Pakistan is set to import up to 300,000 tons of sugar from Azerbaijan through government-to-government (G2G) agreements, as the country grapples with domestic shortages caused by climate-induced crop losses and alleged market manipulation.
Government-to-Government Sugar Deals
Authorities have confirmed that Pakistan is engaged in negotiations with Azerbaijan to arrange the procurement of sugar on a government-to-government basis. A 200,000-ton contract has been signed off on, and the initial shipments are expected to be received in early September. The overall import quantity might reach up to 300,000 tons, based on the current situation of demand and supply within the country.
Lack of Transparency Raises Questions
Important issues of the agreement, such as the subsidy element of the bargain and the ultimate cost of implementation, were not disclosed. This has been a concern regarding Pakistan’s commitment to the IMF loan program. It is said that there might be a subsidy above Rs. 30/kg, a level that could be questioned by the IMF, which has cautioned against further subsidies.
IMF Oversight and Policy Reversal
The import decision was cleared by a committee led by Deputy Prime Minister Ishaq Dar. While the government claims the measure aims to stabilize prices and provide relief, the IMF reportedly rejected Pakistan’s ‘food emergency’ justification and warned of risks to the ongoing $7 billion loan program.
Ironically, Pakistan had already been exporting more than 757,000 tons of sugar worth 406.9 million in August 2024, up to January 2025, due to oversupply. Nevertheless, the latest crop destruction due to climatic factors has resulted in a decrease in output to 5.8 million tons, compared to the 6.3 million tons needed to satisfy both domestic and external demands.
Crackdown on Alleged Hoarding
The government recently alleged that it had confiscated 1.9 million metric tons of sugar held by privately owned mills and placed 18 mill owners on the Exit Control List. The Pakistan Sugar Mills Association denied the claims, calling the situation ‘administrative chaos.’ Food Minister Rana Tanveer Hussain has blamed hoarders for fuelling the artificially high prices.
Since foreign production is insufficient and the government is being monitored by the IMF, the policy of sugar imports will be crucial to stabilizing sugar prices and meeting consumer needs. Only the following months will reveal how well these imports will fill the supply gap and whether they will result in fiscal or trade imbalances.
