Advice to Pakistan: Accountability key to fending off protests, says IMF chief

Lagarde says transparency only way to tackle corruption

ISLAMABAD: The chief of the International Monetary Fund (IMF) on Tuesday advised Pakistan to tackle the menace of ‘real or perceived corruption’ – particularly in light of the Panama and Bahamas leaks – by bringing facts to the table in a transparent manner.

“Transparency … facts on the table so that there can be accountability,” the global lender’s managing director (MD) Christine Lagarde replied when asked how Pakistan’s government should deal with protests being staged by political parties against corruption. She was addressing a news conference alongside Finance Minister Ishaq Dar at the conclusion of her visit to Pakistan.

Lagarde gave an unambiguous message on tackling “real or perceived corruption, or both.” She urged Pakistani authorities to take the issue head on, as some young Pakistanis have started believing they can buy everything with money.

“[Corruption] can reduce the ambition of the youth of Pakistan. Why bother if everything can be bought and that is what some young people think,” she said. “Corruption harms the economy and hampers foreign direct investment. Whether real or perceived, it has to be attacked and addressed.”



The IMF chief added that bringing facts about corruption to the table was a question of honesty, not prosecution. “Transparency and accountability are the best ways to tackle these issues… Panama or Bahamas leaks or whatever,” she said.

Lagarde said that technological progress and the high speed at which information is collected and disseminated these days is going to make it more and more complicated for people to hide money. She said that best way to address corruption issue is the combination of transparency and accountability. “It may take time but will ensure prosperity of society.”

The IMF chief’s remarks may lend strength to those who have launched a tirade against corrupt practices in the country. Pakistan Tehreek-e-Insaf has already announced it will lock Islamabad down on November 2, if Prime Minister Nawaz Sharif does not offer himself for accountability after his family members’ names appeared in the Panama Papers.

Pakistani institutions have failed to respond to the Panama leaks adequately as not a single person has been brought to justice even after six months. Half a dozen responsible state institutions excused themselves from taking any action during a recent meeting of the Public Accounts Committee.

Meanwhile, Ishaq Dar, while addressing the news conference, said Pakistan intends to become a member of the global anti-bribery convention of Organisation for Economic Cooperation and Development (OECD). He said the Pakistan Inquiry Bill 2016 – moved after the Supreme Court termed the 1956 law on inquiry commission toothless – is pending before the National Assembly.

Debt situation

Lagarde said the sustainable way for Pakistan to reduce its high debt to GDP ratio was by Increasing revenue and cutting spending. When reminded that Pakistan’s debt increased even though this was exactly what it had been doing over past three years, she replied “I don’t have a magic recipe.”

During the past three years, the government levied more than Rs1.2 trillion in new taxes that were equivalent to 4% of Gross Domestic Product. It also cut back development spending by as much as 30% of the approved budget.

However, Finance Minister Dar said that out of the Rs1.2 trillion raised through extra taxes, as much as Rs700 billion went to provinces.

Lagarde said Pakistan still needs to improve its revenue policy and administration to boost tax collection. “Tax loopholes have been closed but there are clearly renewed efforts that can be undertaken in the area of eliminating mighty tax evasion and enlarging the tax net, making sure that the base is large,” she said. The IMF added that spending should be focused in areas that boost growth.

She gave credit of the successful completion of the three-year IMF programme to the government. “Ownership of the programme by the political leadership was the reason for its success,” she said.

“Much has been achieved and much more remains to be done,” Lagarde added.

Published in The Express Tribune, October 26^th, 2016.