Islamabad [Pakistan], July 15 (ANI): The International Monetary Fund (IMF) has expressed strong objections to Pakistan’s recent decision to grant tax exemptions and subsidies on imported sugar, warning that the move could jeopardize the country’s ongoing $7 billion loan agreement, ARY News reported on Tuesday.
Official sources told ARY News that the IMF opposes the federal government’s plan to subsidize imported sugar by PKR 55 per kilogram, lowering the price of imported sugar — expected to cost PKR 249 per kg — under the guise of a “food emergency” response. The IMF reportedly dismissed Islamabad’s justification, arguing that the scheme does not adequately serve households and risks benefitting industrial users instead, which the lender views as inconsistent with fiscal prudence and public interest.
The federal government is now re-evaluating its decision to grant full duty exemptions on the import of 500,000 metric tons of sugar, which had been approved by the federal cabinet without prior consultation with the Ministry of Finance. The Federal Board of Revenue (FBR) waived all duties and taxes on these imports, while the Trading Corporation of Pakistan (TCP) has already floated a tender for 300,000 metric tons, with bids closing on July 18.
Adding to the controversy, the Pakistan Sugar Mills Association (PSMA) informed the government that domestic mills already have sufficient stocks to meet national demand through November, with the ability to supply 530,000 tons monthly. The PSMA also criticized the government for imposing a sales tax of over PKR 25 per kilogram on locally produced sugar, which they argue is unfair given the duty-free import of foreign sugar.
The IMF’s concerns have put added pressure on the government to reconsider its sugar import strategy, which is now facing pushback from both the lender and the domestic sugar industry.
Amid the standoff, the government and the PSMA reached an agreement to lower domestic sugar prices, setting a new ex-mill rate of PKR 165 per kilogram, Dawn reported Monday. The Ministry of National Food Security and Research hailed the agreement as a “big relief” for the public. Provincial governments will now be tasked with ensuring adequate sugar availability at the agreed price point.
This agreement comes after previous government efforts failed to curb rising sugar prices, which had climbed to nearly PKR 200 per kilogram, prompting the latest import and subsidy plans.
The government’s tender for 350,000 metric tons of imported sugar, deemed premium quality and compliant with market standards, will be handled by TCP to ensure transparency, quality control, and proper oversight. All duties and taxes on imported sugar have been waived in an effort to make sugar more affordable and counter inflationary pressures, Dawn added.
However, the IMF has warned that such populist fiscal measures could derail Pakistan’s commitments under its bailout program, potentially complicating future disbursements and economic stabilization efforts.
(ANI)
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