Karachi: The State Bank of Pakistan (SBP) has instructed banks to facilitate the export of 500,000 tonnes of sugar, which has triggered fear that the domestic prices might be affected, reports Dawn.
The sugar industry has been pushing for approval to export an additional 850,000 tonnes of sugar, which would be worth approximately $485 million.
On September 21, the Economic Coordination Committee (ECC) of the cabinet allowed the export of 140,000 tonnes of sugar. However, there are growing concerns that rapid sugar exports could lead to a spike in local prices, as seen in the past.
“The ECC has approved another 500,000 tonnes of sugar for export under specific terms and conditions, and the federal cabinet has endorsed this decision,” the SBP said in a statement on Wednesday, advising banks to process requests from eligible exporters.
According to data presented at the ECC meeting, as of September 30, the country had 2.054 million tonnes of sugar in stock, with a total consumption of 5.456 million tonnes during the first 10 months of the 2023-24 sugarcane crushing season. After accounting for the 140,000 tonnes previously approved for export, it is estimated that by November 30, 1.014 million tonnes of sugar will remain in stock. Officials at the meeting noted that there would still be a surplus of 564,000 tonnes.
In August, the government estimated total sugar stocks at 4.8 million tonnes. The ECC expects that after exporting the approved quantities, 704,000 tonnes of sugar will remain available at the start of the next crushing season.
Sugar exports have long been a sensitive issue in Pakistan, with even minor shortages often leading to price hikes. Over the past three years, retail sugar prices have doubled, now reaching Rs150 per kilogram. The sugar industry, citing a bumper sugarcane harvest, claims there is a surplus of over one million tonnes that is not needed domestically. However, the government remains cautious, balancing the influence of powerful sugar mill owners.
In a circular issued on Wednesday, the SBP instructed banks to obtain proof of export quota allocations from provincial cane commissioners and to maintain records of these documents. Exporters must also provide an undertaking to ship the sugar within 90 days of receiving their quota allocation. For exports to Afghanistan, banks are required to secure 100% advance payment through official banking channels.
