Islamabad, July 17, 2025 —
In a controversial move, the Ministry of Finance has acknowledged the International Monetary Fund’s (IMF) objections to Pakistan’s recent tax exemptions on sugar imports. This comes just days after the government entered another agreement with the Pakistan Sugar Mills Association (PSMA), allowing sugar exports if stocks exceed seven million metric tonnes, further intensifying tensions with the IMF.
Signed on July 14, the agreement with PSMA includes a price-fixing clause to maintain ex-factory sugar prices between Rs165 and Rs171 per kg until October 15, 2025. This clause not only raises competition law concerns under the Competition Commission of Pakistan (CCP) but also suggests the government has not learned from past policy missteps. A similar export approval last year triggered a price crisis, pushing sugar prices to Rs200 per kg.
The IMF has expressed clear displeasure over the government’s waiver of 53% import duties on sugar, a move intended to reduce import costs by Rs82 per kg. The government justified the waiver as necessary to stabilize soaring domestic prices, but IMF officials view the tax exemption as a violation of written commitments under the $7 billion Extended Fund Facility (EFF).
“There are about 70 benchmarks in the IMF programme, and one of them is that tax exemptions cannot be given,” stated Finance Secretary Imdadullah Bosal during a National Assembly Standing Committee on Finance session on Wednesday.
Amid IMF pressure, the government scaled back its sugar import tender from 300,000 metric tonnes to just 50,000 tonnes, extending the bidding deadline from July 18 to July 22.
Lawmakers including Syed Naveed Qamar and PPP’s Nafisa Shah criticized the government’s inconsistent handling of the sugar market. “Vested interests are stronger than the IMF,” Shah remarked, highlighting how entrenched players continue to dominate policymaking.
The Export Agreement Loophole
The new sugar export agreement outlines that any stock exceeding 7 million metric tonnes, including carryover and new production, may be exported after 30 days of the crushing season’s end in 2025–26. The inclusion of imported sugar in this stock tally further muddies the regulatory landscape.
Pakistani Rupee Slightly Strengthens Against US Dollar Amid Global Currency Stability
Stock verification will rely on the Federal Board of Revenue’s (FBR) track-and-trace system and be overseen by a four-member committee—two officials from federal/provincial governments and two from the PSMA, raising concerns over transparency.
The price-fixing formula allows millers to increase ex-mill prices by Rs2 per kg each month until October 2025, locking in high returns for millers while potentially sidelining consumers and market forces.
“Before exports last year, ex-mill prices were below Rs140. Now they are fixed at Rs171. That’s a windfall,” noted Qamar, urging the government to exit the sugar trade entirely and abolish the sugar mill licensing regime.
Other Legislative Matters
The committee also discussed two critical private member bills:
-
The Corporate Social Responsibility (CSR) Bill, led by Nafisa Shah, mandates 1% of net income from companies toward social welfare. Despite opposition from the finance ministry, the committee supported further consideration, arguing many firms already comply voluntarily.
-
The Parliamentary Budget Oversight Bill, tabled by MNA Rana Iradat Sharif Khan, aims to improve fiscal accountability. The bill faced resistance from the finance bureaucracy, but Qamar emphasized its necessity to dismantle bureaucratic monopolies and improve governance.
