THE IMF’s long-awaited Governance and Corruption Diagnostic Assessment report on Pakistan is a grim analysis of the country’s persistent corruption challenges, rooted in systemic weaknesses and chronic governance failures across state institutions, which stifle economic goals. The report finds that institutional weaknesses, lack of transparency in state functions, preferential treatment for select businesses, and inefficiencies in public-sector transactions are major constraints to growth.

The document’s publication, a precondition for the IMF’s approval for disbursing the next $1.2bn loan tranche in December, also calls for a series of reforms spread across the next three to six months to help raise the growth rate to 5-6.5pc over the next five years. It provides a detailed diagnostic of Pakistan’s inefficient and opaque tax system, SOE mismanagement, a judiciary hampered by antiquated laws hindering contract enforcement and property rights, politically driven financial discretion, and weaknesses in anti-corruption regimes. It questions the lack of transparency in the functioning of the Special Investment Facilitation Council and the immunity granted to its officials. No wonder the government had been delaying its publication despite repeated reminders from the IMF.

At the core of the GCDA is the argument that our poor economic performance is closely linked to opaqueness and discretionary practices that shape governance and policy outcomes. Thus, the report’s contention that effective reforms must begin with expanding access to information to anchor transparency and accountability across policy formulation, implementation and monitoring, and enable both state and non-state actors to participate more effectively in economic decision-making, should not be ignored. Without a shift to rules-based governance, the weaknesses will continue to suppress growth.

The accompanying 15-point reform agenda reinforces this argument. Broadly, the reforms aim for improvements in governance, anti-corruption frameworks, business regulations and foreign trade oversight as prerequisites to unlocking growth potential. The recommendations directly target institutional arrangements that entrench discretion and weaken market and investor confidence. They are aimed at ending preferential treatment for powerful public-sector entities; bringing transparency to SIFC decision-making and its approval of concessions for select businesses; tightening controls on financial discretion through greater parliamentary oversight; mandating e-governance procurement for state transactions; and restructuring anti-corruption agencies.

In short, the GCDA underscores that the current governance model based on opacity, discretion, privilege, institutional and legal decay, and political patronage cannot serve the best economic interests of the people. The difficulty is that Pakistan’s power centres as well as policy and business elites do not yet appear ready to give up their privileges and embrace the change even though time is fast running out for crucial, make-or-break decisions. Will the IMF diagnostic change that? The jury is out.

Published in Dawn, November 21st, 2025