By Staff Reporter
KARACHI: Pakistan’s state-run grain trader has slashed its sugar import tender by more than 80% after the International Monetary Fund raised concerns over tax exemptions on the commodity, a move exposing tensions between global financial pressures and a deepening domestic supply crisis.
The Trading Corporation of Pakistan (TCP) initially invited bids for 300,000 metric tons of sugar on July 11, with a deadline of July 18, 2025. However, in a corrigendum issued on Tuesday, the TCP reduced the tender quantity to just 50,000 metric tons and extended the bid deadline to July 22, 2025.
The revision also broadened the acceptable sugar grades from “Medium Grade” to include both “Small (Fine)” and “Medium Grade” sugar. “The words ‘300,000 metric tons’ appearing under the heading Tender No.1 shall now be read as ‘50,000 metric tons,’” the TCP stated in its corrigendum.
Additionally, the tender opening date was pushed back, with the document noting, “The date of opening of tender appearing as July 18, 2025, in paragraph No.2 and paragraph No.4, shall now be read as ‘July 22, 2025.’”
The sharp reduction in the import volume follows reported concerns from the IMF regarding tax exemptions granted on sugar imports, which the fund believes could jeopardize Pakistan’s $7 billion loan program.
According to a report by The Express Tribune, the IMF rejected Pakistan’s argument that the tax-free sugar import was necessary due to a food emergency. The finance ministry, in turn, raised objections with the Prime Minister’s Office, stating that the cabinet had approved the sugar import summary without input from the finance minister.
The finance ministry warned that the waiver of duties and taxes on sugar imports violated Pakistan’s commitments to the IMF, which include a pledge not to issue new tax exemptions or preferential treatments. “These breaches could detract from the IMF programme,” the ministry reportedly cautioned. However, no official confirmation of the IMF’s stance has been issued.
The controversy comes amid a deepening sugar crisis in Pakistan, where retail prices have surged 36% since January, reaching Rs200 per kilogram, up from Rs140. The price spike is largely attributed to a 14% drop in domestic sugar production to 5.9 million metric tons this year, hampered by adverse weather and reduced cane yields.
Compounding the issue, sugar exports soared 2,200% in the last fiscal year, with 765,734 metric tons shipped between July and May, generating Rs114 billion in revenue. While the export boom bolstered foreign exchange reserves, it severely depleted local supplies.
The Pakistan Sugar Mills Association (PSMA) estimates that current stocks of 2.8 million metric tons will last only until November, based on monthly consumption of 535,000 metric tons, against an annual demand of 6.4 million metric tons.
The government, which had previously defended its export policy by citing abundant supply at the time, now views imports as critical to bridging the gap. However, critics argue that the earlier export approvals prioritized millers’ profits, bolstered by the Rs114 billion windfall, over consumer affordability.
On July 8, the government approved the import of 500,000 metric tons of sugar to counter escalating costs. To facilitate this, the Federal Board of Revenue (FBR) exempted customs duty on the import of sugar, reduced the sales tax rate from 18% to 0.25%, and lowered withholding tax to 0.25% for imports by the TCP or private sector.
The import price is estimated at around Rs245 per kilogram, though the exact figure will be determined once bids are received.
A day before the tender revision, the government set the ex-mill price of sugar at Rs165 per kilogram, a Rs25 increase from last June’s rate. The new pricing, according to a government statement, is intended “to ensure affordability.” “All provincial governments will ensure the availability of cheap sugar to the public in light of this decision,” the statement added.
The move has drawn sharp criticism from the opposition. The opposition Pakistan Tehreek-e-Insaf (PTI) on Tuesday condemned the government’s decision to import 500,000 metric tons of sugar, calling it a “deliberate, well-orchestrated conspiracy benefiting the sugar mafia and political elites.”
A PTI spokesman accused the government of engineering the current sugar crisis to enable profiteering by powerful businessmen while ordinary citizens suffer. The PTI also questioned the necessity of imports, claiming that approximately 2.6 million metric tons of sugar are already stockpiled domestically.
The party further alleged that the Finance Ministry opposed the import decision, which was made without the finance minister’s consent, raising concerns about who truly controls economic decisions. PTI has called for a judicial inquiry into the matter, demanding transparency on profiteers, investigations into hoarding, and accountability for those responsible.
The party estimates the duty and tax exemptions will cost the treasury Rs72 billion, while the sugar mafia has already pocketed Rs92 billion from exports.
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