The IMF has expressed concerns over Pakistan’s decision to allow tax-free sugar imports. The move conflicts with the country’s $7 billion loan programme.
IMF officials said exempting duties on sugar imports could affect future loan disbursements. The decision goes against the commitments made under the Extended Fund Facility (EFF).
The government justified the tax waiver by declaring a national food emergency. It allowed duty-free import of 500,000 metric tons of sugar to control rising prices.
However, the IMF rejected this reasoning and warned that such policy changes could undermine fiscal discipline. The Fund urged Pakistan to reconsider the tax exemption to stay aligned with the reform programme.
In response, the government is reviewing the tax-free import policy. Officials are considering withdrawing exemptions, especially for private importers.
The sharp rise in local sugar prices, which crossed Rs200 per kilogram, prompted emergency imports. The federal cabinet approved the import without consulting the Ministry of Finance.
The Trading Corporation of Pakistan (TCP) has floated a tender for importing 300,000 metric tons of sugar. Bids are due by July 18.
Experts warn that ignoring IMF guidelines risks Pakistan’s economic stability. Such moves could delay financial support and slow down reforms.
This issue highlights the ongoing challenge for Pakistan to balance inflation control with IMF’s structural reform requirements. The IMF’s position remains crucial for the country’s economic recovery.
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