ISLAMABAD: The International Monetary Fund (IMF) has pointed out governance weaknesses in Pakistani state institutions and urged prioritizing a 15-point set of recommendations to address these issues tied to a heightened risk of corruption.
The directions published in the IMF’s Governance and Corruption Diagnostic Assessment (GCDA) estimate that implementing the recommended reforms could raise Pakistan’s gross domestic product (GDP) by 5–6.5 percent over the next five years.
The report, published by Pakistan’s finance ministry on Wednesday, follows an IMF team’s visit to Pakistan last month to help local authorities address budget discrepancies amounting to the tune of Rs448 million ($1.58 million).
The global lender said its recommendations focus on measures critical to addressing governance weaknesses that constrain private sector development, public sector performance, and accountability, and have “significant macro-economic consequences.”
“Indicators reflect weak control of corruption over time with negative consequences for public spending effectiveness, revenue collection, and trust in the legal system,” the report read.
“While corruption vulnerabilities are present at all levels of government, the most economically damaging manifestations involve privileged entities that exert influence over key economic sectors including those owned by or affiliated with the state.”
The 15-point plan focuses on ministries and departments, including the Public Procurement Regulatory Authority (PPRA), the Special Investment Facilitation Council (SIFC), the Securities and Exchange Commission of Pakistan (SECP), the Federal Board of Revenue (FBR), the National Accountability Bureau (NAB), and the ministries of information technology (IT), law, finance, interior and planning.
It urged the PPRA to improve the public procurement system performance by eliminating preferences for state-owned enterprises, and the SIFC to make its first annual report public, including all the investments and details of the concessions.
The report recommended the SECP to establish a database for all federal business regulations, eliminate unnecessary regulations, and create a review process for all new regulatory proposals, urging the SECP and the IT ministry to increase transparency by digitizing the process of complying with regulations.
“Within 15 months, establish the list of regulatory processes to be digitized, and demonstrate progress in introducing digitized compliance procedures,” the lender said.
The law ministry was urged to develop and publish a methodology to assess performance of courts and judges along with publishing a report covering the involvement of administrative tribunals and special courts in economic and commercial matters.
The report said Pakistan’s finance ministry should publish a tax simplification strategy by May 2026 and annually report on its implementation progress. It urged the improvement of FBR’s organizational structure by reducing the autonomy of field offices and enhancing human resource practices.
The publication of the GCDA report by the IMF is a precondition for the IMF executive board’s approval of a $1.2 billion disbursement next month under two concurrent programs.
Pakistan has been working closely with the IMF on economic reforms. In September 2024, the South Asian nation secured a $7 billion bailout from the international lender after months of negotiations, aiming to stabilize its struggling economy. It was followed by a $1.4 billion, 28-month Resilience and Sustainability Facility in May.
