ISLAMABAD:
The government has failed to publish on time the Governance and Corruption Diagnostic report in which the International Monetary Fund (IMF) recommended measures to enhance judicial integrity, address conflict of interest, and improve performance and service delivery.
The global lender has also advised the federal cabinet, the Supreme Judicial Council and the provincial high courts, through their respective governments, to publish yearly reports. These reports should list steps taken to strengthen judicial integrity, including statistics on complaints received, the disposition of complaints and actions taken, sources told The Express Tribune.
Finance Minister Muhammad Aurangzeb on Monday chaired a meeting to review progress on the implementation of IMF conditions before the second review talks begin on September 25. The IMF team will start its mission in Karachi with separate meetings with the central bank before arriving in Islamabad.
According to sources, the briefing to the finance minister showed the federal government had met most conditions related to fiscal matters. But key commitments on governance in state-owned enterprises (SOEs) and state institutions were still pending.
Overall, programme implementation was considered satisfactory, and the government expected no hurdles in successfully concluding the second review talks for release of the $1 billion third loan tranche, said a government official after the meeting.
However, among the conditions that could not be met include publishing the full Governance and Corruption Diagnostic report by July-end and amending 10 laws governing state-owned companies to align them with the SOE Act by June 2025.
The meeting was informed that the IMF’s corruption and governance diagnosis report could not be made public because the global lender had only shared the draftreport days before the deadline. The final version was still awaited, making timely publication impossible.
The finance ministry’s spokesperson did not respond to queries about missing the condition on publishing the report.
Since the report remains unpublished, another IMF condition is now at risk. The government was required to release a governance action plan based on the report’s recommendations by October 2025. Government officials said this deadline is also likely to be missed.
The IMF set around 50 conditions under the $7 billion bailout package. Some are monitored quarterly, others annually, with tranche approvals linked to compliance.
Before finalising its recommendations, the IMF also met the Chief Justice of Pakistan and several other institutions to discuss governance and rule of law concerns.
The draft report contained about a dozen recommendations to strengthen rule of law in Pakistan. The focus was mainly on enforcing commercial contracts, improving tribunal and special court efficiency, enhancing judicial integrity, and speeding up judicial processes.
To strengthen judicial integrity, the IMF advised Pakistan “strengthen integrity and conflict of interest provisions for all judicial personnel and review and increase transparency around payments and grants to judicial personnel”.
For judicial efficiency, the IMF proposed preparing “a multi-year judicial reform strategy to strengthen institutional performance and judicial service delivery in Pakistan”.
The IMF further recommended the Judicial Commission of Pakistan create standardised principles for judicial appointments and tenure. These principles should apply to judges and tribunal members, particularly those dealing with commercial disputes. Demonstrable compliance was required for all appointments.
Another proposal asked Pakistan to establish a methodology to assess courts and judges’ performance under the Ministry of Law. The results of such monitoring should be published on official websites, particularly for tribunals and courts handling commercial cases.
The IMF also recommended that the federal cabinet expand and institutionalise alternate dispute resolution by operationalising dispute resolution centres and enacting arbitration laws.
It called for the creation of a task force to propose reforms for efficient contract enforcement, in line with international best practices. Additional recommendation included drafting a plan to reduce case backlogs and updating laws on contracts and property rights.
Beyond governance, the government also breached an IMF condition by granting tax exemptions. It waived duties on sugar imports, in violation of the agreement.
Provincial governments missed their target of generating Rs1.2 trillion in cash surpluses. Similarly, the Federal Board of Revenue (FBR) failed to meet two key commitments. Against the Rs12.3 trillion target for the last fiscal year, it collected Rs11.74 trillion.
The FBR also missed its Rs50 billion target from retailers under the Tajir Dost Scheme. In reality, it failed to collect any significant revenue under this scheme.
The finance ministry also could not meet the condition of amending 10 SOE laws in order to bring them in conformity with the SOE Act. The meeting was informed that some of the laws were at the initial stage of the amendments and had been presented before the Cabinet Committee on the Legislative Cases.
