A high-level technical assistance report by the International Monetary Fund (IMF) has painted a devastating picture of entrenched corruption and systemic governance failures in Pakistan, describing corruption as a “persistent feature” of the country’s political and economic landscape with severe consequences for growth, investment, and public trust.
The diagnostic, portions of which have been seen by media outlets, states that Pakistan continues to rank poorly on global governance indicators, particularly in controlling corruption, rule of law, contract enforcement, and property-rights protection. The state’s dominant role in the economy – through extensive ownership of enterprises and control of key sectors – is identified as a primary source of rent-seeking and regulatory capture by privileged actors.
“Complex and overlapping regulatory frameworks, coupled with discretionary enforcement and limited transparency, foster an environment where privileged actors can extract undue benefits,” the report notes.
Economic governance under fire
The IMF highlights structural weaknesses in public resource management and opaque state intervention in markets. Pakistan’s notoriously complicated tax system, combined with a powerful yet under-scrutinised Federal Board of Revenue (FBR) and a leaky customs administration, has kept the tax-to-GDP ratio among the lowest in the world while creating massive corruption risks.
Public financial management fares no better: large deviations between budgeted and actual expenditure, weak procurement controls, and inefficient oversight of public investment projects and state-owned enterprises (SOEs) are flagged as chronic problems. Market regulation is crippled by excessive red tape, lack of regulatory independence, and distortions that systematically favor politically connected firms.
Accountability institutions “lack competence and independence”
Even where institutions exist, they are described as ineffective and politicised:
Anti-corruption bodies (NAB, FIA, and provincial agencies) suffer from poor coordination, wasteful use of resources, excessive focus on prosecution rather than prevention, and a long history of political interference.
The judiciary remains fragmented, overburdened, and widely perceived as corrupt, causing years-long delays in commercial disputes and weak property-rights protection.
Recommendations of the Auditor-General of Pakistan are routinely ignored, with virtually no follow-up action.
Despite Pakistan’s 2022 exit from the FATF grey list after improvements in the AML/CFT framework, enforcement against corruption-related money laundering and international asset recovery cooperation remains weak.
The report also criticises restricted public access to information and minimal opportunities for citizens to participate in governance, further eroding integrity and oversight.
While the IMF diagnostic was prepared as technical assistance under the current Extended Fund Facility (EFF) and is not part of conditionality, its blunt language is likely to intensify pressure on the government to undertake far-reaching governance and anti-corruption reforms. Successive Pakistani administrations have promised institutional overhaul, but observers note that political will has consistently fallen short in the face of entrenched vested interests.
