The International Monetary Fund (IMF) has raised serious concerns over Pakistan’s decision to waive taxes on the import of 500,000 metric tonnes of sugar, citing a violation of the country’s ongoing $7 billion loan agreement. According to sources reported by The Express Tribune, the IMF dismissed the government’s justification of a food emergency, arguing that the move goes against the agreement’s explicit ban on preferential tax treatments, exemptions, and amnesties for commodity imports.
The Federal Board of Revenue (FBR) had reduced the sales tax on sugar imports from 21% to just 0.25%, along with complete exemption from customs duties. This step was taken to offset a price spike caused by previous sugar exports, but it triggered backlash from the IMF due to its direct contradiction of Pakistan’s reform commitments.
Currently, sugar prices in Pakistan have hit a record Rs200 per kilogram, prompting urgent action from the government. Despite internal objections—particularly from the Ministry of Finance, which warned that the move could endanger the IMF program—the government proceeded with issuing a tender for the import of 300,000 metric tonnes of sugar, with bids due by July 18, 2025.
The IMF was reportedly not consulted prior to this decision, increasing friction between the fund and the government. Compounding the crisis is a projected sugar shortfall of 535,000 metric tonnes expected by October-November 2025, which follows the export of 765,000 metric tonnes of sugar last year.
In light of the IMF’s pushback, the government is now considering options such as withdrawing the tax relief or cancelling imports for the private sector, but no final decision has been made so far.
