Failure To Publish IMF Report Exposes Pakistan's Governance Gaps, Risks $7 Billion Bailout

Pakistan has missed a crucial deadline to release the Governance and Corruption Diagnostic Report, a key requirement under the International Monetary Fund's (IMF) USD 7 billion bailout programme. The report, which includes recommendations to enhance judicial integrity, address conflicts of interest, and improve institutional performance, was supposed to be published by the end of July but remains pending, as reported by The Express Tribune. According to The Express Tribune, the IMF had also advised the federal cabinet, the Supreme Judicial Council, and provincial high courts to issue annual reports highlighting measures taken to strengthen judicial integrity. These reports were expected to include data on complaints filed, their resolution, and follow-up actions. However, delays in finalising the diagnostic document have stalled progress on this front.

On Monday, Finance Minister Muhammad Aurangzeb chaired a review meeting on the implementation of IMF conditions ahead of the lender's second programme review mission, set to begin September 25 in Karachi. The IMF team will initially hold discussions with the central bank before moving to Islamabad for high-level meetings.

Briefings presented to the finance minister revealed that while Pakistan has fulfilled most fiscal requirements, governance-related reforms, particularly in state-owned enterprises (SOEs) and judicial institutions, remain incomplete. The IMF only provided the draft governance report days before the deadline, making timely publication impossible. As a result, the subsequent requirement of formulating a governance action plan based on the report's recommendations by October 2025 is also likely to be missed, as reported by The Express Tribune.

The IMF's draft document reportedly contains nearly a dozen recommendations focusing on the rule of law, efficient contract enforcement, judicial transparency, and alternative dispute resolution. Suggestions include developing a multi-year judicial reform strategy, setting standardised criteria for judicial appointments, publishing judicial performance assessments, reducing case backlogs, and modernising contract and property laws.

Beyond governance, Pakistan has also fallen short on other key indicators. The government violated its agreement by granting tax exemptions on sugar imports, while provincial administrations failed to achieve their Rs1.2 trillion cash surplus target Federal Board of Revenue (FBR) also underperformed, collecting Rs 11.74 trillion against the target of Rs 12.3 trillion and failing to generate revenue under the Tajir Dost Scheme. 

The overall programme implementation was still considered satisfactory, raising hopes for the release of the $1 billion third loan tranche, as reported by The Express Tribune. 

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed)

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