The International Monetary Fund (IMF) has imposed a significant condition on Pakistan’s federal and provincial governments, prohibiting them from establishing support prices for agricultural commodities, including wheat and sugarcane, reported Pakistani media.
A media report stated that this condition is part of a larger agreement tied to a $7 billion bailout package. The aim is to reduce government spending and limit provincial control over subsidies.
Currently, the federal and provincial governments fix the prices of major crops and agricultural inputs such as fertilisers. However, the new IMF directive calls for not announcing any support price or undertaking any procurement activity that may interfere with private sector operations. The phase-out of these price-fixing mechanisms would be gradual by June 2026, starting with the Kharif crop season.
Additionally, the IMF has banned provinces from providing subsidies on electricity and gas throughout the 37-month loan period.
The IMF has also directed governments to restrict their commodity procurement to meet their own needs and to sell them at market prices, ensuring that full costs are recovered from buyers. In the past, government intervention in the market has caused price imbalances and disrupted supplies.
