IMF 'objects' to sugar import subsidy

ISLAMABAD: The International Monetary Fund (IMF) has expressed reservations over Pakistan’s decision to offer tax exemptions and subsidies on imported sugar, warning that such measures could jeopardize the ongoing $7 billion loan program, ARY News reported on Tuesday, citing sources.

According to official sources, the IMF has opposed the government’s plan to provide a subsidy of Rs55 per kilogram on imported sugar, which is expected to arrive in Pakistan at a cost of Rs249 per kg.

The international lender has also rejected the Pakistan government’s justification that the import falls under “food emergency” measures.

A key concern raised by the IMF is that a significant portion of the imported sugar is likely to be consumed by industrial users rather than domestic households. This, the IMF argues, undermines the rationale of public interest and could be viewed as a violation of fiscal discipline.

The government is now reportedly reviewing its decision to grant full duty exemptions on the import of 500,000 metric tons of sugar, which was approved by the federal cabinet without input from the Ministry of Finance.

The Federal Board of Revenue (FBR) had waived all applicable duties and taxes, and the Trading Corporation of Pakistan (TCP) has already floated a tender for the import of 300,000 metric tons, with bids due by July 18.

The Pakistan Sugar Mills Association (PSMA) has also intervened, informing the government that local mills have enough sugar stock to meet national demand until November.

The PSMA claims it can supply 530,000 tons per month until then and criticized the government for charging over Rs25 per kg in sales tax on domestically produced sugar.