IMF mission to examine graft vulnerability in six state functions

ISLAMABAD: A three-member IMF’s scoping mission is visiting Pakistan to undertake Governance and Corruption Diagnostic Assessment (GCDA) and its findings might become part of the conditionalities of the Fund-sponsored programme.

“This is a preliminary mission for technical assistance on the governance issue,” Mahir Binci, the IMF’s resident chief in Pakistan, said when The News sought comments on Sunday.

However, the sources said that the findings of the technical scoping mission might pave the way for conditionalities under the $7 billion Extended Fund Facility (EFF) for Pakistan. But it’s premature to give any judgment at this juncture.

According to official statement, issued by the finance ministry on Sunday, a three-member IMF scoping mission is visiting Pakistan to undertake the Governance and Corruption Diagnostic Assessment (GCDA). The focus of the mission will be to examine the severity of corruption vulnerabilities across six core state functions, the ministry said, adding that the statement was being issued to give clarity to reports circulating in the media regarding the visit.

These functions include fiscal governance, central bank governance and operations, financial sector oversight, market regulation, rule of law and Anti-Money Laundering and Combating the Financing of Terrorism (AML-CFT), according to the release.

The mission will mainly engage with organizations like Finance Division, Federal Board of Revenue, State Bank of Pakistan (SBP), Auditor General for Pakistan, Securities & Exchange Commission of Pakistan (SECP), Election Commission of Pakistan (ECP) and Ministry of Law & Justice.

The GCDA report will recommend actions for addressing corruption vulnerabilities and strengthening integrity and governance, which will assist the government in bringing about reforms for promoting transparency, strengthening institutional capacities and achieving inclusive and sustainable economic growth.

“The Government of Pakistan appreciates the technical support of IMF in this regard,” the press release added. It said the IMF had long provided advice and technical assistance that helped foster good governance, such as promoting public sector transparency and accountability.

Traditionally the IMF’s main focus has been on encouraging countries to correct macroeconomic imbalances, reduce inflation and undertake key trade, exchange and other market reforms needed to improve efficiency and support sustained economic growth.

While these remain its main focus in all its member countries, the IMF has found that a much broader range of institutional reforms is needed if countries are to establish and maintain private sector confidence and thereby lay the basis for sustained growth.

According to the statement, the IMF identified that promoting good governance in all its aspects, including ensuring the rule of law, improving the efficiency and accountability of the public sector, and tackling corruption are essential elements of a framework within which economies can prosper.

In 1997, the IMF adopted a policy on how to address economic governance, embodied in the Guidance Note ‘The Role of the IMF in Governance Issues’.

To further strengthen the implementation of the policy, the IMF adopted in 2018 a new Framework for Enhanced Engagement on Governance (Governance Policy) that aims to promote more systematic, effective, candid, and even-handed engagement with member countries regarding governance vulnerabilities including corruption that are critical to macroeconomic performance.

Under this policy and framework, the IMF offers to undertake Governance and Corruption Diagnostic Assessment (GCDA) with member countries to analyse and recommend actions for addressing corruption vulnerabilities and strengthening integrity and governance in the IMF member countries. Following the analysis, GCDAs prioritise and sequence recommendations for systematically addressing the vulnerabilities. Since 2018, 20 GCDA Reports have been finalised and include Sri-Lanka, Mauritania, Cameroon, Zambia, and Benin. Ten Diagnostics are ongoing, and several are under consideration by the IMF. So, similarly under the EFF 2024 programme for Pakistan, there is a structural benchmark that with the IMF capacity development support, the government will undertake a GCD Assessment to analyse critical governance and corruption vulnerabilities and identify priority structural reforms moving forward. This GCDA report will be published, the statement added.