IMF slams Pak's weak financial management recommends minimising misuse of taxpayer money

Islamabad, Nov 26 (PTI) The IMF has expressed dissatisfaction over Pakistan’s weak financial management, cash monitoring and accountability for public resource allocation as it recommended minimising misuse of taxpayer money for individual and political whims.
     The Washington-based donor's comments featured in its Governance and Corruption Diagnosis Assessment (GCDA), which was a key demand to fulfil before the International Monetary Fund (IMF) issues the next tranche of over USD 1.2 billion next month.
     Cash-strapped Pakistan is currently in 24th IMF programme agreed last year to provide it USD 7 billion dollars over a period of 39 months.
     “Despite some improvement in the last two years, Pakistan has consistently struggled with weak budget credibility, which has generated several macro-critical governance weaknesses …
     “There are a number of shortcomings in public investment management resulting in failure to protect funding for approved projects over the project life cycle and major project delays and cost increases in projects,” said the International Monetary Fund (IMF), Dawn said.
     The IMF demanded immediate steps, within three to six months, to enhance cash management by implementing the overarching sectorisation exercise to unify decision-making around Single Treasury Account (TSA) institutional coverage.
     It said the situation was compounded by a weak TSA framework without a firm institutional coverage decision that undermined effective control over the government’s cash balances.
     “The current set-up in debt management involves multiple entities with overlapping roles and responsibilities, which complicates decision-making and coordination”, it said, elaborating that mechanisms for monitoring and accountability were weak, including in the management of financial and non-financial assets, and state-owned enterprises.
     “Institutions that use budgetary resources but are designed to operate outside of standard fiscal accountability constraints undermine other state institutions and increase corruption risks,” the IMF said.
     Moreover, fiscal and economic governance vulnerabilities reflect a persistent gap between formal policy and actual practice, creating space for the misuse of public authority for private gain, it added.
     Parliamentary oversight of spending is weakened by substantial differences between approved budgets and actual expenditures. For example, the National Assembly approved PKRs 9.4 trillion in expenditure overruns in 2024-25, five times higher than the previous year.
     On top of that, constituency development funds under the direct control of legislators further skew capital investments and complicate oversight.
     Pointing to weak budget controls, the IMF said that several stages of the expenditure process were carried out manually and are not presently captured in the Financial Accounting and Budgeting System, presenting governance vulnerabilities in budget execution, reported Dawn.
     After holding back for almost three months, the Ministry of Finance released the GCDA report on November 19.
     In the 186-page document, the global lender said that Pakistan could generate between a 5 per cent to 6.5 per cent increase in GDP by implementing a package of governance reforms over the course of five year.
     It pointed out that the key areas for Pakistan, included improvements in governance and anti-corruption, business regulation and regulation of foreign trade.

(This story has not been edited by THE WEEK and is auto-generated from PTI)