IMF Deadline Nears, But Pakistan’s Sugar Sector Reforms Remain Stuck

The government has not been able to implement sugar sector reforms despite the March 2026 IMF deadline fast approaching, according to official sources.

According to sources, despite repeated requests from the Ministry of Industries and Production, provinces have yet to complete the required legislation needed to initiate deregulation of the sugar sector.

Under the proposed deregulation framework, farmers will no longer be bound to cultivate sugarcane and will have complete freedom to decide whether to grow the crop. They will also be allowed to sell sugarcane to any sugar mill anywhere in the country without zoning or territorial restrictions.

Sources further said that deregulation would lead to the lifting of controls on sugar exports. There would be no tariffs or bans on sugar imports, nor restrictions on the import of raw materials used in sugar production.

Under commitments made to the IMF, deregulation is required to begin by March 2026, while the federal government is expected to fully exit the sector by June 2026 after achieving agreed benchmarks.

Sources said proposals for sugar sector deregulation have been under discussion since October 2025, but no meaningful progress has been made so far. The federal government has formally written to provincial authorities, urging them to pass enabling legislation through their respective assemblies to move the process forward.

Punjab, Sindh, and Khyber Pakhtunkhwa have acknowledged receipt of the federal government’s correspondence and have referred the matter to relevant departments, while keeping the centre informed, sources added.

To safeguard crop quality, the government plans to issue a negative list identifying harmful sugarcane varieties. Once deregulation is implemented, restrictions on setting up new sugar mills will also be removed nationwide.

The lack of provincial legislation is now emerging as a major bottleneck in meeting IMF commitments, potentially complicating Pakistan’s reform agenda under the ongoing programme.