ISLAMABAD – Pakistan’s recent tax relief on sugar imports has drawn objections from the International Monetary Fund (IMF), the finance ministry revealed to the National Assembly Standing Committee on Finance on Wednesday.
IMF program restricts exemptions
Finance Secretary Imdad Ullah Bosal told lawmakers that the $7 billion Extended Fund Facility (EFF) includes 70 performance benchmarks, one of which explicitly bars the government from granting any new tax exemptions.
“We are currently negotiating with the IMF on this issue,” Bosal said, while responding to queries on why the Fund opposed the sugar relief.
Sugar import tax cuts spark debate
The government recently allowed the import of 500,000 metric tons of sugar with major tax concessions. The Federal Board of Revenue (FBR):
Exempted customs duty on the imports
Reduced sales tax from 18% to 0.25%
Lowered withholding tax to 0.25%
Waived the 3% minimum value-added tax on the imported quantity
But FBR Chairman Rashid Mahmood Langrial clarified that the initiative came from the Ministry of National Food Security and Research. “The cabinet approved the move, and FBR simply issued the formal notifications,” he said.
Langrial noted that sugar currently faces a 54% cumulative tax rate, including 20% import duty, which he said is unusually high. He recalled that domestic sugar prices had at one point dropped to Rs130 per kilogram, indicating there was no immediate shortage.
Committee chairman Syed Naveed Qamar echoed that view, questioning the logic of importing sugar despite “sufficient local stocks.”
IMF also questions remittance scheme financing
Separately, Bosal briefed the panel on the Pakistan Remittances Initiative (PRI) — a program designed to reward banks and exchange companies for bringing in remittances through official channels.
IMF has asked the finance ministry and the State Bank of Pakistan to work out a sustainable financing model for PRI, which lawmakers warned was turning into “another circular debt.”
No funds have been allocated for PRI in the current fiscal year, despite Rs89 billion being earmarked last year — an amount that later swelled beyond Rs100 billion.
The government has now revised the scheme by:
Capping the reward to a flat 20 Riyals per transaction (previously 20–30 Riyals)
Raising the minimum eligible remittance amount from $100 to $200
Policy implications
The dispute highlights the IMF’s strict stance on maintaining fiscal discipline and avoiding sector-specific relief measures. Lawmakers warned that relaxing conditions on sugar imports could trigger additional revenue pressures or force further negotiations with the IMF.