Former Chairman Department of Media and Communication Studies
Islamia University Bahawalpur
The issue of financial corruption in the institutions of Pakistan is not a new and hidden thing, but it is common. Now, in most of the institutions, it has got a kind of “legal status” and it is considered a normal action by the person doing his work giving bribe and the worker taking bribe and this proverb is generally spoken in our society that bribery is the sure way to get work done in Pakistan. Then the question arises why this report prepared by the IMF regarding governance and corruption in Pakistan is currently being discussed so loudly at the national level.
In fact, this report, released on November 20, has been prepared by the IMF with the support of the World Bank and the approval of the Government of Pakistan. IMF has been publishing such reports regarding Pakistan and other countries before but this time this report is so much discussed because this report of IMF has been made public by Ministry of Finance of Pakistan as according to the condition of existing financial agreement with IMF Pakistan was required to make this report public.
Before analyzing the report, it is important to see what points the IMF report covers.
The name of this technical assistance report has been named ‘Pakistan Governance and Corruption Diagnostic Assessment’. Basically, technical assistance or diagnostic reports are reports that are prepared when the IMF is working with a country to provide assistance in its financial affairs. For this reason, the IMF also makes recommendations for governance, corruption, tax reforms and financial reforms. However, this time the conditions of the IMF also included that the federal government of Pakistan would make this report public.
In the above report, IMF has said regarding corruption in Pakistan that corruption is continuous and widespread in Pakistan and due to this, decision-making in various state institutions is weak and resources are being wasted.
The IMF has stated in its report that if corruption and governance issues are improved in Pakistan, an additional growth of five to six percent in GDP is possible. Apart from this, the IMF has described Pakistan’s tax system as complicated and said that unnecessary tax exemptions benefit the powerful classes. Apart from this, according to the report, IT and audit process in FBR is weak.
The IMF has identified lack of transparency and political interference in the government procurement process. In addition, the report states that many institutions are under the influence of powerful groups and there is no accountability system for institutions that run into losses. The IMF has also expressed concerns over the recently established Special Investment Council. The report pointed out that there is a lack of legal and parliamentary oversight of SIFC’s key decisions. The report described anti-money laundering systems and regulatory bodies as weak, saying that monitoring and reporting were not up to international standards.
IMF has identified elite capture as the biggest problem in Pakistan. According to the report, powerful and influential groups in Pakistan influence decisions and policies made in sectors such as sugar, real estate, energy sector, agriculture and government institutions. It is significant that the IMF has also given a 15-point reform plan in its report, which calls for making the tax system transparent and simple. Public procurement should be fully open and monitored. IT and audit system in FBR should be made according to global standards and other suggestions are also included.
Apart from this, the report has given suggestions that government institutions should be regulated under updated laws, the budgeting process should be made more transparent to the public and unnecessary taxes and concessions should be eliminated. The IMF has also warned that if governance in Pakistan is not improved, economic growth will remain structurally constrained, meaning the economy will not recover no matter how good the policy is.
The IMF has also expressed its reservations on the recently established Special Investment Council. Special pages have also been included in the IMF report regarding Pakistan’s judiciary. The report described judicial performance as weak and identified weaknesses in the judicial process, particularly delays in judgments, which are weakening the system.
The report states that there is no regular evaluation of the performance of the judicial system i.e. there is no system to continuously monitor the competence and performance of the courts and judges. The IMF has also raised concerns over the transparency and integrity of the judiciary, saying that the payments and financial incentives given to judges are not transparent. Emphasizing the need for judicial reforms, IMF has suggested that the judicial institutions should improve their performance. The duration of hearing cases and judgments should be reduced and the policy of appointment and employment in the judiciary should be improved and standardized. The IMF has also called for a mechanism to monitor the performance of courts and judges to strengthen the transparency and accountability of the judiciary. The report also recommends activation of an alternative dispute resolution system.
The report further states that Pakistan’s economic institutions are not functioning properly.
If the report is examined in the light of these points, we can say that this report has highlighted all the problems due to which Pakistan is facing the challenges of economy and governance. According to the policy of the IMF, the main target in the report is the institutions that are responsible for the development of the country’s economy. And the report clearly opines that the economic institutions of Pakistan are not working properly. Transparency and performance are lacking and enforcement of laws is inadequate.
In its report, IMF has mentioned in detail all the institutions including FBR, State Bank, Judiciary, CPS, SIFC. However, it is important that the IMF also said that if the recommendations given in the report are implemented, Pakistan’s economic development can start in three to five years.
Most importantly, this report provides a good opportunity for the government to improve its governance, so rather than unnecessarily defending the points raised in this report, the government should focus on improving the performance of its institutions on the recommendations made in the report. Instead of being a victim of expediency, the report should be used as a basis and accountability of all stakeholders involved in corruption and mismanagement should be started without discrimination so that in the coming years, where the country’s economy can improve and the people can be given significant relief, the way to get rid of the IMF can also be paved.
If the government removes the unnecessary privileges of the privileged classes and collects taxes from the big tax evaders and transfers its benefits to the common man, I think the people will be ready to forgive all their political and parliamentary mistakes. And Pakistan can get rid of extending its hands in front of the IMF and friendly countries. But it is a sad aspect that since 1958, Pakistan has been taking loans from the IMF and despite the passage of 68 years, Pakistan has not been able to stand on its feet economically due to its bad governance and corruption. Meanwhile, many countries in our region and the world have gone ahead of us economically. Therefore, it is time for the government to take advantage of this opportunity to take direct revolutionary steps in the light of the report and put Pakistan’s governance and economy on the path of improvement.
It is worth mentioning that the focus of this report is the two-year performance report of the federal accountability agency NAB, in which NAB has shown the recovery of assets worth five hundred and three trillion rupees during 2023-2024. On the basis of this performance report, the IMF has commented that corruption in Pakistan is so embedded from top to bottom, from the individual to the collective level, that if Pakistan is really serious about getting rid of it, its national income can increase by five to six and a half percent annually in five years.
The IMF has focused only on the governance of federal institutions in its report. Financial management at the military and provincial levels is not part of the report. The NDP and IMF reports show that the corporate sector, big landlords and the political class are major partners in the game of resources and incentives. The current IMF report contains more or less the same as the April 2021 United Nations UNDP country report.
According to this report, 20 percent of the population is benefiting from about 50 percent of the national income. Out of this, 9 percent of the national income is occupied by one percent of the elite.
While the bottom 20 percent of the population has access to only seven percent of the national income. The middle class has grown rapidly in neighboring countries, while the middle class in Pakistan has shrunk from 42 percent to 36 percent. The poverty rate has increased from 39 percent to around 45 percent. Political parties are also dominated by the same classes. He or his followers have a majority in the Parliament as well.
Therefore, the legislation is also in their hands and the logical conclusion is that they have a deep influence on the judiciary as well. These segments benefit up to seventeen and a half billion dollars annually in the form of tax exemptions, easy access to capital, preferential preferential policies in the land and services sector. If only this network of illegal incentives is eliminated, according to an estimate, Pakistan’s total national income can increase by six percent annually.
Through this report, the IMF is calling on our government to improve governance, implement legal, administrative and economic reforms to eliminate undue favors and corruption so that Pakistan can be able to provide relief to the common man through a sustainable economy.
