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Food supply

Pakistan's Sugar Export Deal Sparks IMF Concerns Amid Price Crisis

Strategic Insights

— 2 min read

The Pakistani government has signed an agreement with the Pakistan Sugar Mills Association, allowing sugar exports if total stocks exceed seven million metric tonnes, despite objections from the International Monetary Fund (IMF). The deal aims to persuade millers to keep ex-factory sugar prices between Rs165 and Rs171 per kilogram until October 15, but critics argue that it contradicts Competition Commission of Pakistan laws and sends the wrong signals to the market. The government has also faced criticism for allowing the export of 765,000 metric tonnes of sugar earlier this year, which led to a price crisis. Prime Minister Shehbaz Sharif's government had permitted the export, driving local prices up to Rs200 per kg.

Key Takeaways:

  • The Pakistani government has signed an agreement with the Pakistan Sugar Mills Association to allow sugar exports if total stocks exceed seven million metric tonnes.
  • The agreement aims to persuade millers to keep ex-factory sugar prices between Rs165 and Rs171 per kilogram until October 15.
  • The IMF has objected to Pakistan's tax exemptions on sugar imports, prompting the government to allow tax-free imports of sugar to stabilize prices.
  • The federal government has agreed to allow the export of sugar stocks exceeding 7 million metric tonnes after 30 days of the closing of the crushing season 2025-26.
  • The agreement includes a price-fixing clause that contradicts Competition Commission of Pakistan laws and grants a windfall to millers.
  • The government has been criticized for allowing the export of 765,000 metric tonnes of sugar earlier this year, which led to a price crisis.
  • MNA Jawed Hanif criticized the double standard, saying the government used the IMF as an excuse during budget debates but later breached the agreement itself.
  • The sugar export agreement includes a definition that means even imported sugar, if not consumed, could count toward total stock when verified through the FBR's track and trace system.
  • The agreed-upon price of Rs165 per kg is higher than the previous ex-mill prices, which were below Rs140 per kg.
  • Critics argue that the government should exit the sugar trade entirely and not send the wrong signals to the market by importing sugar.

Statistics:

  • 765,000 metric tonnes of sugar were exported earlier this year, leading to a price crisis.
  • The IMF had objected to Pakistan's tax exemptions on sugar imports, prompting the government to allow tax-free imports of sugar.
  • The federal government will allow the export of sugar stocks exceeding 7 million metric tonnes after 30 days of the closing of the crushing season 2025-26.
  • The maximum ex-mill price of sugar will be fixed at Rs165 per kg on July 15, 2025, and increased by Rs2 per kg monthly until October 15, 2025.
  • The agreement includes a definition that means even imported sugar, if not consumed, could count toward total stock when verified through the FBR's track and trace system.

Sources:

  • The Express Tribune, "IMF objects to Pakistan's tax exemptions on sugar imports"
  • The Express Tribune, "Pakistan signs sugar export deal despite IMF objections"
  • The National Assembly Standing Committee on Finance meeting, July 14, 2025
  • MNA Syed Naveed Qamar, PPP
  • Secretary Finance Imdadullah Bosal, Finance Ministry
  • MNA Jawed Hanif, PPP
  • FBR Chairman Rashid Langrial, Federal Board of Revenue

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