High prices

The government has announced the immediate import of addition 500,000 metric tonnes of sugar to reduce the prices of sugar. The additional quantity will cost the country around $250 million in foreign exchange. It will increase the country’s trade deficit that is already growing due to the overall surge in the import bill. It may be noted that the current account had turned negative during December 2020 after posting surplus consecutively for the previous five months.

The demand for sugar is mostly made by commercial consumers. Household consumption, on the oter hand, forms a small proportion of the total requirement. It is also a fact that sugary products are not good for health and should be discouraged through higher pricing. It is therefore suggested that sugar should be sold at a subsidised rate to domestic users. For commercial consumers, the supply and demand curve of sugar should be analysed to determine its price. There is no wisdom in opting for more imports to bring the prices down for commercial users.

Arif Majeed

Karachi