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KARACHI: The State Bank of Pakistan (SBP) has advised all banks to facilitate the export of sugar but to ensure proceeds are received before shipments are exported.
In a circular on Tuesday, the central bank said the Economic Coordination Committee (ECC) of the Cabinet has allowed the export of 150,000 tonnes of sugar with specific terms and conditions. The decision was taken just two days before the 2024-25 federal budget announcement.
The decision to export sugar has political implications, leading to higher domestic market prices. In FY23, sugar export was permitted, resulting in an 80pc surge in domestic prices.
The Pakistan Sugar Mills Association, with a deep presence in the power corridor at both the federal and provincial levels, has managed to pressure the government into allowing the sweetener export.
Exporters will have to bring proceeds in advance
Though the sugar millers assured the government that there would be no price hike in the domestic market, past experiences contradicted their claims.
Profit-making at the expense of the general public is common. Recently, the county experienced an unwarranted import of wheat, leaving growers in deep financial trouble. They were not able to sell their produce in the presence of a glut caused by scandalous massive imports of 3.5m tonnes allowed by the caretaker government.
Many economic stakeholders and importers were surprised to learn that the State Bank arranged $1bn for the import of wheat while creating excessive problems for other imports of even $1m.
The State Bank circular further said that, based on a valid sales contract, the banks will ensure 100 per cent receipt of export proceeds in advance from the buyer abroad through the normal banking channel before the shipping takes place.
The circular said the banks would obtain an undertaking from the exporters that the consignment would be shipped within 45 days from the date of quota allocation.
The banks will obtain proof of the allocation of quota by the respective provincial cane commissioners and keep a copy in their records.