ISLAMABAD: The International Monetary Fund (IMF) has sharply criticised Pakistan’s persistent fiscal mismanagement, weak public financial controls, and inadequate cash monitoring despite being in its 24th IMF programme, calling for urgent reforms to curb inefficiencies and potential misuse of public funds.
In its Governance and Corruption Diagnosis Assessment (GCDA), the IMF said Pakistan continued to struggle with “weak budget credibility”, generating governance vulnerabilities that undermine economic stability. The Fund noted that while minor improvements had occurred over the past two years, systemic flaws in budgeting, project execution and cash oversight persisted.
The IMF highlighted that public investment management remained riddled with shortcomings, leading to frequent delays, cost overruns and an inability to protect funding for approved projects. It said these problems enabled political and individual discretion over resource allocation, eroding transparency and accountability.
Within the next three to six months, the Fund has demanded Pakistan overhaul its cash management structure by operationalising a unified Single Treasury Account (TSA) and adopting a forward-looking cash forecasting approach. It warned that the existing TSA framework lacked clarity on institutional coverage, weakening control over government cash balances and allowing for fragmented accounts that facilitate inefficiencies and potential corruption.
The Fund expressed concern that Pakistan’s debt management system involved overlapping roles across multiple institutions, complicating coordination and decision-making. Weak monitoring mechanisms for both financial and non-financial assets — including state-owned enterprises — further increased corruption vulnerabilities.
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“Institutions that use budgetary resources but operate outside standard fiscal accountability constraints undermine state institutions and increase corruption risks,” the report stated.
Parliamentary oversight was also deemed ineffective. The IMF highlighted that the National Assembly approved Rs9.4 trillion in expenditure overruns for 2024-25 — five times higher than the previous year — illustrating a widening gap between budgeted and actual expenditures. Legislator-controlled constituency development funds, the Fund warned, skew investment priorities and complicate scrutiny.
The IMF said the situation was compounded by a weak TSA framework without a firm institutional coverage decision.https://t.co/I5vRCQTTPn
— Dawn Business (@dawn_business) November 26, 2025
The IMF also questioned the opacity around interest earnings on government accounts held in commercial banks, stating it remains unclear whether these revenues are recorded in the federal budget.
While acknowledging the Ministry of Finance’s establishment of a Cash Coordination Committee (CCC) and a Cash Forecasting Unit (CFU), the IMF noted that both remained largely non-functional — with the CFU unstaffed and the CCC meeting irregularly, hindering Pakistan’s ability to manage borrowing effectively.
It further criticised Pakistan’s reliance on manual stages of expenditure processing, which are not integrated into the Financial Accounting and Budgeting System (FABS), exposing significant governance vulnerabilities.
The IMF concluded that without decisive reforms to strengthen fiscal discipline, centralise cash management, and enhance transparency, Pakistan’s public financial management would remain prone to inefficiency and corruption.
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