ISLAMABAD – Corruption is a persistent challenge in Pakistan, with significant adverse implications for economic development, it was revealed in a report prepared by the International Monetary Fund and released by the Ministry of Finance.
In response to a request from the Pakistani government, the IMF undertook a Governance and Corruption Diagnostic with World Bank participation. The exercise included field visits from February 6 to 14, 2025 (scoping mission) and April 3 to 14, 2025 (main mission) in Islamabad and Karachi.
The report is based on information obtained as of the end of the April 2025 main mission. It does not capture reforms that have been introduced since April 2025.
“Indicators reflect weak control of corruption over time with negative consequences for public spending effectiveness, revenue collection, and trust in the legal system. 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,” read the report.
These dynamics are compounded by perceptions that the anticorruption approach has lacked consistency and impartiality, contributing to diminished public confidence in enforcement institutions.
In a context where corruption has significant macro-economic consequences, the GCD revealed systematic governance weaknesses across state functions.
“Pakistan is exposed to corruption risk generated by: weaknesses in budgeting and reporting of fiscal information, and management of public financial and non-financial resources, particularly in capital spending, public procurement, and the management and oversight of state-owned enterprises; an overly complex and opaque tax system administered by tax and custom authorities operating with insufficient capacity, management, and oversight; overwhelming regulations and intrusive state action related to business formation, entry and operation in specific economic sectors, administered by insufficiently independent regulatory authorities; and a judicial sector that is organizationally complex, is not able to reliably enforce contracts or protect property rights due to problems with efficiency, antiquated laws, and the integrity of judges and judicial personnel.”
Reliance on courts to enforce contracts or protect property rights is discouraged by the enormous backlog of cases and concerns over the integrity and independence of judicial institutions.
Both past reforms and on-going efforts to enhance the “efficiency” of the state, “right-size” the state, and utilize digital technology across state functions demonstrate the organizational capacity and competency that exists as well as the commitment to improve public sector effectiveness.
The recommendations provided in this report have been shaped to complement the Government’s on-going reform efforts in the interest of contributing to the momentum and sustainability of change.
