The IMF's superficial assessment of corruption

The IMF's 2025 Governance and Corruption Diagnostic Assessment for Pakistan has stirred considerable debate. Many see it as a bold attempt to confront corruption in one of its major borrower countries, highlighting how this problem runs far deeper than a handful of scandals or a few "rotten apples". Skeptics of international financial institutions, however, consider the IMF's framing as narrow and deflective, shifting attention away from the Fund's own role in Pakistan's economic troubles.

Although the IMF has shaped Pakistan's economic policies for decades, its diagnostic assessment disregards the consequences of the IMF's own structural reform agenda on the country. Instead, the assessment concentrates solely on domestic shortcomings, citing corrupt practices in fiscal governance and public procurement, weaknesses in regulatory bodies, state-owned enterprises, and even the judicial system, as the main causes of Pakistan's economic problems.

The IMF's assessment has proposed a reform agenda that it claims could raise Pakistan's GDP by between 5 per cent and 6.5 per cent over the next five years. This quantitative projection is useful because it illustrates the scale of economic losses and the dampening effect that corruption has on growth. The IMF's recommendations to achieve such ambitious growth include improving fiscal governance, strengthening procurement rules, reforming state-owned enterprises and digitising tax processes. However, the technical fixes proposed by the IMF are unlikely to succeed if they leave untouched the deeper architecture of power in the country.

For decades, IMF programmes have pushed Pakistan toward market liberalisation, fiscal austerity and a reduced role for the state in service delivery. These neoliberal reforms have hollowed out public institutions, weakened social protection and eroded the capacity of the state to serve its citizens. When market-based mechanisms interact with entrenched power structures, they tend to reinforce elite capture rather than creating a 'level playing field'. The elites then use patronage networks to distribute resources to preserve their influence, rather than securing legitimacy by representing the aspirations of the wider population.

The IMF's diagnosis is superficial at best, as it fails to acknowledge the underlying reasons corruption persists in countries like Pakistan. Akhil Gupta's influential analysis of corruption in India is instructive. He argues that in an under-resourced state, corruption often becomes means whereby an otherwise dysfunctional system can function. Low level officials, for example, rely on informal payments or bribes because the state does not provide adequate resources or compensation, making these practices a normalised part of everyday bureaucracy.

The IMF's assessment neither takes such granular subtitles into account, nor does it consider broader geopolitical and postcolonial realities. It does not recognise how Pakistan's civil and military elites have inherited and reshaped colonial administrative structures to amass disproportionate wealth and influence. In addition to lacking historical perspective, the diagnosis also overlooks how the country's elites were further strengthened by decades of transactional American support during the Cold War and again after 9/11. The military, large landowners and political dynasties are not merely corrupt individuals; they are structural beneficiaries of a state molded by colonial legacies and global power politics. Pakistan's elites are also embedded within a hierarchical and extractive global political economy, which IMF policies help sustain.

Overlooking such inconvenient truths, the IMF's reform agenda may nudge Pakistani policymakers to adopt selective measures to enable debt repayment or attract extractive foreign investment, but it will do little to alleviate the burden borne by the millions already struggling under the weight of high sovereign debt.