The International Monetary Fund (IMF) has flagged systemic governance challenges in Pakistan, urging urgent reforms to strengthen transparency, accountability, and institutional efficiency. The warning comes ahead of the next $1.2 billion tranche under the IMF’s ongoing Extended Fund Facility (EFF).
The IMF’s Governance and Corruption Diagnostic Assessment (GCDA) highlights vulnerabilities across fiscal management, public procurement, tax administration, and state-owned enterprises. The report estimates that Pakistan could boost economic growth by 5% to 6.5% over five years if reforms are implemented promptly. It calls for improved monitoring of public spending, stricter oversight of influential public entities, and mandatory e-governance procurement to reduce corruption risks.
The assessment also identifies structural weaknesses in revenue administration, market regulation, judicial efficiency, and anti-money laundering mechanisms. Officials stressed that discretionary spending, opaque tax policies, and weak enforcement of contracts undermine public trust and economic stability.
“A unifying theme is the emphasis on increasing transparency and accountability in policy formulation, implementation, and monitoring,” the IMF report noted.
Pakistan has made progress under the $7 billion IMF program, achieving a primary fiscal surplus, reducing inflation, and rebuilding foreign reserves. However, the IMF warns that these gains remain fragile without sustained governance reforms. The report emphasizes that tackling corruption effectively requires a comprehensive, rule-based approach combining institutional improvements, strengthened anti-corruption frameworks, and private sector engagement.
The GCDA was developed over eight months by an interdepartmental IMF team with World Bank experts, focusing on governance gaps with macroeconomic consequences. The exercise identifies urgent steps to enhance efficiency, reduce discretionary power in public spending, and foster accountability across federal institutions.
Experts believe that implementing these recommendations could significantly increase investor confidence, stabilize the economy, and create conditions for more inclusive growth. IMF analysts highlight that Pakistan’s past reform efforts demonstrate institutional capacity, but consistent follow-through is needed to achieve sustainable change.