THE IMF’s corruption and governance report rightly emphasises the importance of transparency as an important tool in combating corruption. There is obviously far more to it but transparency promises greater bang for the buck and is something that can be done relatively easily.

For an idea of how tough a task the fight against corruption can be, consider some of the things the report itself is able to point to but not say out loud. Take this sentence as an example: “While corruption vulnerabilities are present at all levels of government, the most economically damaging manifestations involve privileged entities that exert influence over key economic sectors, including those owned by or affiliated with the state.”

So the authors can tell that the “most economically damaging manifestation” of corruption involves “privileged entities” that in some cases are “owned by or affiliated with the state”. This is a remarkable sentence given the enormity of what it is striving to convey, and the enormous effort it is taking to avoid any specifics. Reminds one of the old saying which tells us if you want to know who rules you, look for those whose names you cannot take.

But here are some names we can take. For example, one such privileged entity is the Board of Investment (BOI), which was given powers under its Act in 2023 to issues directions to the federal government to exempt or otherwise loosen regulatory compliance and immunity, for certain projects. These powers are contained in Articles 10E, F and G of the Board of Investment (Amendment) Act in 2023. According to the diagnostic, “[g]reater transparency is needed to understand how these powers will be exercised and monitored in practice. The provisions outlined in Articles 10F and 10G, along with the subsequent clauses, appear to create a framework that prioritises facilitation of strategic projects by allowing exemptions from regulatory compliance and shielding officials from personal liability”.

Real reform seeks to change the landscape against which economic behaviour plays itself out.

Burning holes in the country’s compliance framework carries risks. That is what the report is pointing out. The powers to grant such exemptions to particular projects can be misused. Best practice would be for such powers to not be granted in the first place. Second best would be to circumscribe them with clear rules to try and prevent misuse. Third best would be to have greater transparency via legally mandated obligations to disclose every time these powers are used.

This is what the report recommends. In its own words, the first annual report of the Special Investment Facilitation Council, the body entrusted with these powers of the BOI, should be released now, given almost two years since the body’s creation. The report should disclose “information on all investments that it has facilitated, including concessions provided (tax, policy/regulatory, or legislative) along with detailed rationale of concessions, and the estimated value of the concessions, and publishing the information on the implementation of the BOI (Amendment) Act, Article 10F (Power to relax or exempt from regulatory compliance).”

This is a simple step and practically should not be difficult to do. And once the BOI starts following this practice, it should be mandatory on all other bodies that exercise similar authority to do the same. Not only annual reports, but real-time data releases need to be made legally mandatory on many government departments, with special focus on (but not limited to) the FBR and the Power Division. It is a little surprising that given the scale of the revenue challenges and the circular debt, neither body is legally required to disclose any details of its operations.

Given the opacity, the fragmented and overlapping authority enjoyed by different governmental bodies, all the elements with which oversight is built in a system are weakened. The report mentions parliamentary scrutiny, transparency in decision-making, corporate governance, financial reporting and disclosure standards as examples of oversight mechanisms that suffer due to opacity, overlapping mandates, and selective endowment of powers to grant exemptions and enjoy immunity in governmental decision-making.

“Against this backdrop, individuals and industries vie for preferential treatment, resulting in market distortion, limited competition, and collusive arrangements,” the authors say. Once these behaviours are baked in, they create an environment of their own in which those who thrive do so through their contacts and connections, through gaming the system rather than excelling at taking risks and identifying the next generation of business opportunities. Once the state sits heavy over the system, and takes the power to grant special exemptions to a select few, and makes decisions in the dark, and keeps results out of the public sight except through controlled press releases to magnify successes and cloak failures, the stage is set for all manner of carpetbaggers and influence peddlers and speculators and racketeers to pass themselves off as businessmen. (And yes, they are overwhelmingly men in this arena).

If those who run our country want to bring about real growth in the economy, the kind of growth that doesn’t devour itself once it gets going, they should focus their minds on changing this environment. Real reform seeks to change the landscape against which economic behaviour plays itself out. When investors ask for protections from your own tax authorities and judicial system, for example, they are communicating something important. They are saying, we don’t like the landscape in your country. The bad response to these investors is to offer them exemptions. The good response is to find ways to reform the tax and judicial systems and improve their operation. Because if there is no confidence in the institutions that run a country, and the rulers respond by creating supra-institutional authorities that can lift particular investors and individuals above the fray and keep them beyond the law, that action causes confidence in the system to drop even further.

It is a good thing the government requested this diagnostic study to be done. It will be a better thing yet for the government to heed its advice in letter and spirit.

The writer is a business and economy journalist.

khurram.husain@gmail.com

X: @khurramhusain

Published in Dawn, November 27th, 2025