Govt shows reservations over IMF demands

ISLAMABAD: The government has shown serious reservations on different demands of the International Monetary Fund (IMF) over its Governance and Corruption Diagnostic Assessment for Pakistan.

The Pakistani side is considering contesting the Fund report in writing. The government has not yet granted its formal assent to publication of the IMF report, so Islamabad is likely to seek revision in the final report before allowing it to be published.

This scribe sent out a question to the Ministry of Finance spokesman in this regard, but got no reply till the filing of this report. The IMF’s demand for the establishment of a new authority for disclosing the assets of bureaucrats will be resisted, arguing that the FBR and other authorities are already in place and there is no need to come up with an institution when the government is implementing the rightsizing for reducing its footprint. An important meeting of different stakeholders was held last week in the Ministry of Finance to prepare a formal response from the government of Pakistan to the draft report of the IMF. The FBR, the Financial Monitoring Unit (FMU) and other relevant forums exist in Pakistan, so there is no need for duplication of another authority for the same purpose. The IMF had proposed such an authority and cited instances of some other countries. The Ministry of Finance expressed reservations, asserting that the government has already taken major steps to strengthen governance and curb corruption.

The participants of the official meeting were dissatisfied with several findings in the IMF’s draft report and decided to raise several issues with the Fund in writing. The IMF diagnostic report has highlighted weaknesses in public finance management, tax administration, the role of the auditor general, procurement processes, and anti-money laundering enforcement. The Fund has called for tighter rules to limit supplementary grants without prior parliamentary approval, full integration of parliamentarians’ schemes into the regular budget process, and earlier publication of the Budget Strategy Paper (BSP) to ensure greater fiscal discipline and transparency.

The assessment also pointed to corruption risks within FBR tax processes and urged the government to devise a simplification roadmap by 2026. This includes reducing special regimes, overlapping withholding and advance taxes, and multiple tax schedules, alongside annual reporting to the IMF on progress. The draft IMF report recommended granting greater institutional independence to the auditor general of Pakistan through legal changes and removing preferential carve-outs in public procurement to improve accountability.

Officials in the Finance Ministry countered that many of these reforms were already underway. They highlighted that the tax policy has been shifted out of the FBR and placed under the Finance Division, with future budgets to be prepared under this new arrangement. Transformation initiatives within the FBR, they said, were designed to reduce complexity, enhance compliance, and curb avenues for corruption.

The IMF conducted its governance and corruption diagnostic assessment earlier this year through a two-stage process involving dozens of government agencies, regulators, and oversight bodies. The exercise was aimed at identifying vulnerabilities in six core state functions, from fiscal governance and financial oversight to rule of law and anti-money laundering enforcement.

The Finance Ministry high-ups maintain that a formal response will only be shared once the IMF finalizes the document. However, the Fund is pressing for its publication as part of program transparency requirements, with the final report expected to guide a time-bound action plan for governance and anti-corruption reforms.