IMF urges Pakistan to adopt reforms to boost growth beyond 5%

November 20, 2025 (MLN):  The International Monetary Fund (IMF) has urged that Pakistan could achieve economic growth of 5% to 6.5% over the next five years if it swiftly implements a 15-point reform agenda to tackle governance weaknesses and curb corruption.

Structural reforms, combined with stronger institutions, could deliver “substantial economic gains” for the country, according to the IMF’s Governance and Corruption Report.

The Fund recommends ending special exemptions for major state-owned entities in government contracts and transitioning all public procurement to an e-governance system within 12 months.

It also urges greater transparency in the Special Investment Facilitation Council (SIFC), including the prompt publication of its annual report.

The IMF emphasizes the urgent need for stronger parliamentary oversight of fiscal powers and calls for wide-ranging reforms within anti-corruption institutions.

The report stresses that both policymaking and its execution must become more transparent, accountable, and resistant to undue influence.

Pakistan’s tax system is highlighted as a key source of corruption, plagued by complexity, weak administration, and inadequate supervision.

The Fund also flags the country’s declining tax-to-GDP ratio as a critical concern. Judicial backlogs and procedural bottlenecks are further slowing economic activity.

The report raises questions about the Special Investment Facilitation Council (SIFC), pointing to unclear mandates, special exemptions, and limited transparency.

 It also identifies gaps in budget reporting, discrepancies between planned and actual expenditures, and uneven distribution of development funds, often swayed by political or bureaucratic interests.

While the National Accountability Bureau (NAB) recovered 5.3 trillion rupees between January 2023 and December 2024, the IMF notes this is only a small portion of the overall economic damage caused by corruption.

The 2019 decision by the previous PTI government to permit sugar exports is cited as a case of elite capture, where policy served narrow vested interests rather than the public.

The report highlights how ordinary citizens frequently pay to access public services, while elites exploit government mechanisms for personal gain, impeding broader economic progress.

 Corruption diverts resources that could otherwise enhance productivity and development. Inconsistent enforcement of anti-corruption measures has eroded public trust, and weaknesses in budgeting, financial reporting, and procurement continue to create opportunities for malpractice.

Many government functions remain temporary or ad hoc, with officials often lacking the necessary expertise.

Despite some progress in meeting FATF standards, Pakistan has been slow to impose penalties, and convictions for money-laundering cases remain limited. Efforts to cut government spending have largely fallen short, while anti-corruption institutions still face capacity constraints.

The report also notes that bureaucratic hesitation in decision-making contributes to administrative paralysis. Strengthening accountability among tax officials is essential for improving revenue collection, and inefficiencies in the tax system reflect deeper governance challenges that must be addressed.

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