The International Monetary Fund on Tuesday warned Pakistan that its decision to provide tax exemptions and subsidies on imported sugar could undermine the ongoing $7 billion loan agreement with it. The International Monetary Fund (IMF) dismissed Pakistan’s argument that this qualifies as a “food emergency” response, sources told ARY News. According to the sources, the IMF has opposed the Pakistan government’s plan to subsidise imported sugar by PKR 55 per kg, expected to arrive at a cost of PKR 249 per kg. The IMF’s concerns have increased pressure on the government to revisit its sugar import strategy, which now faces objections from both the lender and domestic industry. WHAT IS THE KEY CONCERN? A key concern is that a large share of the imported sugar is likely to be consumed by industrial users rather than ordinary households, which the IMF views as inconsistent with public interest and a breach of fiscal discipline. The government is now re-evaluating its decision to grant full duty exemptions on the import of 500,000 metric tons of sugar – a move approved by the federal cabinet without prior consultation with the ministry of finance. The Federal Board of Revenue (FBR) waived all duties and taxes on these imports, while the Trading Corporation of Pakistan (TCP) has issued a tender for 300,000 metric tons, with bids closing by July 18. Adding to the controversy, the Pakistan Sugar Mills Association (PSMA) informed the government that local mills have sufficient stock to meet national demand until November. It claimed that it could supply 530,000 tons monthly and criticised the government for imposing a sales tax exceeding PKR 25 per kg on locally produced sugar. On Monday, Dawn reported that amid these developments, the government and the sugar industry reached an agreement to reduce sugar prices, setting a new ex-mill rate of PKR 165 per kg. The ministry of national food security and research described this as a “big relief” for the public. Provincial governments will now be responsible for ensuring sugar availability at the reduced price. The ministry had been in talks with the PSMA to assess current supply, pricing trends, and future strategies. (With ANI inputs)