In a surprising policy shift, the government has reduced its planned sugar import from 300,000 metric tonnes to just 50,000 metric tonnes. This change comes amid strong opposition from domestic sugar millers and growing concerns from the International Monetary Fund (IMF) over violations tied to Pakistan’s $7 billion loan programme. The Trading Corporation of Pakistan (TCP) also postponed the bid opening date to July 22, 2025.
The decision follows a secretive agreement with sugar millers — many of whom are also lawmakers — to raise the ex-mill price from Rs159 to Rs165 per kg. While this benefits millers with billions in extra profit, retail prices for consumers remain close to Rs200 per kg, well above the official cap of Rs164 set earlier this year. This sudden change in strategy marks a reversal of the government’s earlier plan to import half a million tonnes of tax-free sugar to ease prices.
However, the IMF strongly opposed the tax waiver, calling it a direct breach of the Extended Fund Facility (EFF) agreement. The Finance Ministry had already warned that bypassing IMF approval for duty-free imports could jeopardize the entire loan programme. Despite Pakistan’s argument of a national food emergency, the IMF rejected the explanation and flagged two serious policy violations.
Sources reveal that after the original import plan was announced, sugar millers quickly mobilized political support to push back. Officials from the Ministry for National Food Security confirmed that intense lobbying led to reduced imports and a price increase that favored the industry. Critics argue that this outcome reflects how deeply politics influence commodity pricing in Pakistan.
Sugar remains one of the most politically sensitive goods in the country, with over 80% of mills owned by politicians. Despite the government’s repeated efforts to control prices, enforcement remains weak and market rates continue to rise. As a result, consumers are still paying nearly 20% more than the official price cap, adding to public frustration over inflation.
This latest policy reversal highlights the ongoing tension between meeting IMF requirements and managing powerful local business lobbies. As Pakistan prepares for further talks with the IMF, the sugar controversy serves as a warning of the challenges in balancing public interest, economic stability, and political pressure.