EDITORIAL: It is telling that the IMF’s concerns about Pakistan’s audit structure have arrived at a moment when the country’s institutions are already under strain. The Fund’s warning about the absence of internal audit mechanisms and the limited independence of the Auditor General’s Office may seem technical on the surface, but it cuts to the core of how public authority is exercised.
An audit system that cannot stand apart from the executive, and oversight mechanisms that cannot function without administrative permission are unlikely to safeguard public funds, let alone restore public confidence.
The scale of the problem outlined by the Fund is stark. Weak constitutional and parliamentary audit supervision threatens fiduciary risks to about Rs40 trillion in federal public funds, with even greater exposure in the provinces. The lack of internal controls, the failure to implement mandatory internal audit functions under the Public Finance Management Act 2019, and the absence of chief internal auditors across ministries have collectively produced a governance gap that is difficult to defend.
Six years after the law required each division to appoint its own internal auditor, not one has been posted. Even the existing financial management officers are missing in a sizeable number of ministries. The result is predictable. Without internal dashboards to detect problems, irregularities continue to surface only after the damage has been done.
The IMF has also drawn attention to the structural subordination of the Auditor General’s Office. Despite constitutional autonomy, the AGP remains attached to the Federal Secretariat, reporting through the executive rather than directly to parliament. It cannot hire auditors without clearance, faces a staffing deficit of fifteen hundred, and is subject to budget release constraints even though its funds are classified as charged expenditure. These are not incidental administrative issues.
They create dependency in precisely the areas where independence is required most. When the office responsible for safeguarding the integrity of public spending cannot control its own budget or staffing, the oversight framework is compromised at its foundation.
The Fund’s diagnosis also highlights the inefficiencies of an audit system overwhelmed by output and starved of follow-through. With over six thousand reports produced annually, and 75 percent of recommendations still pending in the Public Accounts Committee, the process has become a cycle of documentation without consequence. Reports stretch into thousands of pages, repeating unresolved irregularities year after year because the executive agencies concerned do not respond.
The absence of monitoring systems for compliance leaves recommendations suspended in procedural limbo. The audit burden expands while impact diminishes.
The IMF is blunt about the stakes. Internal and external audits are vital to reducing corruption and ensuring integrity in public financial management. When these functions fail, they expose the entire public sector to avoidable risks. Yet the structural weaknesses the Fund identifies are also part of a larger pattern. Pakistan has a long history of institutions that struggle to maintain independence in practice, regardless of their formal mandates.
The gap between constitutional autonomy and operational subservience is not confined to audit bodies. It has affected a wide range of public institutions, shaping a system in which external pressure often becomes the catalyst for internal reform.
In that sense, the Fund’s intervention may serve a purpose beyond the immediate technical recommendations. Pakistan tends to take its reform obligations more seriously when they are anchored in an external programme. If the IMF has chosen to highlight these weaknesses now, it is reasonable to expect that they should inform the design of future support as well.
Simply identifying the deficiencies will not be enough. The reforms required to establish an independent audit office, streamline oversight processes, and enforce compliance need political will that has been absent for years. Attaching progress in these areas to broader financial assistance may be the only way to ensure that implementation follows diagnosis.
The challenge, then, is not just administrative. It is institutional. Pakistan cannot protect trillions in public resources without structures capable of examining, reporting, and acting without interference. The IMF has pointed to a well-known problem. This time, it must be met with more than acknowledgment.
Copyright Business Recorder, 2025
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