IMF Flags Pakistan’s Weak Fiscal Governance Gaps

The IMF has raised serious concerns about Pakistan’s weak fiscal controls, fragmented treasury operations, and slow reform implementation. In its Governance and Corruption Diagnosis Assessment, the Fund urged Pakistan to take urgent steps within six months to strengthen cash forecasting, improve treasury transparency, and close governance gaps that increase corruption risks.

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The International Monetary Fund has yet again flagged Pakistan’s weak fiscal management, warning that persistent gaps in treasury operations and public spending oversight are undermining financial stability. Its latest Governance and Corruption Diagnosis Assessment noted that despite being in its 24th programme, the pace of Pakistan’s progress on strengthening public financial controls remained slow and fragmented.

The report noted that incomplete integration in the Single Treasury Account has allowed government entities to maintain their scattered cash balances across multiple bank accounts, which apart from resulting in idle funds, raises transparency concerns on interest earnings. Several tiers of Pakistan’s expenditure cycle continue to rely on manual procedures outside the Financial Accounting and Budgeting System, therefore exposing the process to governance vulnerabilities.

The IMF further criticized the fragmented setup of debt management, the absence of a fully functional Cash Forecasting Unit, and the infrequent holding of coordination meetings-all factors limiting timely decision-making. Delays and increasing costs in development projects, partly driven by inconsistent funding and constituency-based spending, were also highlighted.

Overall, the Fund emphasized that it was time for Pakistan to bridge the gap between policy and practice. Strengthening cash forecasting, enhancing analytical tools, and finalizing TSA reforms over the coming three to six months remain vital for fiscal discipline and reducing corruption risks.