KUALA LUMPUR: Pakistan, the world's No.4 vegetable oil buyer, will not cut import duties on palm oil and soy oil despite escalating food costs as the government needs the revenues, a key industry official said on Tuesday.
Some Asian countries such as Taiwan and Bangladesh are mulling or have cut food import duties or sales taxes to slow rising inflation that can stoke unrest.
Despite Pakistan's inflation staying at double digit levels for 2010 and early this year, it needs revenues from food imports to reduce its fiscal deficit under an IMF loan agreement said Ikram Chaudhary, secretary of the Pakistan Edible Oil Refiners Association.
"Consumers will live on a hand-to-mouth basis and imports need to be planned carefully," Chaudhary told Reuters from Islamabad ahead of the Bursa Malaysia Palm Oil Conference in March. "Imports need to be bought on price dips."
Combined with higher prices of vegetable oils, imports of mostly palm oil products from Malaysia as well as soy oil will stay flat at 1.93 million tonnes, he added.
Revenues from vegetable oil imports brought in about 14.9 billion Pakistani rupees ($174.2 million) last year, Reuters calculations on import data show. Pakistan's debt servicing bill was $5.5 billion last year.
The IMF loaned Pakistan $11 billion in 2008 to rescue the South Asian economy. Meeting deficit targets through a broader tax base was set as a condition for the loan and future lending programmes.
The IMF and Pakistan agreed on a revised fiscal deficit target of 4.7 percent of gross domestic product in 2010/2011 following the summer floods that damaged some wheat, sugar and cotton growing areas.
The cottonseed crop arrivals are due this month but it was too early to assess the impact of the flood damage, Chaudhary said.
"There might be a significant decline but it won't generate more imports than usual because prices are still so high. There was a big rise in imports last year but we are not going to see the same trend this year," Chaudhary.
Last year, vegetable oil imports rose 7.9 percent to 1.93 million tonnes, data from the Pakistan Edible Oil Refiners Association showed.
Cottonseed output for the year to June 2010 rose 4.9 percent to 3.2 million tonnes just before the floods hit new plantings.
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