Turning over a new leaf.

Byline: Jawaid Bokhari

In talks with the visiting International Monetary Fund (IMF) technical team, the Ministry of Commerce has stressed that Pakistan needs fiscal space for stimulating economic growth and encouraging industries to push exports.

While the need for a sound stability programme for resolving the current crisis largely enjoys a consensus, the view that there is a limit to the price that can be extracted from a sinking economy is gaining grounds.

Taking an overview of the state of the economy, State Bank Governor Dr Reza Baqir has rightly observed: 'The balance of risks is shifting as the pace of economic growth slows.' In an interview with Bloomberg, he said Pakistan must balance the risk of a slowing economy with its desire to lower the inflation rate. His statement has been interpreted by analysts as indicating that no increase in central bank policy rate is now on the cards.

Similar sentiments were voiced by the commerce division team led by advisor Abdul Razak Dawood in talks with the visiting IMF's team in Islamabad. The Fund's technocrats are reported to have enquired from the division's top bosses what type of programme Pakistan needs. The Pakistani side responded that it should be growth-oriented. The IMF technical team members did not agree for well-known reasons of their own. The commerce division had sought space to extend tax concessions to the industry to boost exports of manufactured goods.

Whatever may be the ultimate outcome and the time taken to reach the final decision, the relevant ministries and institutions are now engaged in discussing the possible incentive package for encouraging investment in Special Economic Zones (SEZs). To promote industrial investment, the proposals include exemptions from corporate income tax and turnover tax, 100 per cent foreign ownership, no minimum investment requirement and no taxes on non-residents. The incentives would require amendments in the existing SEZ Act.

One window facility - on agenda for some time now - will also be provided for company registration, facilitation for procurement of licences, Federal Board of Revenue registration, employee visas, banking services, access to Board of Investment and for addressing investors' complaints.

These proposals coincide with a move by the Securities and Exchange Commission of Pakistan (SECP) for promoting capital formation by facilitating issues (share floatation), reducing the cost of Initial Public Offering (IPOs) and...