ISLAMABAD – July 17, 2025:
In a move likely to raise eyebrows at the International Monetary Fund (IMF), the federal government has signed a fresh agreement with the Pakistan Sugar Mills Association (PSMA), allowing the export of sugar stocks exceeding seven million metric tonnes (MMT) after the 2025–26 crushing season—despite clear IMF reservations over previous tax waivers and pricing mechanisms.
The deal, quietly inked on July 14 between the Ministry of National Food Security and the PSMA, aims to keep ex-mill sugar prices capped between Rs165 and Rs171 per kilogram until mid-October. The agreement comes just months after the government’s earlier decision to allow the export of 765,000 metric tonnes of sugar—an action that triggered a sharp spike in local prices, with retail rates touching Rs200 per kg.
That controversial move was followed by a tax-free sugar import scheme, which prompted a strong backlash from the IMF. At a National Assembly Standing Committee on Finance meeting on Wednesday, Finance Secretary Imdadullah Bosal acknowledged the IMF’s disapproval, saying the Fund had objected to the blanket exemptions that violated agreed programme benchmarks.
“There are nearly 70 performance criteria in the IMF programme,” Bosal explained, “and one of them is the non-granting of tax exemptions. This was a clear breach.” He confirmed that discussions with the IMF are ongoing to resolve the matter.
Sources say the IMF has explicitly asked Pakistan to roll back three statutory regulatory orders (SROs) that were used to waive import taxes on sugar. As reported earlier by The Express Tribune, the Fund sees this as a serious violation of the $7 billion agreement, which includes strict rules on revenue generation and subsidy control.
Federal Board of Revenue (FBR) Chairman Rashid Langrial defended the decision, saying that import duties on sugar stood at a hefty 53%, making it unaffordable for domestic consumers. The waiver, he argued, was meant to slash import costs by Rs82 per kg.
Initially, the Trading Corporation of Pakistan (TCP) planned to import 300,000 tonnes of sugar. However, after IMF objections, the target was scaled back to just 50,000 tonnes, and the tender deadline was extended to July 22.
During the committee meeting, MNA Jawed Hanif criticized the government for what he called a “double standard”—arguing that while the government blames the IMF for fiscal restraint during budget sessions, it later violates the very commitments it made to the Fund.
PPP’s Nafisa Shah echoed the concern, stating bluntly: “It seems vested interests are more powerful than the IMF.”
The new sugar export deal outlines that any stock exceeding 7 MMT—including unutilized imported sugar—can be exported, starting 30 days after the 2025–26 crushing season ends. Stock verification will be conducted through the FBR’s track and trace system and monitored by a four-member committee, including representatives from federal and provincial governments and two from the PSMA.
However, the price-fixing clause included in the deal has raised legal concerns. It stipulates that the ex-mill price of sugar will be capped at Rs165 per kg from July 15, 2025, with a Rs2 monthly increase until mid-October. Critics argue this contradicts Competition Commission of Pakistan (CCP) regulations and effectively offers sugar millers guaranteed profits.
Industry watchers point out that before last year’s export authorization, sugar was being sold at below Rs140 per kg. With the new fixed prices and without retail markup included, the millers are poised for a significant financial windfall.
Committee Chairperson Syed Naveed Qamar did not mince words. “The government needs to get out of the sugar business altogether,” he said. “We should abolish the licensing regime for sugar mills and stop importing sugar. It sends the wrong signal to the market.”
He argued that sugar should be deregulated entirely, much like wheat has been. “There are already sufficient stocks available domestically,” Qamar added.
Legislative Matters Also Reviewed
Alongside the sugar debate, the committee reviewed two significant private member bills: the Corporate Social Responsibility (CSR) Bill introduced by Nafisa Shah, and the Parliamentary Budget Oversight Bill proposed by MNA Rana Iradat Sharif Khan.
The CSR bill seeks to mandate companies to allocate 1% of their net income for social welfare projects. While the finance ministry opposed the move—claiming it would increase the cost of doing business—committee members pushed back. “It’s net income, not gross sales,” argued Nafisa Shah, noting that many companies already voluntarily contribute around 1.5% toward CSR.
The ministry requested a month-long consultation period with stakeholders, but the committee deemed it unnecessary.
Meanwhile, the budget oversight bill was also met with resistance from bureaucracy, but Qamar emphasized its importance. “Yes, this may challenge the bureaucratic status quo,” he said, “but for the sake of transparency and accountability, this legislation is absolutely necessary.”
