policy 2015.

The ECC also allocated Rs10 billion to provide rupee cover for a foreign-funded project. Additionally, it expanded the Prime Minister's Youth Business and Agriculture Loan Scheme (PMYBALS) by introducing Tier 4 loans. These term loans will have a 0% end-user rate on a first-loss basis, with Rs8.6 billion allocated for the current fiscal year.

To ensure pension sustainability, the ECC approved the creation of a Pension Fund through a Non-Banking Finance Company (NBFC) regulated by the SECP, with Rs31 million earmarked for seed money and related expenses.

The ECC also reiterated its decision to supply 150,000 MT of subsidised local wheat to Gilgit-Baltistan until a permanent solution is reached.

Chairing the ECC meeting, Finance Minister Muhammad Aurangzeb provided a comprehensive economic overview, underscoring the government's efforts to stabilise the economy and ensure sustainable growth. He highlighted the government's fiscal policies, including effective public finance management, trade improvements, and energy sector reforms, as key contributors to the positive trajectory.

The ECC was briefed on significant price reductions for essential commodities, including wheat flour, diesel, petrol, pulses, onions, basmati rice, sugar, and electricity. These measures have reportedly eased financial burdens on citizens and strengthened purchasing power.