IMF report exposes scale of corruption in Pakistan

Corruption has long been recognized as the root cause of Pakistan’s economic instability and systemic financial challenges. Daily encounters with bribery, favoritism and bureaucratic inefficiency are common for ordinary citizens, while reports of embezzlement, fraud, and mismanagement in the national treasury frequently make headlines.

Now, the International Monetary Fund (IMF) has corroborated what Pakistanis have long suspected, presenting startling figures that highlight the scale of corruption in the country.

In its 186-page Governance and Corruption Diagnostic Assessment, the IMF revealed that Pakistan’s political and bureaucratic elite siphon off nearly $20 billion annually - over PKR 5.5 trillion - through corruption. According to the report, this accounts for 5 to 6.5 percent of Pakistan’s approximately $400 billion annual GDP.

In the latest episode of On My Radar, Kamran Khan highlighted these findings, emphasizing the magnitude of the problem and the urgent need for comprehensive reforms in governance and accountability.

The IMF report further notes that over the past two years, Pakistan’s National Accountability Bureau (NAB) recovered PKR 530 billion and looted assets through anti-corruption efforts. While this is only a fraction of the total economic burden, the IMF stresses that these recoveries expose the systemic intensity of corruption.

The timing of the report is significant, coming just ahead of the IMF Executive Board’s approval of a $1.2 billion tranche for Pakistan, prompting experts to view the findings as part of the conditions for the continuation of IMF support.

The IMF warns that transparency in Pakistan’s public institutions has deteriorated sharply, with corruption becoming highly organized and entrenched. It spans across departments, public expenditures, development projects, and the procurement sector.

Political influence dominates financial decisions, and executive authorities wield excessive discretionary powers over public funds, creating wide gaps between approved budgets and actual spending.

To address these challenges, the IMF recommends reinstating mandatory asset declarations for all senior public servants, as was previously practiced. It also advises reviving the parliamentary tax directory, which has not been published since 2019. At that time, tax data revealed stark disparities: then-Prime Minister Imran Khan paid PKR 9.8 million, current Prime Minister Shehbaz Sharif PKR 8.2 million, Asif Ali Zardari PKR 2.2 million, and Bilawal Bhutto PKR 535,000, while then-Punjab Chief Minister Usman Buzdar paid just PKR 2,000.

The IMF notes that political pressure, corruption within the Federal Board of Revenue (FBR), a limited tax base, and public distrust in the tax system are major reasons for Pakistan’s low tax-to-GDP ratio.

The report also calls for eliminating special concessions granted to a few influential entities in public contracts and questions the necessity of creating the SEZ Investment Facilitation Company (SIFC) separately when a Board of Investment already exists.

The IMF recommends that SIFC publish an annual report on decision-making, privileges, and performance. Moreover, all government procurement should be conducted via e-governance within 12 months to improve transparency and accountability.

Beyond highlighting governance weaknesses, the IMF report identifies opportunities for economic growth through structural reforms.

It suggests that large-scale governance improvements could boost Pakistan’s GDP growth to 6.5 percent over the next five years. However, this requires the establishment of a robust anti-corruption framework and a strong political commitment to transparency and accountability.