PM rolls out governance reforms under IMF lens

ISLAMABAD:

Prime Minister Shehbaz Sharif on Wednesday launched economic governance reforms to address vulnerabilities identified in the International Monetary Fund's (IMF) Governance and Corruption report, while taking ownership of a 142-point agenda for institutional building and rule of law.

The plan envisages undertaking national risk assessment on corruption, making rule-based appointments in key institutions, including the National Accountability Bureau (NAB) and improving its credibility in the eyes of the public.

While addressing the launching ceremony, Shehbaz said that the recommendations of the international institutions have been incorporated in his reforms' plan but it is fundamentally the government's home grown agenda to "shift from crisis management to institutional building".

According to a condition of the $7 billion IMF bailout package, Pakistan was required to publish "governance action plan based on the recommendations of the Governance Diagnostic Assessment" to address critical governance vulnerabilities by December 31.

After the ceremony at the Prime Minister House, the Finance Ministry released the 240-page Economic Governance Reforms report, detailing every aspect that could help improve poor governance and address critical corruption related vulnerabilities.

Earlier, the ministry had released the 186-page Governance and Corruption Diagnostic report to meet the IMF condition.

Shehbaz said that under his governance plan, there are 59 priority actions and 83 complementary actions. This brings the total tally of these required actions to 142 that have to be implemented over a period of next three years.

The prime minister said that the government's focus would now shift from crisis management to institutional building. He said that people of Pakistan have paid a very heavy price during the past two years and "we cannot return to business as usual".

While speaking at the occasion, Finance Minister Muhammad Aurangzeb said that the governance plan is based on three core streams: growth oriented fiscal and public investment governance, enhancing market confidence and simplification of regulations and building trust in legal processes.

The Finance Ministry will act as the secretariat to implement the action plan, while the UK's Foreign and Commonwealth Development Office (FCDO) will provide technical support.

The ministry released a report stating that where relevant, alignment (of the plan) with the IMF Extended Fund Facility will be reinforced through IMF participation in these dialogues for the implementation of the plan.

Major actions

Pakistan has committed with the IMF to publish SIFC annual report by June 2027. The draft annual report will be submitted in December 2026 and the final report to be submitted in March 2027.

The purpose of the report is to enhance transparency regarding strategic investments by producing and making public the first annual report of the Special Investment Facilitation Council (SIFC), including information on all investments that it has facilitated, including concessions provided along with detailed rationale of concessions, and the estimated value of the concessions.

By June 2026, the government will also conduct National Risk Assessment on corruption and within three months it will form the national anti-corruption task force. The government will also identify top 10 agencies with high corruption risks by June 2027. And by June 2028, it will publish annual reports of the identified 10 highest risk agencies and will report on demonstrated reduction of risks.

The IMF's report had cited the NAB report, which showed that the anti-graft watchdog recovered Rs5.3 trillion of the embezzled money in just the past two years.

According to the new action plan, by June 2026, the government will conduct legislative review of the Anti-money Laundering Act (AMLA) to remove ambiguities. It will also finalise and submit amended Anti-Money Laundering Bill for review by parliament. By June 2027, these amendments will be notified.

Within one and half years, Pakistan will also build the capacity of judges through implementing training plans regarding the AMLA.

The IMF has also given a one and half year's timeline to strengthen accountability and integrity of the civil servants. It will deploy a computerised system to generate risk based cases for verification.

The verification will be conducted by the FBR and other relevant agencies. Using the risk factor model, cases getting red flags will be reviewed by a committee of Establishment Division, FBR, FIA, and NAB to decide if the matter should be formally investigated; and if so, by which agency.

By June 2027, the government will notify SECP rules that should codify the entire process of appointment of chairman, commissioners and policy board members of the SECP.

The government will ensure timely initiation of appointment processes, minimum three months before tenure completion and it will also make a public annual governance and transparency report approved by SECP policy board.

It will also review the appointment process for the NAB chairman by June 2027 and would increase the public credibility of NAB as an anti-corruption agency, according to the published plan.

In six months, Pakistan will form a methodology working group that will be mandated to conduct a diagnostic to efficiently and effectively resolve economic disputes, monitor judicial and court performance, to reduce pendency and oversee implementation of recommendations. By June 2027, Pakistan will publish an annual performance report with recommendations on economic disputes.

For Increasing Efficiency, Integrity, and Performance Culture of Tax Administration, by June next year the government will establish multiple executive committees and subsequently will prepare and implement plans over a period of two years to enhance capacity and integrity of the tax officers.

The government will formulate a time-bound tax simplification strategy with draft tax policy provisions to: reduce rate schedules, reduce special regimes, reduce excessive withholding taxes, reduce advance taxes, rationalise tax exemptions and harmonise federal and provincial taxes. These measures will be designed to aim for revenue neutrality in the medium term.

The government will enforce a 10% cap on new PSDP projects and will prioritise the high impact PSDP projects by June 2027. Within one and half years, it will prevent mid-year cuts on the development expenses and will develop a mechanism to link constituency demands with resource allocations. However, unanticipated revenue shortfalls will have to be adjusted in PSDP financing, according to the plan.

New Public Procurement Rules 2025 will be prepared in line with international best practice and being processed for cabinet approval that will explicitly contain no preferential treatment for state-owned enterprises.