Pakistan Govt Challenges IMF’s Corruption Report Draft

The federal government has expressed serious reservations over the International Monetary Fund’s (IMF) draft Governance and Corruption Diagnostic Assessment, signaling its intent to challenge several findings and recommendations before granting approval for the report’s publication. Sources within the Ministry of Finance revealed that Islamabad is preparing a formal written response to contest the IMF’s conclusions. The government has yet to provide its formal assent for the report’s release and is expected to seek revisions before allowing it to be made public. One of the most contentious issues is the IMF’s demand for the establishment of a new authority to disclose the assets of bureaucrats. Officials argue that existing institutions, such as the Federal Board of Revenue (FBR) and the Financial Monitoring Unit (FMU), already perform this function, making the creation of a new body redundant. The government, which is actively pursuing a policy of rightsizing to reduce its institutional footprint, views the proposal as unnecessary duplication. An important meeting of stakeholders, including representatives from the FBR and other relevant agencies, was held last week at the Ministry of Finance to finalize Pakistan’s response to the IMF’s draft report. Participants reportedly expressed dissatisfaction with several findings, particularly those related to public finance management, tax administration, and anti-money laundering enforcement. The IMF’s draft report highlights weaknesses in key areas, including the role of the auditor general, procurement processes, and fiscal governance. It calls for tighter controls on supplementary grants without prior parliamentary approval, full integration of parliamentarians’ development schemes into the regular budget, and earlier publication of the Budget Strategy Paper (BSP) to enhance fiscal transparency and discipline. The report also flags corruption risks within the FBR’s tax processes, urging the government to simplify tax structures by 2026. Recommendations include reducing special tax regimes, eliminating overlapping withholding and advance taxes, and consolidating multiple tax schedules. Additionally, the IMF has proposed granting greater institutional independence to the auditor general through legal reforms and removing preferential carve-outs in public procurement to improve accountability. However, officials in the Finance Ministry counter that many of these reforms are already underway. They pointed out that tax policy has been shifted from the FBR to the Finance Division, with future budgets to be prepared under this new framework. Transformation initiatives within the FBR, they added, are aimed at reducing complexity, enhancing compliance, and curbing corruption. The IMF conducted its diagnostic assessment earlier this year through a two-stage process involving dozens of government agencies, regulators, and oversight bodies. The exercise sought to identify vulnerabilities in six core state functions, including fiscal governance, financial oversight, rule of law, and anti-money laundering enforcement. While the IMF is pushing for the report’s publication as part of its program transparency requirements, Pakistani officials remain cautious. The Finance Ministry has stated that a formal response will only be shared once the IMF finalizes the document. The final report is expected to guide a time-bound action plan for governance and anti-corruption reforms. For now, Islamabad appears determined to resist certain recommendations, particularly those it views as duplicative or misaligned with ongoing reforms.