Govt cuts sugar import amid IMF concerns over policy violations

• Trading Corporation delays bid opening date to July 22, 2025.
• Move marks U-turn from govt's aim to import 0.5m tonnes of sugar.
• IMF terms tax waiver imports "violation of EFF commitments".
  

ISLAMABAD: In a sharp reversal of policy, state-run Trading Corporation (TCP) has cut its sugar import tender from 300,000 metric tons to just 50,000 metric tonnes due to pressure from domestic millers and rising concerns from the International Monetary Fund (IMF) over policy violations tied to the $7 billion loan programme, The News reported on Wednesday.

The TCP's move, announced via an official corrigendum, comes after the federal government reached a behind-the-scenes deal with Pakistan’s powerful sugar millers — many of whom are in parliament — agreeing to raise the ex-mill sugar price from Rs159 to Rs165 per kilogramme.

Furthermore, the body has delayed the bid opening date to July 22, 2025. 

That Rs6 per kg hike effectively granted the industry billions in fresh profits, even as retail prices remain stuck near Rs200 per kg, well above the government’s earlier price cap of Rs164 per kg announced in March by Deputy Prime Minister Ishaq Dar.

The rollback in imports marks a significant U-turn from Islamabad’s earlier commitment to bring in half a million tonnes of tax-free sugar to tackle record-high prices and public outrage over inflation. 

But the IMF has sharply criticised the decision to waive nearly all import duties without consultation, branding it a direct violation of Pakistan’s written commitments under the Extended Fund Facility (EFF).

According to officials, the IMF dismissed Pakistan’s justification of a national "food emergency" and warned that the tax-free import policy — executed without prior approval from the lender — breached two core conditions of the bailout. The Finance Ministry had earlier cautioned that the move could put the entire loan program at risk, already strained by repeated policy reversals.

Insiders at the Ministry for National Food Security told the publication that lobbying by sugar millers intensified immediately after the import plan was announced. "They activated their political links, pushed back hard, and ultimately got what they wanted — a rollback of large-scale imports and a sweet Rs6 per kg bonus," a senior official said.

Sugar remains a politically explosive commodity in Pakistan, where over 80% of sugar mill ownership is linked to lawmakers. 

Despite repeated attempts to regulate prices, enforcement has been weak. Market rates have defied official caps, leaving consumers to pay nearly 20% more than the announced government ceiling.