Pakistan does not need more laws

The IMF’s demand for 174 legislative amendments exposes Pakistan’s deeper crisis: the country does not lack policies or laws. It lacks the state capacity to design, implement and enforce them.

IMF is well aware of this gap, having experienced non-compliance on its repeated demand for reforms in the energy sector, state-owned enterprises, enhancement of the tax base and fiscal reforms. And yet it is expecting that the legislative amendments could mend the lapses in the system.

Pakistan has repeatedly sought to reform state-owned enterprises, yet a majority remains a major fiscal burden. The IMF now calls for stronger SOE governance, greater transparency and a smaller state commercial footprint - being fully aware that the gap between what it calls for and what is implemented is only widening.

Pakistan is preparing around 174 amendments to existing laws under its IMF programmes. The proposed changes cover financial sector governance, state-owned enterprises, remittances, climate policy, regulation and other areas.

This brings to the surface the ground reality - “bundles of paper shall move from one state entity to another for an unspecified period, and any hope of relief to the public is a distant possibility”.

The number of legislation is not the real story. What matters is what it reveals about the Pakistani state governance.

For decades, Pakistan has responded to structural problems by creating laws, policies, committees, authorities and regulatory bodies. Yet the capacity to implement them has steadily weakened. The country has accumulated plans without execution, institutions without autonomy, regulations without enforcement and legislation without continuity.

The result is a state trapped in firefighting rather than strategic planning.

The decline of the Planning Commission (covered in my publication last week), illustrates this wider institutional erosion. Once a centre of economic thought and long-term planning, it gradually lost authority and capacity. The problem was not confined to one institution; it reflected a broader deterioration in the quality and continuity of governance.

The same pattern appears across the economy.

Tax reform similarly focuses on digitalisation, auditing, compliance and institutional restructuring - not because tax laws are absent, but because the state struggles to administer them.

The business environment tells a similar story. Pakistan has introduced investment policies, special economic zones, export processing zones and numerous incentives. Yet businesses still face regulatory uncertainty, overlapping jurisdictions, taxation problems and administrative delays.

The IMF programme now seeks regulatory simplification, a national regulatory registry and changes to corporate legislation. But passing another law will not solve the problem unless government has the discipline and capacity to make the system work.

Good governance is not created by legislation alone. It depends on competent institutions operating under clear rules, with measurable objectives, continuity, accountability and political ownership.

Pakistan has weakened many of these foundations.

The civil service, once the principal instrument of policy formulation and implementation and an effective one, is increasingly consumed by short-term administrative pressures and political demands. Frequent transfers, institutional restructuring and the proliferation of special-purpose bodies have eroded professional continuity and long-term policy expertise.

This has direct economic consequences. Investors assess more than tax rates and incentives. They seek reliability and consistency in state governance. Governance is not separate from economic growth. It is an economic variable.

Weak institutions raise business costs, discourage investment, reduce productivity and increase the risk premium.

Pakistan is also relying increasingly on the IMF to advance reforms that should form part of its own national governance agenda. External discipline can help governments overcome domestic resistance, but no country can indefinitely outsource institutional reform to an international lender.

The goal should be to reform because Pakistan understands what its economy and society require - It require a shift: from policy accumulation to execution; from ad hoc committees to permanent institutions; from political firefighting to strategic planning; and from counting laws passed to measuring outcomes achieved.

Parliament has an important role in this process. Legislation should not be treated as the final measure of reform. Every major law should include clear implementation mechanisms, designated institutions, measurable performance indicators and periodic independent review.

Pakistan must also restore excellence in governance. Competence, institutional memory, professional continuity, evidence-based policymaking and accountability must become central to the policy cycle - not merely invoked after failure.

The 174 proposed amendments should therefore be treated as a mirror reflecting the condition of the Pakistani state.

The country does not lack capable people or sound ideas. It is blessed with lots of it. Given the enabling environment their performance in foreign lands is enviable. The country lacks the institutional environment in which competence can consistently produce national results.

Pakistan cannot legislate its way to prosperity, borrow its way out of structural weakness or rely indefinitely on external programmes to compensate domestic shortcomings.

The real reform Pakistan needs is the restoration of state capacity: the ability to think beyond the next crisis, formulate evidence-based policy, implement decisions professionally and hold institutions accountable for results.

Until that happens, Pakistan will continue to produce laws, plans and reform programmes while confronting the same problems.

The ultimate test of governance is not how much legislation a state produces. It is whether the state can make its decisions work.

Copyright Business Recorder, 2026