The International Monetary Fund (IMF), in its Governance and Corruption Diagnostic Assessment (GCDA) for Pakistan, has highlighted persistent corruption challenges driven by systemic weaknesses across state institutions, recommending a 15-point reform agenda to address weaknesses that constrain private sector development and reduce accountability.
The publication of the report, available on the Ministry of Finance’s website, was a precondition for the IMF Executive Board’s approval for the release of a $1.2 billion tranche of the ongoing 37-month $7 billion Extended Fund Facility. It suggests, citing media reports, that Pakistan could boost economic growth by about 5-6.5% over five years if it implements necessary governance reforms within 3-6 months.
The reform agenda is divided into three timelines—short-term (6 months or less), medium-term (6 to 18 months) and long-term (18-36 months). It calls for eliminating preferences for state-owned enterprises to improve the performance of the public procurement system and enhancing transparency regarding strategic investments by making public the first annual report of the Special Investment Facilitation Council. It also calls for enhancing regulatory consistency through the Securities and Exchange Commission of Pakistan and increasing transparency and enhancing efficiency by systematically digitizing the process of complying with regulations. Further, it seeks actions to reduce backlog of economic disputes by developing and publishing the methodology to be used to assess performance of courts and judges reporting to the Ministry of Justice.
The IMF report has recommended the publication of a tax simplification strategy by May 2026 to reduce rate schedules, special regimes, excessive withholding and advance taxes, rationalize tax exemptions and scale back rulemaking power. It calls for strengthening the FBR’s governance and effectiveness by improving its organizational structure to better align oversight and management with achieving core objectives, reducing the autonomy of field offices, enhancing human resource practices, and enhancing its ability to identify and address key risks. It also wants to enhance the accountability of FBR operations by publishing audit findings.
The report proposes avoiding in-year budget adjustments without parliamentary approval and introducing a contingency reserve for flexibility in budget execution. It seeks greater transparency in the Public Sector Development Program, calling for only retaining high-priority initiatives and integrating parliamentarians’ projects into the process.
The GCDA recommends adopting and implementing a risk-based approach to addressing corruption vulnerabilities in federal agencies and establishing full institutional independence of the Auditor General of Pakistan. It also seeks improving investigation and prosecution of money laundering offenses by removing legal ambiguity on requiring a predicate conviction, increasing quality and quantity of Suspicious Transactions Reports, strengthening law enforcement agencies capacities for financial investigation, and improving cooperation on asset recovery.
It further seeks to strengthen accountability and integrity among high-level federal civil servants by initiating the publication of asset declarations in 2026, and introducing risk-based verification of asset declarations. The IMF recommends reviewing and enhancing the legal framework governing the appointment of heads of key oversight bodies to promote merit-based, transparent and credible selection processes.
“A unifying theme is the emphasis on increasing transparency and accountability in policy formulation, implementation and monitoring. This involves improving access to information and strengthening the capacity of state and non-state stakeholders to participate effectively in governance and economic decision-making,” read the report, emphasizing that Pakistan would obtain substantial economic benefits from improving governance, accountability and integrity.
“Pakistan could generate between a 5-6.5% increase in GDP by implementing a package of governance reforms over the course of five years” beginning in three to six months, it said, adding both the lender IMF and the government agreed that confronting and reducing corruption vulnerabilities was necessary for sustainable reform. It said anti-corruption efforts are most successful when they combine initiatives to strengthen governance with initiatives to directly confront corruption and enhance integrity.
Indicators showed weak control of corruption over time with negative consequences for public spending effectiveness, revenue collection, and trust in the legal system, it added.
From January 2023 to December 2024, Pakistan’s anti-graft body NAB recovered Rs. 5.3 trillion, though the IMF says the amount represents only a small portion of the economic damage caused by corruption.
The report criticizes the 2019 decision by the Pakistan Tehreek-e-Insaf government to allow sugar exports, calling it evidence of elite capture and policymaking driven by vested interests. It says Pakistanis routinely pay to access public services and that political and economic elites often use government policies and implementation mechanisms to enrich themselves, ultimately hindering economic progress.
The IMF warns that corruption drains resources that could otherwise boost productivity and development. It adds that inconsistent and non-neutral anti-corruption efforts have eroded public trust.