Pakistan can boost GDP up to 6.5 pc if it implements reforms: IMF

Islamabad, Nov 20 (PTI) Highlighting corruption as a major challenge for cash-strapped Pakistan, the IMF has said that the country can boost its GDP up to 6.5 per cent in the next five years if it implements a package of governance reforms within the next three to six months.

After holding back for almost three months, the Ministry of Finance released the Governance and Corruption Diagnostic Assessment (GCDA) report on Wednesday to meet the IMF’s condition to release it before the meeting of the executive board for approval of the USD 1.2 billion disbursement next month.

In the 186-page report, the International Monetary Fund noted that there was no reliable measure to quantify the scale of corruption in Pakistan, but said that “those costs can be gleaned from the recovery of corruption-related assets".

"Pakistan could generate between a 5pc to 6.5pc increase in GDP by implementing a package of governance reforms over the course of five years” beginning in three to six months, it said, demanding that Pakistan immediately initiate a 15-point reform agenda to improve transparency, fairness and integrity.

The key areas include improvements in governance and anti-corruption, business regulation and regulation of foreign trade.

It pointed to corruption-related recoveries of PKR 5.3 trillion in just two years while making an assessment that found corruption "persistent and corrosive" at every level of government.

The estimated PKR 5.3 trillion figure is added up from January 2023 to December 2024.

The report stated that Pakistanis are regularly required to pay officials for access to services. At a higher level, official policies and practices have been shaped by economic and political elites to make use of public authority to enrich themselves at the cost of greater societal well-being and economic growth.

"Shortly after independence, M A Jinnah, Pakistan's founding father, denounced corruption in 1947 as a poison that needed to be eradicated,” said the IMF. “More than 70 years later, corruption continues to hinder Pakistan's macroeconomic and social development by diverting public funds, distorting markets, impeding fair competition, eroding public trust, and constraining domestic and foreign investment.” The GCDA seeks an end to special treatment for a few influential public sector entities in direct government contracts and transparency in the affairs and decision-making of the Special Investment Facilitation Council (SIFC). It also recommends tighter limits on the government's financial powers without greater parliamentary oversight and streamlining of anti-corruption agencies.

The government had been delaying the publication of the report since August.

The GCDA revealed systemic governance weaknesses across state functions and noted that the country was exposed to corruption risk generated by weaknesses in budgeting and reporting of fiscal information, and management of public financial and non-financial resources, particularly in capital spending, public procurement and the management and oversight of state-owned enterprises (SOEs).

Pakistan has gone to the IMF 24 times since 1958, making it one of the Fund's most frequent borrowers. Nearly every government - military or civilian - has had to seek IMF assistance, reflecting Pakistan's chronic balance of payments crisis.

The current deal under Shehbaz Sharif is Pakistan's 25th IMF program, and so far, two tranches have been issued, while the third is expected to be released next month. PTI SH CORRUPTIONCORRUPTION ZH ZH