- IMF report urges Pakistan to fix governance flaws in high-risk state bodies
- Calls for transparent, merit-based appointments in NAB, SECP, CCP
- Proposes independent Auditor General, overhaul of FBR structure
- Recommends tax simplification strategy by May next year
- Lender wants annual progress reports, stronger anti-graft mechanisms
ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to plug governance gaps and address vulnerabilities in the top 10 government entities it considers at the “highest risk” of corruption, while also calling for merit-based appointments in key accountability and regulatory bodies.
According to government sources, the IMF’s Governance and Corruption Diagnostic Assessment report has recommended transparent selection processes for the heads of the National Accountability Bureau (NAB), the Securities and Exchange Commission of Pakistan (SECP), and the Competition Commission of Pakistan (CCP).
The government had committed to the Fund to publish the report by the end of July and submit an implementation plan by the end of October. However, the report’s release has been delayed — one of the outstanding issues holding up the staff-level agreement for the next IMF loan tranche.
Sources said the IMF urged Pakistan to adopt a risk-based approach to tackling corruption vulnerabilities across federal agencies. The recommendations include publishing an action plan to mitigate risks in the 10 entities with the highest corruption exposure, based on a centralised and publicly available assessment framework. The lender also wants Pakistan to publish annual progress reports on the plan’s implementation.
In one of its key recommendations, the IMF advised improving governance at the Federal Board of Revenue (FBR) by publicly disclosing data on complaints, investigations, sanctions, and cases referred to enforcement agencies.
The Fund’s report aims to enhance governance, strengthen the rule of law, and ensure that Pakistan’s judicial system facilitates rather than impedes business and investment. It was compiled following consultations with nearly three dozen government departments and state organs—including a meeting with the Chief Justice of Pakistan.
To preserve institutional independence, the IMF has proposed reviewing the legal frameworks governing appointments to oversight bodies such as NAB, SECP and CCP to ensure merit-based, transparent, and credible selection processes.
The recommendation coincides with the upcoming end of the SECP chairman’s tenure, as the government weighs whether to grant an extension or appoint a new head. The SECP regulates the corporate and equity markets, while the CCP ensures fair competition in the economy.
The IMF also proposed amending laws to establish the institutional independence of the Auditor General of Pakistan (AGP), which currently operates under the Ministry of Finance. The AGP audits federal and provincial accounts, though its reports often face implementation and quality concerns.
The Fund has also identified major flaws in the FBR’s governance structure and called for strengthening its organisational effectiveness, aligning oversight with strategic objectives, and reducing the autonomy of field formations. It noted that existing laws grant extensive powers to grade-20 officers—powers that, in a democratic setup, should rest with the federal cabinet or parliament.
Among other recommendations, the IMF advised Pakistan to publish a Tax Simplification Strategy by May next year, aimed at reducing tax rates, schedules, special regimes, and excessive advance and withholding taxes, while rationalising exemptions and curbing the FBR’s rule-making powers.
The IMF expressed dissatisfaction with the FBR’s performance and called for stronger accountability. It recommended publishing audit findings on Pakistan Revenue Automation Limited (PRAL) within a year and issuing a public report tracking the FBR’s responses to major audit observations.
Further, the lender has proposed creating executive committees at FBR headquarters, limiting field formation autonomy, and establishing a truly independent internal audit office reporting directly to the chairman. It also suggested an independent audit of FBR’s IT systems and the creation of an internal affairs unit to enforce integrity and anti-corruption policies across the tax machinery.
