‘Corruption not declining, but rising’: Senate panel endorses IMF report

ISLAMABAD: The Senate Standing Committee on Finance and Revenue on Wednesday endorsed the International Monetary Fund’s Governance and Corruption Diagnostic Report, warning that corruption in the country is not declining but rising.

The Senate body observed that the tag of corruption is tarnishing Pakistan’s image in the eyes of potential investors and stalling billion-dollar MOUs that have yet to be materialized.

Senator Abdul Qadir pointed out that the Special Investment Facilitation Council (SIFC) had originally projected $60 billion in investment, but only $2 billion has actually materialized. He added that even the Council now acknowledges the difficulty of attracting investment in the current environment, which is burdened by heavy taxation.

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The committee meeting held under the chairmanship of Senator Saleem Mandviwalla to consider the Money Bill referred by the House to further amend the Income Tax Ordinance, 2001, through the Income Tax (Third Amendment) Bill, 2025. The Committee also received briefings on the PayPak payment system and the IMF’s Technical Assistance Report on Governance and Corruption Diagnostic Assessment.

The Committee received a briefing on the IMF report. Members unanimously condemned corruption and recommended strict measures to eradicate this menace from the country.

The parliamentary panel expressed displeasure over the absence of the Federal Minister for Finance, the Secretary of the Finance Ministry, and the Governor of the State Bank of Pakistan, and directed them to ensure their presence in the next meeting to continue deliberations on corruption and formulate a comprehensive strategy to address it.

The committee members stated that the Fund’s report highlighted Rs 5.3 trillion in corruption. Senator Farooq Naek said the report had “defamed Pakistan globally,” while Senator Dilawar Khan called it “a cancer diagnosis” of the country’s governance. Senator Mandviwalla openly endorsed the report, saying, “The IMF is right — corruption is rising, not falling.”

Senator Dilawar Khan said the IMF had identified corruption worth Rs5,300 billion in the country and questioned whether action would be taken against the institutions mentioned in the report. He also cited a serious incident involving an FBR officer in Lahore who allegedly demanded a share from a member in a refund-related corruption case and opened fire when his demand was refused.

Chairman Mandviwalla and other members expressed shock at the revelation and decided that the FBR case would be discussed in detail in the next committee meeting.

The Ministry of Finance maintained that most of the issues highlighted in the report were already being addressed by the government. According to officials, the report was prepared with the IMF support and emphasizes the need to implement an action plan for effective governance, to be completed within six to 10 months, with a maximum allowable period of one and a half years.

Naik asked the government whether it acknowledged the irregularities and institutional weaknesses mentioned in the report, noting the seriousness of the allegations. The Ministry of Finance clarified that the diagnostic report identifies problems, and the government is already working on reforms in multiple sectors, while IMF recommendations will be fully implemented.

The Finance Ministry officials admitted Pakistan had agreed to release the report ahead of the IMF Board review and confirmed that Pakistan accepted its findings. The committee was informed that a 15-point framework has been approved to address governance failures. Reforms include the customs faceless system, e-invoicing, and track-and-trace.

Senator Qadir said that a CDA official involved in a case involving graft worth billions of rupees was sent to Adiala Jail. A deal was struck in Adiala, and the man was posted at an office bigger than he had previously held. He alleged that it appears that mafias run the government, adding that the system could not be run in this manner.

The standing committee examined the proposed amendments to the Income Tax Ordinance 2001, [The Income Tax (Third Amendment) Bill, 2025] amid strong criticism from Chairman Mandviwalla, who said the FBR “never implemented the committee’s directions” regarding arbitration for tax disputes. Officials admitted that earlier ADR committees were handpicked by the FBR, discouraging taxpayers from seeking arbitration. Under the new framework, taxpayers will send a panel of three retired judges to FBR.

The FBR Chairman will choose one as the ADR Committee Chairperson. ADRC must now deliver decisions within 90 days. Government companies have also been granted the right of appeal. Naek insisted the ADRC chair must be a retired High Court judge with tax and commercial law experience, sparking debate within the committee. The committee unanimously approved the Income Tax (Third Amendment) Bill 2025 with necessary modifications.

The committee also discussed Starred Question No. 24 raised by Senator Kamran Murtaza. The meeting grew tense when the Auditor General’s office admitted a stunning error in its report:

Amounts worth 85 billion and 282 billion rupees were mistakenly recorded as trillions, inflating irregularities to an absurd 375 trillion rupees. Murtaza challenged the explanation, demanding the true financial loss to Pakistan. Senator Farooq Naek responded, “They’ve admitted the mistake, that’s enough—let’s close this.” The committee, however, directed audit authorities to submit complete details.

The committee was briefed on the scope, performance, and challenges faced by the PayPak payment system, including the factors contributing to its low market share.

The committee expressed outrage over commercial banks’ reluctance to promote local PayPak debit cards, despite SBP directions. The committee was informed that Pakistan has 53 million debit cards and over 2 million credit cards. PayPak’s market share stands at 26 percent. PayPak carries zero transaction fees, unlike Visa and MasterCard. Last year.

Copyright Business Recorder, 2025