Governance gaps hurting Pakistan's economy, urgent reforms needed: ICMA report

Islamabad [Pakistan], December 27 : Pakistan requires immediate, coordinated and practical governance reforms to rebuild public trust, strengthen state institutions and improve economic performance, according to a comprehensive analytical review released by the Institute of Cost and Management Accountants of Pakistan (ICMA), The Express Tribune reported on Saturday.
The report converts the International Monetary Fund's (IMF) governance and corruption diagnostic into an actionable reform roadmap spanning fiscal management, taxation, public sector oversight, the judiciary, anti-corruption bodies and digital governance. It warns that persistent governance weaknesses and poor corruption controls are directly undermining economic growth, institutional credibility and investor confidence, as reported by The Express Tribune.
According to the IMF diagnostic cited in the report, Pakistan faces serious vulnerabilities in key state functions, including budget management, revenue administration, market regulation, financial sector oversight, anti-money laundering systems and the rule of law.
Building on these findings, ICMA has identified 32 priority reform areas aimed at shifting the focus from diagnosis to implementation, The Express Tribune reported.
Fiscal oversight is highlighted as the cornerstone of governance reform. The report notes that frequent in-year budget changes without effective parliamentary scrutiny have weakened fiscal discipline.
It recommends establishing an independent Parliamentary Budget Office with technical expertise to assess government spending, fiscal risks and budget amendments. Public hearings on major budget changes, external audits and real-time digital budget tracking are also proposed to enhance transparency and accountability, The Express Tribune reported.
Tax and revenue administration reforms form another key pillar. The report describes Pakistan's tax system as complex, fragmented and unpredictable, discouraging compliance and limiting revenue growth.
It calls for the creation of a Revenue Intelligence Unit within the Federal Board of Revenue (FBR) to leverage data integration and risk-based analytics to combat tax evasion while easing pressure on compliant taxpayers. It also recommends transforming the Tax Policy Office into a fully empowered Tax Reform and Simplification Unit to rationalise laws, reduce exemptions and provide clearer guidance, as reported by The Express Tribune.
State-owned enterprises (SOEs), identified as a major source of fiscal risk, receive special focus. The report points to weak oversight, political interference and incomplete financial reporting as drivers of persistent losses. It proposes a dedicated SOE Performance and Oversight Unit within the Ministry of Finance to monitor operations, identify risks early and improve governance through professional training of boards and management.
Public investment and procurement are flagged as additional governance weak points. Frequent delays, cost overruns and weak monitoring, the report says, reduce the effectiveness of development spending. It recommends setting up an independent Public Investment Monitoring Unit to regularly review major projects and report transparently to parliament and the public. For procurement, it suggests an analytics team within the Public Procurement Regulatory Authority to track trends, detect irregularities and assess supplier performance.
On anti-corruption, the report highlights fragmented mandates and weak coordination among federal and provincial agencies. It proposes establishing a National Anti-Corruption Coordination Council to facilitate intelligence sharing, joint investigations and harmonised case management, while maintaining institutional independence. Strengthening capacity in financial forensics, digital investigations and money laundering cases is seen as critical to improving conviction rates, The Express Tribune reported.
Judicial reform is described as essential to restoring confidence in the rule of law and improving the business climate. The report points to large case backlogs and slow resolution of commercial disputes, recommending specialised benches, expanded digital case management, performance monitoring and greater use of alternative dispute resolution mechanisms.
Digital governance is presented as a cross-cutting priority. The report calls for full integration of NADRA's digital identity system with federal and provincial services and the creation of a national data exchange layer to improve service delivery and real-time monitoring. It also stresses the need for strong ethics frameworks, whistleblower protection, transparent asset declarations and better public communication to rebuild trust.
The report concludes that the success of the reform roadmap depends on political will, institutional coordination and sustained capacity building. It urges close collaboration among the government, the IMF, regulators, civil society and professionals to translate recommendations into measurable outcomes, arguing that effective implementation could help Pakistan curb corruption, strengthen institutions and achieve sustainable economic growth, The Express Tribune reported.