ISLAMABAD: The International Monetary Fund’s (IMF) Governance and Corruption Diagnostic (GCD) Assessment Report has laid bare the extent of widespread corruption across all tiers of the state and called on Pakistan to implement more than 90 key recommendations to curb it, The News reported.
The Fund has identified 15 priority areas where weak governance, rule-of-law shortcomings and corruption are undermining Pakistan’s growth potential by an estimated 5% to 6.5% of GDP each year. The report forms part of the prior actions for the release of a $1.2 billion tranche under the $7 billion Extended Fund Facility (EFF).
Of the 92 major recommendations in the action plan, the GCD urges steps to strengthen accountability and integrity among senior federal civil servants through the publication of their asset declarations in 2026.
It also recommends the introduction of risk-based verification of those declarations, and a review and strengthening of the legal framework for appointing heads of key oversight bodies, the Competition Commission of Pakistan (CCP), the Securities and Exchange Commission of Pakistan (SECP) and the National Accountability Bureau (NAB), to ensure merit-based, transparent and credible selection processes.
The IMF recommended 12 major action plans for the rule of law including: establishing a programme to reduce the case backlog, particularly for commercial disputes, with progress published online; creating an action plan to update the legal framework for contracts and property rights, culminating in a draft Code of Civil Procedure for parliament; introducing procedural changes to set time limits and reduce delays in contract cases; and forming a task force to propose efficiency reforms for contract enforcement, aligned with good practices like automated proceedings.
Further recommendations involve identifying all state-owned land and its controlling entity within a centralised database under the Ministry of Finance; publishing clear, rule-based procedures for transferring state-owned land and a bi-annual list of all such transfers with their value.
It proposes a performance assessment methodology for courts and judges, with the first results for relevant tribunals and special courts made public.
It also calls for creating standardised principles for judicial appointments and tenure, ensuring compliance in commercial courts; strengthening integrity and conflict-of-interest rules for judiciary while increasing financial transparency; initiating annual public reporting on integrity measures, including complaint statistics; expanding, institutionalising Alternative Dispute Resolution mechanisms alongside enacting the Arbitration Bill; and preparing a multi-year judicial reform strategy to enhance institutional performance and service delivery in Pakistan.
To address governance weaknesses, the IMF recommends publishing a tax simplification strategy by May 2026 to rationalise rates, exemptions and rule making power, with annual progress reports and demonstrated reductions in exemptions; strengthening FBR governance by improving its structure, reducing field office autonomy, enhancing HR practices, and boosting risk management; enhancing FBR accountability by publishing PRAL audit findings within 12 months and a public report on its response to major audits; improving the top-down budget process to avoid in-year adjustments without parliament’s ex-ante approval, while using a contingency reserve for flexibility; and enhancing Public Sector Development Programme (PSDP) transparency by integrating parliamentarians’ projects.
It also recommended to establish full institutional independence of the Auditor General of Pakistan for accountability and oversight. It suggests enhancing the investigation and prosecution of money laundering by removing legal ambiguity on predicate convictions; bolstering the National Accountability Bureau’s independence and effectiveness through stronger appointment procedures, investigative capacities and internal accountability; and considering the creation of a centralised authority to collect, digitise, and publish asset declarations of high-level public officials.
The report exposes elite capture of sugar sector, which has benefited for decades from favourable policies, subsidies and regulatory loopholes due to a nexus between industry magnates and political leaders.
Many sugar mill owners, holding government positions have secured highly recommended prices and protective tariffs, ensuring profitability at the expense of competitiveness. During 2018-19, officials tied to the industry allowed significant subsidised exports, creating domestic shortages and price spikes.
A subsequent FIA investigation found that mill owners colluded to create artificial shortages and manipulate prices by speculative hoarding and laundering profits through fake accounts. Although the inquiry named political heavyweights as culprits, accountability was limited to occasional crackdowns.
The GCD Assessment Report has also identified several shortcomings in public investment management, including failure to protect funding for approved projects leading to major project delays and cost increases.
This is compounded by a weak Single Treasury Account framework that undermines effective control over the government’s cash balances. The current debt management structure is complicated by multiple entities with overlapping roles, hindering decision-making and coordination.
Weak monitoring and accountability mechanisms extend to the management of financial and non-financial assets and state-owned enterprises. Public procurement remains fragmented, privileging state parties who can exploit their favoured status to capture markets and rents.
Information gaps further undermine the procurement accountability framework which, while existing, is rendered ineffective by multiple, often overlapping, layers of accountability across government agencies.
The absence of a clear tax policy and weak internal controls grant autonomy to tax officials.
Furthermore, overlapping responsibilities across coordinating bodies, such as the Economic Coordination Committee, the Securities and Exchange Commission of Pakistan (SECP) and the Special Investment Facilitation Council (SIFC), limit parliamentary scrutiny and transparency in decision-making.
The SIFC needs to develop explicit protocols for actions and enhanced transparency arrangements for oversight and accountability.