IMF Review at Risk as Pakistan Fails to Deliver Governance Diagnostic Report

Pakistan has stumbled in meeting critical International Monetary Fund (IMF) requirements, failing to publish a vital governance and corruption diagnostic report by the July deadline, according to sources cited by The Express Tribune. The report, intended to outline measures to bolster judicial integrity, address conflicts of interest, and improve state institution performance, remains unreleased, jeopardling concerns about Pakistan’s compliance with its $7 billion IMF bailout package.

On Monday, Finance Minister Muhammad Aurangzeb chaired a high-level meeting to assess progress ahead of the IMF’s second review talks, scheduled for September 25. The briefing revealed that while fiscal targets were largely met, significant governance commitments, particularly for state-owned enterprises (SOEs) and judicial reforms, remain unfulfilled. The finance ministry also missed a deadline to amend 10 laws governing SOEs by June 2025, further jeopardling doubts about Pakistan’s commitment to IMF conditions.

The unpublished report was expected to detail steps to strengthen judicial integrity, including statistics on complaints and actions taken by the federal cabinet, Supreme Judicial Council, and provincial high courts. Its absence now jeopardles the risk of missing another IMF deadline in October 2025 for releasing a governance action plan based on the report’s recommendations. Government officials admitted that this target is likely to be missed as well.

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The IMF’s bailout package includes approximately 50 conditions, with compliance monitored quarterly and annually. Key judicial reforms recommended by the IMF include enhancing integrity and conflict-of-interest provisions for judicial personnel, increasing transparency in payments to judges, and developing a multi-year strategy to improve judicial efficiency and service delivery. The Judicial Commission of Pakistan was tasked with establishing standardized principles for judicial appointments and tenure, particularly for those handling commercial disputes, with compliance required for all appointments.

Additionally, the IMF urged the creation of a methodology to assess court and judge performance under the Ministry of Law, with results to be published online, especially for commercial tribunals. Other recommendations included expanding alternate dispute resolution through operational dispute resolution centers, enacting arbitration laws, and forming a task force to propose reforms for efficient contract enforcement. The IMF also called for plans to reduce case backlogs and update laws on contracts and property rights.

Beyond governance, Pakistan breached IMF conditions by granting tax exemptions on sugar imports, contrary to the agreement. Provincial governments failed to generate the targeted Rs 1.2 trillion in cash surpluses. The Federal Board of Revenue (FBR) also fell short, collecting Rs 11.74 trillion against a Rs 12.3 trillion target for the last fiscal year and failing to meet the Rs 50 billion revenue goal from the Tajir Dost Scheme for retailers.

The finance ministry’s spokesperson did not respond to inquiries about the delayed report, kindling further speculation about Pakistan’s ability to meet IMF expectations. As the September 25 review looms, these lapses could jeopardize the release of further bailout tranches, potentially deepening Pakistan’s economic challenges. The international community and investors are watching closely, with the risk of increased scrutiny on Pakistan’s governance and fiscal discipline.

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