IMF seeks to include anti-corruption mechanism in ‘prior actions’

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) are making an all-out effort to evolve a consensus on prior actions for moving towards a staff-level agreement and one of the bones of contention is related to the strengthening of anti-corruption institutional mechanism.

The IMF wants to make it a part of the prior actions list because the government could not fulfil the Structural Benchmark (SB) agreed by the PTI-led regime on the completion of the 6th review. Now the IMF is vying for converting it into a fresh prior action for reviving the programme.

Pakistan has asked the IMF to exclude the strengthening of anti-corruption institutions from the list of prior actions, arguing that it did not fall within the purview and the mandate of the Fund. For striking a staff-level agreement, Pakistan and IMF high-ups are discussing a list of prior actions. Pakistan will have to implement certain prior actions with effect from July 1, 2022, including the enactment of the Finance Act 2022 after getting approval of the parliament, imposition of petroleum levy, and raising power tariff in a gradual manner. The Monetary Policy Committee is also scheduled to meet on July 7, for tightening of monetary stance. Now keeping in view CPI-based inflation skyrocketing to 21.3 percent while the Wholesale Price Index touched 38.94 percent, there is no doubt that monetary tightening is on the cards.

The deregulation of POL prices is a part of the structural benchmark for the completion of the next reviews under the IMF program. Now there is a bone of contention that the IMF is asking for the inclusion of anti-corruption measures as part of prior actions.

This scribe sent a questionnaire to the IMF headquarters in Washington, DC, and inquired whether the anti-corruption institutional mechanism is a part of prior actions for the completion of the 7th and 8th reviews under the EFF program, the IMF spokesperson replied, "Discussion with the Pakistani authorities on the review continue and we do not comment on specific elements under discussion. In general, strengthening governance and transparency has been a key goal under Pakistan’s EFF supported program as these ultimately support robust inclusive growth”.

However, Pakistani authorities did not have any objections to the continuation of Structural Benchmark (SB) for establishing a task force with inputs from international experts and civil society organizations to strengthen the institutional framework for the purpose of an anti-corruption drive. But the IMF argued that the missing out on the Structural Benchmark had resulted in the placement of prior actions as Islamabad made a commitment to implement the SB in the last review but failed to meet the deadline.

Pakistan and the IMF had agreed on the completion of the 6th review under the PTI-led regime that the government would take measures for strengthening the effectiveness of anti-corruption institutions. Priority measures include the establishment of an asset declaration system with a focus on high-level public officials (including federal cabinet members) by end-January 2022 (end-June 2021 SB, reset to end-January 2022), publication of the second review cycle report under the UN Convention against Corruption, and review of the institutional framework for Pakistan’s anti-corruption institutions by independent experts with international experience.

The measures to strengthen governance and the control of corruption remain crucial. Pakistani authorities committed with the IMF that their priorities include strengthening the effectiveness of anti-corruption institutions. To further advance transparency, accountability and integrity in the public sector, Pakistan will issue regulations to establish an electronic asset declaration system (end-June 2021 SB, reset to end-January 2022) that is comprehensive (i.e., covering assets beneficially owned or located abroad), centrally-held with the Federal Board of Revenue, covering federal civil servants of Base Pay Scale 17 to 22, accessible to entities authorized by law (including banks for the limited purposes of conducting customer due diligence as required for the provision of banking services), and effectively verified.

It will also institutionalise public access for annual declarations for all members (elected and unelected) of the federal government cabinet of Pakistan. “We are undertaking the 2nd review cycle under the UNCAC implementation mechanism, and will publish the full report, including the findings, analysis, and recommendations for improving the anti-corruption framework,” it said.

A task force with inputs from reputable international experts and civil society organizations will complete a review of the institutional framework of our anti-corruption institutions by end-December 2021 to enhance their independence and effectiveness in investigating and prosecuting corruption cases, with proposals for legislative amendments as appropriate, it added. However, the government could not deliver on the commitments and now the IMF wants to include it as a part of prior actions for the revival of its programme.