Govt Plans Sugar Sector Deregulation to Meet IMF Requirements: Sources
The federal government has decided to withdraw its involvement from the sugar sector in line with conditions set by the International Monetary Fund (IMF), according to sources from the Ministry of Industries and Production.
Plans have been finalised to fully deregulate the sugar industry, restricting the government’s role to maintaining a strategic buffer stock of 500,000 tonnes.
Outside of this reserve, the government will no longer intervene in sugar pricing, procurement, or supply, effectively handing over full control to the private sector.
The final draft of the proposal, prepared in consultation with key stakeholders, is expected to be presented to the Prime Minister next week.
The Trading Corporation of Pakistan (TCP) will retain a stock equal to one month’s national consumption.
Meanwhile, all other sugar handling and trade will be managed by the private sector.
The draft suggests that if deregulation leads to price volatility, the Benazir Income Support Programme (BISP) subsidy budget could be increased to protect vulnerable consumers.
In the case of surplus production, sugar will be exported, an approach aimed at ensuring better prices for sugarcane farmers.
Government of Pakistan estimates indicate that by running sugar mills at 70 percent capacity instead of the current 50 percent, an additional 2.5 million tonnes of sugar can be produced.
The excess sugar, if exported, could generate up to $1.5 billion in foreign exchange, according to the draft proposal.
Earlier, the International Monetary Fund (IMF) expressed reservations over Pakistan’s decision to offer tax exemptions and subsidies on imported sugar, warning that such measures could jeopardise the ongoing $7 billion loan program.
According to official sources, the IMF opposed the government’s plan to provide a subsidy of Rs55 per kilogram on imported sugar, which is expected to arrive in Pakistan at a cost of Rs249 per kg.
The international lender has also rejected the Pakistan government’s justification that the import falls under “food emergency” measures.
