IMF raises objections over Sugar import Subsidy

ISLAMABAD: The International Monetary Fund (IMF) has raised concerns over Pakistan’s decision to grant tax exemptions and subsidies on imported sugar. According to news, which cited sources on Tuesday, the IMF warned that these measures could jeopardize the ongoing $7 billion loan program.

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

The international lender has also dismissed the Pakistani government’s justification that the import qualifies as a “food emergency” measure.

The IMF has raised a key concern that industrial users, rather than domestic households, are likely to consume a significant portion of the imported sugar. The IMF argues that this undermines the justification of serving the public interest and could be seen as a breach of fiscal discipline.

The government is reportedly reconsidering its decision to grant full duty exemptions on the import of 500,000 metric tons of sugar, a move the federal cabinet approved without consulting the Ministry of Finance.

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

The Pakistan Sugar Mills Association (PSMA) has also stepped in, informing the government that local mills have sufficient sugar stock to meet the country’s demand until November.

The PSMA claims it can supply 530,000 tons of sugar per month until November and has criticized the government for imposing over Rs25 per kilogram in sales tax on locally produced sugar.

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