IMF pushes sugar deregulation in Pakistan

The International Monetary Fund (IMF) has called for deregulation of Pakistan’s sugar sector while also seeking an end to tax exemptions available to electric vehicles (EVs) under the country’s auto policy, according to sources familiar with the ongoing discussions.

The latest demands have emerged as the government works on economic and financial policy measures linked to its commitments under the IMF programme. Talks between the IMF mission and various government departments are continuing as authorities work to finalise the required policy framework.

The sugar sector has become a key point of discussion, with the IMF seeking greater deregulation. However, the matter has not yet been finalised because the Sindh government has raised objections to the federal approach, describing the proposed sugar policy as an issue involving provincial autonomy.

The disagreement between the federal and Sindh governments has delayed the finalisation of the sugar policy. Further discussions are expected as the government attempts to address the differences while meeting its commitments under the IMF programme.

The IMF mission is also seeking changes to the taxation framework for electric vehicles. According to officials, the Fund has proposed withdrawing tax exemptions provided to EVs under the country’s auto policy.

At the same time, the IMF has reportedly agreed to the government’s plan to provide fuel subsidies to eligible consumers under the Prime Minister’s fuel relief scheme. However, the Fund has stressed that the number of beneficiaries should not be expanded further.

The IMF has also proposed keeping the fuel subsidy focused on smaller vehicles rather than extending it to a wider category of consumers. The government and the Fund are continuing discussions on the design and scope of the programme.

Further talks are scheduled between the IMF mission and officials of the Ministry of Petroleum. Petroleum sector discussions are expected to focus on the structure of gas tariffs and the growing circular debt in the gas sector.

The Petroleum Ministry delegation will be led by the petroleum minister during the discussions with the IMF team. Officials are expected to review measures aimed at improving the financial position and efficiency of the energy sector.

The IMF mission is also due to meet officials from the Ministry of Privatisation. The discussions are expected to cover the proposed privatisation of power distribution companies (DISCOs) and measures to reduce transmission and distribution losses.

Meanwhile, negotiations between the IMF and the Federal Board of Revenue (FBR) have reportedly been completed.