Pak violates terms of $7-bn IMF bailout package

Cash-strapped Pakistan has breached key terms of its $7 billion bailout agreement with the International Monetary Fund (IMF) by recently announcing duty and tax-free sugar imports, contrary to its written commitments under the loan programme.

The move, aimed at easing domestic sugar prices that have soared to Rs 200 per kg, was approved during a meeting of Pakistan's steering committee on sugar import chaired by the federal minister for national Food security and research, Rana Tanveer Hussain, on July 9.

It was decided that sugar would be imported via the Trading Corporation of Pakistan (TCP) to ensure transparency and government oversight in two phases -- first a tender for 200,000 metric tonnes of sugar will be issued, followed by another tender for 150,000 metric tonnes after one week.

“To facilitate this process, the government has exempted all duties and taxes on sugar imports so that sugar can be made available to the general public at affordable prices and inflationary pressures can be eased,” Pakistan's Information Department stated in a press release, a copy of which has been accessed by The Tribune.

However, this tax exemption directly violates IMF conditions prohibiting new tax amnesties or preferential tax treatments. An IMF document published in April 2025 had clearly stated: “Do not grant tax amnesties, and do not issue any new preferential tax treatment (including exemptions, zero rating, tax credits, accelerated depreciation allowances, or special rates).”

Pakistan secured the $7 billion loan package in September 2024 after edging toward default amid political turmoil, post-2022 flood recovery struggles, and years of economic mismanagement.

Meanwhile, the IMF has reportedly rejected Pakistan’s request to waive taxes on sugar imports, terming it a serious breach of the agreed programme.