Pakistan’s economic leadership has signaled a decisive shift toward addressing longstanding governance and institutional gaps after the International Monetary Fund’s latest assessment underscored systemic weaknesses. Finance Minister Mohammad Aurangzeb stated that the government is committed to resolving every issue outlined by the Fund as part of its Governance and Corruption Diagnostic Assessment, a report that casts a critical but necessary spotlight on structural obstacles hindering economic stability and growth.
Speaking on Thursday, Aurangzeb noted that the points detailed by the IMF require clear and immediate action. He emphasized that the government is aligned with the need to confront these challenges, adding that Pakistan remains hopeful for progress in the ongoing engagement with the Fund. He expressed confidence that an agreement with the IMF will materialize, highlighting that the executive board’s upcoming decisions will determine the country’s next steps under the Extended Fund Facility.
The IMF’s diagnostic report, released last week, outlines deep-rooted issues that continue to shape the country’s economic landscape. While acknowledging that policy efforts under the EFF have led to improvements in macroeconomic stability and restored a degree of market confidence, the assessment stresses that persistent corruption and weak institutional frameworks are significantly holding back development. It points to deteriorating indicators of corruption control and notes negative effects on public spending efficiency, revenue administration and citizens’ trust in legal structures.
A major concern raised by the Fund is the entrenched culture of informal payments for basic services. The report notes that these leakages divert essential public funds that could be directed toward production, infrastructure and broader development objectives. The IMF highlights that corruption-related vulnerabilities are evident across federal, provincial and local levels of governance. However, the most damaging instances involve influential groups with privileged access to economic sectors, particularly those connected either directly or indirectly to state-linked entities.
The report also dedicates considerable attention to the judicial system, describing its organisational complexity, large backlog of cases and reliance on outdated legal frameworks as major impediments to robust economic activity. The IMF argues that inefficiencies and questions around judicial independence compromise contract enforcement and weaken the protection of property rights, discouraging reliance on formal channels for resolving disputes and undermining the stability needed for investment.
To address these issues, the Fund has outlined a detailed set of recommendations that span immediate actions as well as medium- to long-term structural reforms. At the heart of its proposals is a call for the urgent rollout of a 15-point reform agenda designed to enhance governance, curb corruption risks and build the foundations for sustainable private sector–driven growth.
Among the key recommendations is the removal of preferential treatment for major public institutions in government contracting. The IMF also urges the government to transition all procurement processes to a complete e-governance platform within a year, a shift intended to increase transparency and reduce opportunities for manipulation. Additionally, the Fund calls for stronger parliamentary oversight over financial authorities and greater public access to fiscal information to reinforce accountability.
As Pakistan aims to secure the IMF board’s approval for a $1.2 billion disbursement under the ongoing $7 billion programme, the successful adoption of these reforms is expected to play a pivotal role in shaping the country’s economic direction. The coming months will test the government’s resolve as it navigates both immediate fiscal pressures and the deeper structural changes required to build a more transparent and resilient economic framework.
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