IMF Flags Governance Flaws in Pakistan, Proposes Transparency Reforms

ISLAMABAD: The International Monetary Fund (IMF) has identified key shortcomings in Pakistan’s governance, including the politicisation of the civil service, weak organisational accountability, and excessive focus on short-term goals. These issues, the IMF noted, contribute to broader governance weaknesses and increase vulnerability to corruption.

The observations were made following the conclusion of a 12-day visit by the IMF’s legal mission, led by Joel Turkewitz. During the visit, the mission engaged with around 30 organisations and departments as part of finalising the Governance and Corruption Diagnostic Assessment report. This was the second such visit in as many months.

The report which is expected to be made public by August this year will give recommendations for ensuring greater transparency and improving the public sector delivery by minimising the chances of corruption and through merit-based decisions.

The sources said that the IMF mission held the concluding meeting with the Pakistani authorities on Monday and shared its initial assessment. But the detailed report will be handed over later on.

Neither the Cabinet Division nor the IMF resident representative to Pakistan responded to requests for comments.

One of the main findings of the mission was that Pakistan’s civil service was highly politicised, according to the sources. Not only that, the heads of the state-owned enterprises and their boards were appointed under political considerations, said the sources privy to these discussions.

The Pakistan Muslim League-Nawaz (PML-N) government had changed the boards of eight out of 10 power distribution companies last year. But the boards of Hyderabad and Sukkur power distribution companies were not changed due to an understanding with the Pakistan Peoples Party (PPP).

The Power Minister, Sardar Awais Legahri, now publicly criticises the performance of these two companies, which contributed to the overall power sector losses during the first half of this fiscal year. The IMF assessment of the politicisation is also in line with the prevailing situation in the bureaucracy.

The key positions are said to be mostly filled with people having allegiance to the political leaderships. In addition to political patronage, the civil servants also get protections from their seniors and often serious corruption crimes remain unpunished.

During its 12-day stay in Pakistan, the IMF held meetings with around 30 government departments and institutions. However, some of the planned meetings could not take place.

One of the findings was that there had been no uniformed anti-corruption policy and the anti-corruption measures were mostly event or organisation based and various entities were responsible for minimising the menace.

The National Accountability Bureau (NAB), the Federal Investigation Agency (FIA) and the provincial anti-corruption departments are responsible for ending corruption in the government. However, there has not been any consistent anti-corruption policy.

NAB’s role was weakened after amendments to the accountability law, the changes that were necessitated due to politicisation of NAB in the past. The Right to Information Act (RIA) is also selectively applied, which compromises transparency.

The Public Procurement Regulatory Authority (PPRA) rules are often bended for public procurements and these rules need to be amended to end discrepancies and exemptions, said a Pakistani official who was part of these discussions.

The sources said that another important area in the IMF report would be the weakness of the organisational accountability in Pakistan. They said that during its interactions with the Pakistani authorities, the IMF particularly identified the departments of the Auditor General of Pakistan (AGP) and the Competition Commission of Pakistan (CCP).

The role of the office of the AGP is to ensure that the public funds are prudently spent and are not embezzled, while the CCP is mandated to ensure there is no cartelisation or monopoly and the market is functional on the basis of fair play.

However, the CCP has been handing over decisions against associations like the Pakistan Sugar Mills Association (PSMA) but still the PSMA is part of every important decision on the pricing of sugar.

According to the IMF’s assessment, the sources said, there is also a lack of risk prioritisation among the government organisations that causes weak governance and increased corruption vulnerabilities.

The sources said that the IMF also observed that judicial processes in Pakistan were lengthy and slow and as a result there was a huge backlog of court cases.

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While analysing the policy priorities of Pakistan, the IMF observed a number of loopholes, which led to poor decision making, said the sources. The IMF’s observations were that Pakistan was more focused on achieving short-term targets, which often undermine the long-term policy objectives.

One of the reasons for poor governance was that there was fragmentation of the authority and often same nature functions and roles are distributed to more than one entities, said the sources. This overlapping of jurisdiction has weakened the accountability against the poor decisions.

Sometimes, the decisions are taken on the basis of unverified information, which leads to making wrong policies, said the sources.

The government’s footprints have expanded to many areas and in some sectors still an old licence regime and outdated regulations are in practice, said the sources. The sources said that the detailed IMF report will cover this aspect and the recommendations will be given for bringing improvements.

This news is sourced from The Express Tribune and is intended for informational purposes only.