What is genuinely new in the IMF’s Governance and Corruption Diagnostic Assessment (GCDA) for Pakistan? Government allies portray it as a welcome step toward transparency — after all, the Ministry of Finance itself released the report on November 19. Critics, however, call it a “bombshell” for exposing trillions of rupees worth of leakages, slippages, and pilferage across the state machinery. Many observers see it as an indictment of Pakistan’s elite-dominated governance model, with implications for creditworthiness and global ratings. And some — a camp I belong to, though I am not an economist — argue the report will change little in a country where politically aligned elites often escape consequences as long as they remain geopolitically useful.
The government had requested this governance diagnostic, hoping it would earn praise for its enthusiastic compliance with IMF demands over recent years — especially since the emergence of the hybrid order following the controversial April 2022 vote of no confidence. But Pakistan’s ruling class is notoriously selective about what it highlights as achievement. The IMF’s fact-driven diagnosis of systemic dysfunction proved deeply embarrassing for those who expected a pat on the back. In reality, it reads like a charge sheet against every group that has ruled — and misruled — Pakistan for decades.
As economist Javed Hassan notes, the Fund, “in its measured but unsparing language,” exposes a harsh truth: governance failures and corruption are not small distortions but a macroeconomic constraint costing 6–6.5% of GDP annually. The IMF further highlights how Pakistan’s fiscal and taxation systems remain riddled with discretionary exemptions, off-budget spending, and entrenched elite capture. Illicit financial flows and tax avoidance drain nearly as much potential revenue as the entire tax-to-GDP ratio manages to collect.
The indictment extends to the justice system as well. An overburdened, under-modernized judiciary — weighed down by case backlogs, outdated procedures, and integrity deficits — stands as a major barrier to investment. Weak contract enforcement and fragile property rights fuel a pervasive culture of bribery and rent-seeking.
Concerns flagged about the Special Investment Facilitation Council (SIFC) are particularly striking. The Fund points not only to opaque tax concessions and extra-legal immunities, but also to the lack of accountability, describing the Council as yet another channel for the elite to capture the report criticizes elsewhere. If the SIFC is to survive, why not transform it into a permanent body rooted in transparency, equitable representation, and inclusivity — instead of a selectively empowered forum? And why continue keeping obsolete bodies such as the Planning Commission, the Board of Investment, and dozens of redundant advisory committees alive? Research on misgovernance and its remedies already exists; what Pakistan lacks is leadership willing to synthesize that knowledge and implement it through a genuine one-window operation, rather than a maze of bureaucratic hurdles that terrify investors.
The government did not anticipate that the IMF would make the $7 billion loan contingent on publishing this report. Treating it as a routine matter, it delayed the release by nearly three months and even tried persuading the Fund to remove some of the most critical observations, which the IMF reportedly did. Yet the Fund’s top management insisted on publication, leaving Islamabad with no escape route.
Another uncomfortable truth the report underscores is that pilferage, waste, and kickbacks are embedded in Pakistan’s procurement and tendering systems. For years, experts have demanded an overhaul of the archaic procurement procedures designed to benefit a tight network of bureaucratic and political actors. Under the existing structure, items purchased by the state routinely cost three times the market price due to multi-layered approvals and rent extraction. The procurement ecosystem and state-owned enterprises function as a parallel patronage economy, serving bureaucratic elites and their political patrons.
In recent years, I have not encountered a single politician or senior bureaucrat advocating the abolition of this opaque system — especially when exceptions are easily made whenever powerful civil-military institutions such as the FWO or NLC are involved. The only meaningful path forward is the rapid introduction of mandatory e-governance, within 12 months, for procurement, tax filing, budgeting, and approvals. That alone could shrink Pakistan’s envelope-passing culture almost overnight.
The IMF also raises questions about the National Accountability Bureau’s (NAB) claims of Rs 5.3 trillion recovered. How much of this is actual cash, if any at all? The report recommends a single, genuinely independent anti-corruption agency — itself a damning commentary on Pakistan’s skewed accountability structure, which has historically targeted opponents while shielding those in power. NAB, FIA, and Anti-Corruption Departments often resemble patronage parking lots rather than bodies of impartial oversight. Their functioning has stalled progress and tarnished the country’s reputation globally.
As Javed Hassan aptly puts it, Pakistan’s tragedy is not a shortage of diagnosis — the country has produced more IMF, World Bank, and donor reports than almost any economy of comparable size. Rather, every report merely rediscovered the same structural deformities using updated jargon. The GCDA is unusually blunt and unusually detailed. Whether it, too, becomes another entry in the graveyard of unimplemented reform agendas will reveal much about Pakistan’s trajectory — and about the limits of IMF conditionality in a state that has mastered tactical compliance.
The broader pattern is clear: when Pakistan is geopolitically “aligned,” the IMF and World Bank often find creative ways to relax merit-based conditions. Prior actions are debated, delayed, and diluted, yet the next tranche eventually arrives — the same lifeline provided to regimes such as Egypt to survive their political and economic storms.
