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IMF Imposes Ban on Agricultural Support Prices in Pakistan as Part of $7 Billion Bailout
The IMF has mandated that Pakistan’s federal and provincial governments phase out support prices for key crops under its $7 billion bailout package. This move is set to end subsidies on essential commodities like wheat, sugarcane, and cotton.
ND
by News Desk
2024-09-05
IMF Imposes Ban on Agricultural Support Prices in Pakistan as Part of $7 Billion Bailout

The International Monetary Fund (IMF) has imposed a crucial condition on Pakistan's federal and provincial governments as part of its $7 billion bailout package. The condition stipulates the phasing out of support prices for key agricultural commodities, including wheat, sugarcane, and cotton, beginning with the current Kharif crop season and concluding by June 2026.
This restriction is part of broader efforts by the IMF to curb government spending and limit the authority to provide subsidies. Under the new terms, all five governments—federal and provincial—will be required to halt their price-setting mechanisms, affecting not only local crops but also imported fertilizers, which will no longer be sold at subsidized rates.
The Punjab government, which has already ceased purchasing wheat from farmers, has observed a 40% drop in wheat and wheat flour prices, contributing to a lower inflation rate last month. However, the IMF has also mandated that no subsidies be provided for electricity and gas during the 37-month loan program.
Despite claims from the Punjab government that they have not received official communication regarding these conditions, sources confirm that the IMF’s directives will be enforced, marking the end of government intervention in the agricultural sector.
The implications of this decision are expected to be significant, particularly for the sugarcane industry, where government-imposed prices have historically been a contentious issue between farmers and millers. With the IMF’s condition, market forces will now dictate sugarcane prices, potentially causing fluctuations in sugar prices.
These measures are part of the Extended Fund Facility (EFF) agreement, which is still pending approval from the IMF executive board. The enforcement of these conditions will have profound effects on Pakistan's agricultural sector and overall economic stability.
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IMF

PakistanEconomy

AgriculturalPolicy
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