The Pakistani government has scrapped its sugar import tender after the IMF rejected a proposed tax waiver on imported sugar. The Trading Corporation of Pakistan (TCP) had initially planned to procure 300,000 metric tons of sugar, but the tender was withdrawn due to a dispute over the exemption.
Following the IMF’s rejection of the proposed tax waiver, the TCP has issued a revised tender to import 50,000 metric tons of sugar, substantially scaling back its original plan. International suppliers have been invited to submit bids by July 22, marking a notable shift in Pakistan’s sugar import strategy amid financial constraints and ongoing policy negotiations.
The Pakistani government had originally planned to import 500,000 metric tons of sugar and eliminate import duties to counter surging domestic prices, which recently crossed Rs200 per kilogram, the highest ever. However, the plan was rolled back following the IMF’s caution that these tax exemptions breach the terms of Pakistan’s current $7 billion loan agreement.
The domestic sugar supply became constrained after the government’s prior decision to export 765,000 metric tons, contributing to market shortfall.
To ease soaring domestic sugar prices worsened by earlier exports, Pakistan’s Federal Board of Revenue (FBR) granted sweeping tax relief on sugar imports. This included slashing the sales tax from 21% to just 0.25%, along with full exemption from import duties. However, the IMF flagged this move as a breach of Pakistan’s existing loan agreement, which explicitly violates preferential tax policies such as exemptions, zero ratings, and commodity-specific concessions.
The tax relief directly contradicts the IMF’s fiscal conditions under the $7 billion loan program, which are intended to enforce strict budgetary discipline.
Pakistan is now in breach of its agreement with the IMF, having gone against written pledges by offering selective tax exemptions and engaging in prohibited commodity procurement.
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