IMF Condition Threatens Global Textile Circular Economy

The International Monetary Fund's (IMF) condition to halt the sale of 20% of production by factories running in the Export Processing Zones (EPZs) in Pakistan's local market has raised concerns about its impact on the global textile circular economy.

Pakistani exporters, along with their US counterparts, have opposed this decision, arguing that they sell goods in the local market after paying applicable duties and taxes. The abolition of the 20% quota is part of the original IMF deal signed by relevant stakeholders.

The US-based Secondary Materials and Recycled Association (SMART) has warned that eliminating the 80/20 rule would sharply reduce demand and prices for recovered textiles, weaken collection programs, and disrupt Pakistani recyclers and manufacturers. It also stated that charitable organizations such as Goodwill, the Salvation Army, and St Vincent de Paul rely on the sale of donated goods to support community services.

Pakistan is a critical link in the global textile circular economy, with used textiles collected in the US, Canada, Europe, and elsewhere being sorted and graded in Pakistan before being directed to reuse, recycling, manufacturing, and affordable consumer markets.