When the IMF mission arrives in Pakistan on September 23, discussion will inevitably focus on familiar macroeconomic indicators: revenue collection, fiscal performance, reserves, energy-sector reforms and compliance with programme benchmarks. But another question deserves even greater attention: what has happened to Pakistan’s governance reform agenda?
Last year, purportedly at the request of the Government — though in substance it was an IMF requirement — the Fund undertook a detailed Governance and Corruption Diagnostic Assessment. Unlike many previous exercises, this was not simply about fiscal deficits or short-term stabilisation. It examined the institutional weaknesses and corruption vulnerabilities that repeatedly undermine economic performance.
Its conclusions were disturbing, though hardly surprising. The IMF identified persistent corruption risks in a heavily state-dominated economy, weak institutional capacity, fragmented oversight, complex regulation, inconsistent accountability and a deeply constrained rule of law. It examined fiscal governance, taxation, public procurement, state-owned enterprises, market regulation, judicial effectiveness and anti-corruption institutions.
The message was clear: many of Pakistan’s economic failures are ultimately governance failures.
Weak procurement raises the cost of government. Poorly governed SOEs create recurring fiscal burdens. Complex, discretionary and often copy-paste regulation discourages investment. An inequitable tax system rewards influence rather than productivity. Weak enforcement undermines competition, while slow and unpredictable courts raise the cost of doing business.
The problem runs even deeper than the diagnostic could capture. Property disputes, contract enforcement and regulatory investigations can remain unresolved for years, sometimes decades, while even fundamental constitutional rights are not always effectively protected. Such failures do not merely deny justice; they lock up capital, destroy value and impose a heavy economic cost.
Corruption in such an environment is not simply about individuals accepting illegal gratification. It becomes part of an economic system in which discretion, privilege, regulatory capture and weak accountability determine how resources are allocated and who gets opportunities.
The federal government accepted the broad diagnosis. In December 2025, it published the Prime Minister’s Economic Governance Reform Plan, translating the IMF recommendations into 15 reform areas, 59 priority actions and 82 complementary measures.
The plan was comprehensive. The real question is what happened afterwards.
Recent reporting ahead of the IMF mission suggests that progress has fallen well behind expectations. According to official information cited by Dawn, in the absence of a publicly available government progress report, only a couple of more than three dozen governance targets due during January-June 2026 had been achieved.
Much of the progress reported so far also appears cosmetic — the familiar tick-the-box approach rather than transformational reform. Committees have been established, methodologies prepared, regulations drafted and databases developed. These may be useful building blocks, but they should not be confused with governance reform itself.
The real test is whether discretion has declined; procurement has become genuinely competitive; regulatory decisions are predictable and impartial; politically connected businesses receive the same treatment as everyone else; SOEs are professionally governed and privatisation accelerated; taxation is becoming simpler and fairer; and abuse of public office carries real consequences.
Equally important is whether anti-corruption agencies have become independent, transparent and capable of detecting and deterring sophisticated white-collar crime.
Procurement provides an obvious example. Despite commitments to strengthen competitive bidding, direct contracting with SOEs reportedly continues, while rules intended to eliminate preferential treatment remain incomplete. This is precisely the type of governance weakness the diagnostic was meant to address.
The government had also committed to transparent monitoring through semi-annual progress reports and outcome-based indicators. Governance reform cannot be judged by meetings held, notifications issued or committees constituted. It has to be judged by outcomes.
That is why the September 23 IMF review matters. The Fund should look beyond conventional macroeconomic compliance and ask whether the way the state actually operates has begun to change. Pakistan, however, needs to go much further than simply satisfying an IMF programme.
An important limitation of the diagnostic is that it focused mainly on the federal level. Provincial governments carry major responsibilities for education, health, agriculture, policing, land administration, development expenditure, local government and service delivery. There is little reason to believe that governance weaknesses stop at the federal boundary.
A rigorous assessment of the four provinces would almost certainly expose similar weaknesses in public financial management, procurement, provincial SOEs and autonomous bodies, regulation, service delivery and accountability.
The state of provincial anti-corruption establishments is particularly telling. The IMF diagnostic itself noted weak coordination, insufficient emphasis on prevention, inadequate investigative capacity and a history of political influence.
In practice, the situation can be worse. Institutions created to combat corruption are too often weak, politicised and ineffective. In some cases, they have themselves become part of the patronage and rent-seeking structures they were established to police — pursuing some selectively, protecting others and adding another layer of discretionary power.
An anti-corruption body vulnerable to political influence does not merely fail to deter corruption. It can actually facilitate it.
Provincial governments should therefore not wait for the IMF. Each province should undertake its own Governance and Corruption Diagnostic Assessment, preferably with credible independent professional assistance, publish the findings and prepare a time-bound Governance Improvement Plan.
These assessments should cover procurement, public financial management, provincial public entities, land administration, taxation, regulation, health and education governance, local governments, policing and anti-corruption institutions, with progress measured publicly through meaningful outcome indicators.
This could create the kind of competition among provinces Pakistan actually needs: better health and education outcomes, more transparent procurement, better-governed public entities, more predictable regulation, stronger local governments and genuinely effective anti-corruption institutions.
That would be meaningful federalism.
Instead, considerable political energy is being consumed by an entirely different and highly divisive debate: multiplying provinces.
There may be genuine demands in particular regions, and the Constitution provides a mechanism for considering them where democratic consensus exists. But creating more provinces should not be confused with governance reform.
The IMF diagnostic did not identify the number of provinces as a macro-critical governance constraint. Admittedly, its assessment was primarily federal and was not designed to examine provincial boundaries. But its findings are instructive.
Pakistan’s core problem lies in how institutions function, not simply in how administrative boundaries are drawn. A new province does not automatically create transparent procurement, professionalise bureaucracy, strengthen regulatory independence, eliminate patronage or improve financial management. Nor does it guarantee a more effective anti-corruption establishment.
Indeed, multiplying governments before improving governance risks multiplying assemblies, cabinets, bureaucracies, public bodies and patronage networks while reproducing the same institutional weaknesses.
Pakistan already has a credible federal diagnosis and an agreed reform programme. The federal government should now implement it with urgency — not merely because the IMF demands it, but because better governance is essential for economic efficiency, productivity, fiscal sustainability and public and investor confidence. Doing so would also establish the tone at the top for the rest of the federation.
The provinces, meanwhile, should undertake their own diagnostics and governance improvement programmes rather than waiting for an international institution to tell them what they should already know. That should be Pakistan’s real governance agenda: diagnose honestly, strengthen institutions, reduce discretion, measure outcomes and establish genuine accountability.
The agenda remains unfinished not merely because implementation has been slow. Genuine reform requires those exercising power to willingly accept stronger institutions, greater transparency, less discretion and meaningful accountability. Pakistan already knows much of what needs to be done. The real question is whether those who govern have the intent to do it.
Copyright Business Recorder, 2026
The writer is a former managing partner of a leading professional services firm and writes on governance, the economy, and matters of public interest
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