Pakistan Govt signs new agreement with PSMA on sugar exports, amid IMF concerns
The federal government has allowed sugar exports if stocks exceed 7 million tonnes, under a new deal with PSMA. It also fixed ex-mill sugar prices at Rs165/kg, rising by Rs2 monthly till October 15. The IMF criticized tax exemptions on sugar imports, prompting a cut in planned imports. Critics demand deregulation and clearer trade policies.
The federal government has reached a new agreement with the Pakistan Sugar Mills Association (PSMA) permitting sugar exports when total stocks, including carryover and new production for the 2025-26 season, exceed seven million metric tonnes, The Express Tribune reported.
The agreement also includes a clause that fixes the maximum ex-mill sugar price at Rs165 per kilogram, increasing by Rs2 per kilogram each month until October 15, 2025. However, this price-fixing measure has raised alarms from the Competition Commission of Pakistan (CCP), which has previously warned against price manipulation.
The decision marks a continuation of the government’s efforts to stabilise sugar prices, which have recently surged to Rs200 per kilogram following the export of 765,000 metric tonnes of sugar.
The current agreement has sparked concern from the International Monetary Fund (IMF), which expressed its displeasure over the government’s decision to waive taxes on sugar imports, highlighting the breach of conditions under the ongoing $7 billion IMF program.
The IMF’s objections were specifically related to the tax exemptions granted to sugar imports, as Pakistan had agreed under the IMF framework to phase out such exemptions. IMF officials have demanded the revocation of three statutory regulatory orders (SROs) issued for the waiver of taxes.
In response to the IMF’s objections, the government has reduced the original sugar import volume from 300,000 metric tonnes to 50,000 metric tonnes.
The government’s action to import sugar, despite its previous commitments, has raised concerns regarding its credibility and adherence to IMF guidelines. However, the Finance Ministry and other officials have defended the decision, citing the need to stabilize domestic sugar prices amidst shortages.
The government has justified the price controls, arguing that the sugar industry needs to stabilise prices due to fluctuating supply and demand dynamics. However, critics like PPP’s Syed Naveed Qamar argue that the government should remove itself from the sugar trade entirely, calling for deregulation of sugar prices and an end to the licensing regime for new sugar mills. Qamar also emphasized that the government’s current handling of sugar imports sends mixed signals to the market and could further distort the sugar trade.
Additionally, the issue of over-importing sugar has been raised. Critics have noted that importing sugar undermines efforts to boost local production and could lead to further reliance on foreign sources.
The sugar mills and farmers are also calling for more transparency and clearer policies regarding the import-export dynamics, particularly in light of the government’s ongoing efforts to address price hikes and stabilize the economy.
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Source : Profit Pakistan Today
