IMF Report Exposes How Sugar Cartels Manipulate Prices and Hoard Profits in Pakistan

The latest IMF Technical Assistance Report describes Pakistan’s sugar sector as a clear example of how powerful industry groups and state regulators work together to secure private gains at public expense. The report highlights that sugar mill owners benefited for decades from favourable policies, subsidies, and regulatory loopholes, allowing the industry to operate profitably while undermining market competitiveness. A key concern raised by the IMF is the protection of mill owners through “recommended” sugarcane prices and high import tariffs, which enabled profit guarantees irrespective of market conditions. The report notes that these advantages extended to export and pricing policies that repeatedly favoured the industry. In 2018-19, the government approved large sugar exports and even subsidized them, despite the presence of adequate domestic stocks. This decision led to nationwide shortages and sharp price spikes for consumers. A subsequent high-profile inquiry by the FIA revealed that major sugar mill owners had colluded to engineer artificial shortages and inflate prices. Investigators uncovered speculative hoarding, fraudulent accounting practices, and the laundering of illicit gains. The report identified several political heavyweights as beneficiaries of the scheme, confirming that the government-approved export push played a central role in driving domestic prices higher. Despite these findings, the IMF observes that accountability has remained limited. While occasional crackdowns, such as arrests of brokers or new regulatory measures, have taken place, the underlying cartel structure remains intact.