A Roadmap, Not a Reprimand: Decoding the IMF’s Governance Report for Pakistan

The International Monetary Fund’s (IMF) Governance and Corruption Diagnostic Report has certainly stirred up a hornet’s nest in the media. Many commentators were quick to brand it as a harsh indictment of the current government. However, this interpretation fundamentally misses the point of the report.

Let’s be clear: this exercise was undertaken at the explicit request of the Government of Pakistan and with its full cooperation. Far from being an audit of the current administration or a judgment on its performance over the past year, the report delves into governance practices that have taken root over decades, spanning multiple governments. Its true purpose is to identify systemic weaknesses that hinder Pakistan’s economic potential and to recommend reforms that can unlock long-overdue improvements in governance and economic management. It’s a tool to support reform, not to assign blame, and will guide IMF monitoring and programme execution moving forward.

Five Pillars of Reform

The report covers five crucial areas:

• Fiscal governance
• Market regulation
• Financial-sector oversight
• Anti-money laundering frameworks
• The rule of law

For now, let’s focus on one particularly important and costly example cited by the IMF under market regulation: tariff policy.

Tariff Policy: A Path to Growth and Equity

According to the diagnostic, reforming this single area could “increase growth by approximately two per cent over a five-year period while having a meaningfully positive impact on reducing inequality.” That’s a significant potential boost for an economy yearning for stability and progress.

Importantly, the IMF acknowledges that Pakistan has already begun taking meaningful steps to realign tariff policy with an export-oriented growth strategy. After years where protectionist lobbies dictated tariff decisions, policy is now moving towards greater discipline and transparency. Two reforms stand out:

1. The shift of tariff-setting powers from the revenue-driven Federal Board of Revenue (FBR) to the National Tariff Commission (NTC). This established a comprehensive, whole-of-government structure through the National Tariff Board and the technical Tariff Policy Centre, providing tariff policy with a coherent institutional anchor.
2. The recent approval of the National Tariff Policy 2025–2030. Building on earlier efforts, this new policy outlines a more ambitious and time-bound plan for tariff rationalisation and gradual liberalisation.

If implemented faithfully, the IMF notes, these reforms could help Pakistan break free from a cycle of ad hoc tariff changes and move towards a trade policy that genuinely strengthens productivity, investment, and export competitiveness. Of course, sustaining this progress will depend on the government’s willingness to resist historical pressures that have often derailed reform. Nevertheless, the overall trajectory is unmistakably positive. A predictable, rules-based tariff regime is fundamental for a country aiming for export-led growth rather than reliance on protectionism and special interests. Pakistan has taken several crucial steps in this direction; now, it must stay the course.

Empowering the National Tariff Commission

Looking ahead, the IMF stresses the need to significantly strengthen the National Tariff Commission (NTC). The NTC now has a much wider mandate, encompassing not only enforcing trade remedy measures but also tariff setting. However, it remains severely understaffed and lacks the specialist expertise required to effectively carry out its mandate. Without this capacity, tariff policy remains vulnerable to arbitrary decision-making and rent-seeking pressures. The diagnostic makes it clear: if Pakistan is truly committed to developing a credible, modern tariff regime, then expanding and professionalising the NTC is indispensable.

The good news is that the government has already launched a comprehensive review of the commission’s performance, identified key gaps, and begun evaluating options for meaningful reform. The Prime Minister’s Office is actively steering this effort, drawing on the experience of leading trade-remedy authorities and successful domestic institutional reforms, such as the setup of Pakistan Single Window. A time-bound plan to restructure the NTC along similar modern lines is now in its final stages of approval.

The Opportunity Ahead

In essence, the IMF’s diagnostic report provides a practical roadmap across five core areas that represent much of the government’s most critical work and where reform is urgently needed. What Pakistan now requires is the same disciplined and predictable approach that is beginning to take shape in tariff reforms. The IMF estimates that if these broader reforms are pursued with seriousness and continuity, Pakistan could secure a cumulative GDP gain of 5–6.5% over five years—an opportunity the economy can ill afford to miss.

If the government follows this path with real commitment, it can significantly improve governance, rebuild confidence among domestic and foreign investors, and bring Pakistan’s economic management closer to international best practices. Opportunities where there is such clarity about the problems and broad agreement on the solutions do not come very often. This is one of those moments. Ignoring it would not only squander a valuable chance but could set the country back at a time when it cannot afford further mistakes.

Source: Original Article