IMF Raises Concerns Over Pakistan’s Tax-Free Sugar Import Plan
The International Monetary Fund (IMF) has expressed strong objections to Pakistan’s recent decision to waive all taxes on the import of 500,000 metric tons of sugar, calling it a serious violation of the current $7 billion loan program.
According to a report by the Express Tribune, the tax exemption was aimed at reducing sugar import costs by approximately Rs. 82 per kilogram, a measure intended to stabilize domestic prices following the government’s earlier decision to export 765,000 tons of sugar.
IMF Rejects Emergency Justification
The Government of Pakistan, through its Revenue Division, had justified the tax waivers to the IMF by citing a national food emergency. However, the IMF rejected this explanation, viewing the move as a case of preferential tax treatment and intervention in the commodity market, both of which are in breach of the agreed program terms.
Contravention of Agreed Reforms
Under the terms of the IMF program, Pakistan had committed to:
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Refrain from granting new tax exemptions
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Avoid intervening in commodity pricing
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Phase out federal and provincial price controls in agriculture by FY2025–26
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Review and reform relevant legislation by December 2025
The decision to allow tax-free sugar imports appears to directly contradict these commitments.
Finance Ministry Flags Breach
The Finance Ministry reportedly raised concerns with the Prime Minister’s Office, warning that the tax waiver may undermine Pakistan’s credibility with the IMF and threaten the stability of the ongoing loan program.
In light of the IMF’s objections, the government is reassessing its options, including the possible withdrawal of tax exemptions for the private sector. However, no final decision has been made.
Anticipated Sugar Shortfall
Pakistan is anticipating a domestic sugar shortage of around 535,000 tons in the months of October–November. To address the potential gap, the Ministry of National Food Security has resumed discussions with the Pakistan Sugar Mills Association (PSMA). The PSMA has indicated a willingness to begin the crushing season earlier than scheduled to support supply needs.
