IMF report “accusation” against the government: MPs

A key section of parliament on Wednesday declared the International Monetary Fund (IMF) report “an indictment of the government and parliament”, as the finance minister promised to present an action plan this month to tackle governance and corruption challenges.

“We don’t want to use the IMF report to criticize, but it is an indictment against the government and parliament,” said Syed Naved Qamar, Chairman of the National Assembly’s Standing Committee on Finance. The committee had invited the finance minister for a briefing on the IMF report.

However, Finance Minister Muhammad Aurangzeb said the IMF report was “not an indictment of the present government”.

The meeting of the National Assembly standing committee took place minutes after the meeting of the Senate Standing Committee on Finance. The Senate committee had also scheduled a briefing on the report, which the finance minister did not attend. External Finance Additional Secretary Saira Najeeb gave an overview of the report to the Senate body.

The senators unanimously condemned corruption and recommended strict measures to eradicate the menace. Senator Farooq H Naek said the findings of the report are related to the government and bureaucrats.

The Senate committee expressed its displeasure over the absence of the finance minister, finance secretary and State Bank of Pakistan governor, and asked them to ensure their presence in the next meeting to formulate a comprehensive strategy to tackle corruption.

In the NA committee, Aurangzeb assured the lawmakers that an action plan to implement priority recommendations from the IMF would be submitted by December 31. It is a condition of the IMF to submit the action plan.

The IMF has diagnosed corruption and governance problems in seven different sectors, which are critical, and has also drawn up 92 recommendations, including 15 priority recommendations necessary to revitalize these critical sectors. Asked about the suspension of publication of the report, the finance minister said the first draft of the report was shared with all relevant departments and discussions were then held with the IMF in the light of their observations.

The Ministry of Finance had earlier said that the IMF also sent the draft report close to the deadline, which left no room for discussions with the relevant agencies.

Aurangzeb said the judiciary was involved and agreed to give an action plan to reduce the pending cases and minimize the number of cases related to commercial disputes. He highlighted that priority recommendations include the publication of statements by senior civil servants and the introduction of risk-based verification. The secretary said the officers’ asset declarations would be made public from next year.

The minister said there is also a requirement to avoid budget adjustments during a year without parliamentary approval and to introduce emergency reserves.

The finance minister claimed that the government was already implementing this measure, but Naveed Qamar disputed the claim and said the finance ministry would have to take the prior consent of the National Assembly even for technical top-up grants.

Technical supplementary grants have become the main tool for adjusting large expenditure during a financial year. Aurangzeb argued that as per the IMF’s stipulation, the Special Investment Facilitation Council (SIFC) would report on investments and any concessions given.

He said the IMF has also asked Pakistan to improve the organizational structure of the FBR, reduce the autonomy of field offices and strengthen accountability. It has also proposed imposing a 10% cap on new projects, streamlining portfolios and protecting capital expenditure.

The IMF’s priority recommendations include strengthening investigation, improving money laundering reporting and strengthening asset recovery. It also wants the government to ensure merit-based, transparent selection processes for the heads of key oversight bodies, publish an action plan targeting corruption in high-risk organizations and report on progress annually. The finance minister said the government was committed to removing preferences for state-owned enterprises in government contracts. This is a major objection from the IMF, as government entities take on expensive large contracts without tenders and then subcontract to private parties. Briefing the Senate standing committee, the additional finance minister said the corruption report had been finalized after detailed discussions with all stakeholders and was released after approval from the prime minister.

Asked whether the government accepted the IMF’s allegations of corruption, the secretary said it was not about whether the reports’ observations were true or not, but a holistic diagnosis of the country’s governance structure. He said the government is committed to taking action where necessary.

The additional secretary said the government has taken some steps and introduced impersonal assessment in Customs to eliminate human interaction and biases in tax assessment.

He said the government is implementing digital systems for sales tax and monitoring production in sectors prone to tax evasion to plug revenue leakages. It has also developed Compliance Risk Management (CRM) and integrated data from 26 agencies to better target audit resources, the additional secretary said

There was an overhaul of the appellate court to reduce backlogs, including a more transparent appointment process and an increase in the number of seats from 20 to 36 to address governance challenges, he said. The finance minister informed the NA committee that Pakistan was not the only country where the IMF conducted the governance review. He said that such exercises have been completed in other countries.

Countries where the IMF has undertaken the corruption assessment include Congo, Equatorial Guinea, Peru, Mozambique, Honduras, Guinea-Bissau, Zimbabwe, Central African Republic, Mali, Moldova, Sudan, Paraguay, Zambia, Benin, Mauritania, Cameroon, Sri Lanka, Ukraine and Haiti.

There were 13 countries that undertook the assessment voluntarily. These were Austria, Canada, Germany, France, Italy, Japan, the Czech Republic, Saudi Arabia, Switzerland, the Netherlands, Norway, the United Kingdom and the United States.