The International Monetary Fund’s (IMF) Governance and Corruption Diagnostic Report has, unsurprisingly, triggered a strong reaction in the media. Many commentators have rushed to frame it as a harsh judgment on the sitting government. This interpretation misrepresents the very purpose of the report.
As the document itself makes clear, the exercise was undertaken at the explicit request of the Government of Pakistan and completed with its full cooperation. It is neither an audit of the current administration nor a verdict on its performance over the past year.
Instead, the report examines governance practices that have evolved over decades, across multiple governments, and that now constrain Pakistan’s economic potential. Its purpose is to identify systemic weaknesses and recommend reforms that can help the country unlock long-delayed improvements in governance and economic management. It is meant to support reform, not to assign blame, and to guide IMF monitoring and programme execution going forward.
The report covers five broad areas: fiscal governance, market regulation, financial-sector oversight, anti-money laundering frameworks, and the rule of law. This article focuses on market regulation and, in particular, on tariff policy, which the IMF describes as a particularly important and costly example of current issues.
The IMF diagnostic report is neither an audit of the current administration nor a verdict on its performance over the past year
According to the diagnostic, reforming this area alone could “increase growth by approximately two per cent over a five-year period while having a meaningfully positive impact on reducing inequality”.
Importantly, the IMF acknowledges that Pakistan has already begun taking meaningful steps to realign tariff policy with an export-oriented growth strategy. After years where protectionist lobbies shaped tariff decisions, policy is now moving toward greater discipline and transparency.
The report highlights two reforms of particular significance. The first is the shift of tariff-setting powers away from the revenue-driven Federal Board of Revenue to the National Tariff Commission. This transition established a whole-of-government structure through the National Tariff Board and the technical Tariff Policy Centre, giving tariff policy a coherent institutional anchor.
The second is the recent approval of the National Tariff Policy 2025–2030. Building on earlier efforts, the new policy outlines a more ambitious and time-bound plan for tariff rationalisation and gradual liberalisation. If implemented faithfully, the IMF notes, these reforms could help Pakistan break from a cycle of ad hoc tariff changes and move toward a trade policy that strengthens productivity, investment, and export competitiveness.
For the IMF, the sustainability of this progress will depend on the government’s willingness to resist the pressures that have historically derailed reform. Still, the overall trajectory is unmistakably positive. A predictable, rules-based tariff regime is essential for a country that seeks export-led growth rather than reliance on protectionism and special interests. Pakistan has taken several important steps in that direction. It must now stay the course.
Looking ahead, the IMF stresses the need to strengthen the National Tariff Commission (NTC), which now has a much wider mandate of not only enforcing trade remedy measures but also tariff setting.
It remains severely understaffed and short of the specialist expertise required to carry out its mandate. Without such capacity, tariff policy remains vulnerable to ad hoc decision-making and rent-seeking pressures. The diagnostic makes clear that if Pakistan is committed to developing a credible, modern tariff regime, expanding and professionalising the NTC is indispensable.
Fortunately, the government has already launched a comprehensive review of the commission’s performance, identified key gaps, and begun evaluating options for meaningful reform. The Prime Minister’s Office is steering this effort by drawing on the experience of leading trade-remedy authorities and successful domestic institutional reforms, such as the setting up of Pakistan Single Window, a time-bound plan to restructure the NTC along similar modern lines is now in its final stages of approval.
All in all, the IMF’s diagnostic report provides a practical roadmap across five core areas that capture much of the government’s most critical work and where reform is urgently needed. What Pakistan now requires is the same disciplined and predictable approach that is beginning to take shape in tariff reforms. The IMF estimates that if these broader reforms are pursued with seriousness and continuity, Pakistan could secure a cumulative GDP gain of 5–6.5pc over five years, an opportunity the economy can ill afford to miss.
If the government follows this path with real commitment, it can significantly improve governance, rebuild confidence among domestic and foreign investors, and bring Pakistan’s economic management closer to international best practice.
Opportunities where there is clarity about the problems and broad agreement on the solutions do not come very often. This is one of those moments. Ignoring it would not only waste a valuable chance but could set the country back at a time when it cannot afford further mistakes.
The writer is a member of the Steering Committee for the Implementation of the National Tariff Policy 2025-30 and Convenor of the Committee for Modernisation of the NTC. Previously he has served as Pakistan’s ambassador to the World Trade Organisation.
Published in Dawn, The Business and Finance Weekly, December 1st, 2025
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