IMF Objects to Pakistan’s Decision to Import 500,000 MT Tax-Free Sugar

The International Monetary Fund (IMF) has raised objections to Pakistan’s decision to waive all taxes on the import of 500,000 metric tons of sugar and called it a serious breach of the current $7 billion loan program.

The tax exemptions were intended to lower the import cost by an estimated Rs. 82 per kg and offset the impact of a prior decision to export 765,000 tons of sugar, reported Express Tribune.

The IMF rejected Pakistan’s justification that the tax waiver was due to a food emergency. The Revenue Division had conveyed this explanation to the IMF in writing, but the Fund viewed the move as committing preferential tax treatment and intervening in the commodity market.

Under IMF program terms, Pakistan had committed not to grant new tax exemptions or intervene in commodity pricing. It had also pledged to phase out federal and provincial price-setting in agriculture by FY2025-26 and review related legislation by December 2025.

The finance ministry later raised objections with the Prime Minister’s Office, warning that the decision breached IMF commitments and could undermine the program.

In response to the IMF’s position, the government is now reviewing options, including cancelling the tax waivers for the private sector. No decision has been finalized.

The government expects a domestic sugar shortfall of 535,000 tons in October–November. The Ministry of National Food Security has resumed talks with the Pakistan Sugar Mills Association (PSMA), which has offered to begin the crushing season early.