In scorching criticism of the International Monetary Fund (IMF)’s highly trumpeted Governance and Corruption Diagnostic Assessment (GCDA), an independent think tank has described the report as “analytically strong” but said it compromised on politically sensitive reforms and institutional independence.

The think tank’s report revealed that the IMF compromised on the independence of the National Accountability Bureau (NAB), the Auditor General of Pakistan and oversight of the Special Investment Facilitation Council (SIFC).

The Global Think Tank Network (GTTN) also said that 73% of fiscal consolidation under the IMF programme was the result of placing more tax burden, mostly on the “already-taxed formal firms, salaried individuals, and the less-affluent via petroleum levies and indirect taxation”.

The think tank released its report at the beginning of the IMF mission to Pakistan, which will review implementation of the action plan agreed to address corruption and governance-related vulnerabilities identified in its November 2025 report. However, the GTTN report also highlights compromises that the IMF struck with Pakistan.

The GCDA “is analytically strong and unusually candid”. Yet its omissions are consequential, said the GTTN.

The GCDA’s “enforcement mechanisms are weak, politically sensitive reforms are diluted or deferred, subnational governance is under-examined, and institutional independence is insufficiently secured,” according to the report.

The think tank said that while the IMF achieved fiscal stabilisation, structural reforms were postponed and “stability without reform does not resolve risk; it defers it”.

The GTTN said consistent fiscal consolidation since 2022 had delivered a cumulative primary adjustment of 5.6% of GDP, the largest in Pakistan’s history.

But “73% of this adjustment has come from revenue measures. The burden has fallen disproportionately on already-taxed formal firms, salaried individuals, and the less-affluent via petroleum levies and indirect taxation. One effect of this is to push firms into informality”.

The GTTN added that while already burdened people were overburdened, government expenses kept rising during the past three years. “Overall expenditure by federal and provincial governments has risen by 60% since 2023. Non-interest expenditure has increased by 70%, and personnel-related spending has ballooned from Rs3.7 trillion to Rs5.9 trillion – a 59% increase”, according to the report.

The think tank said the GCDA recognises corruption risks but does not integrate these macro-social consequences into reform design. “Fiscal pain is immediate, yet governance reform is deferred,” it added.

Proposed changes to NAB are confined to a future “review” of its appointment process, without mandating an independent selection committee, fixed non-renewable tenure or structural safeguards to insulate leadership from political influence.

“Although concerns about politicisation are acknowledged, they are not matched by binding institutional redesign,” said the GTTN said.

The GCDA flags the need for a more transparent procedure for key appointments, including the NAB chairman, yet fails to call for widening the pool of candidates beyond the civil service, judiciary and military, which are widely seen as responsible for Pakistan’s current state, according to GTTN.

“The widening of this pool is essential to give a chance to top professionals, academics and other suitably qualified candidates who can bring a fresh and more objective perspective to the fight against corruption”, it added.

Similarly, while weaknesses in audit follow-up are recognised, no enforceable mechanisms are introduced to ensure Auditor General findings result in corrective action. The absence of binding timelines, parliamentary reporting requirements or sanctions for non-compliance leaves a longstanding accountability gap largely intact, said the GTTN.

On the SIFC, the principal recommendation is publication of an annual report, which the government has proposed to issue starting March 2027.

“The GCDA fails to address broader governance concerns such as parliamentary oversight, transparency of concessions, cost-benefit evaluation of projects, or the scope of immunity provisions. Given the Council’s expanding role in economic decision-making, the limited reform requirement is striking”.

The GTTN said provinces account for about 60% of consolidated public expenditure, reflecting fiscal decentralisation, yet the GCDA remains overwhelmingly federal in scope with limited assessment of provincial governance vulnerabilities.

The GCDA provides serious treatment of fiscal governance weaknesses but, the GTTN said, “the most striking empirical evidence drawn from FY15-FY24 budget data points to serious budgetary deviations and malpractices that the GCDA omits”.

Ten out of 40 federal ministries have consistently posted significant ‘overspending’ deviations, with average cumulative overspending during FY15–FY24 amounting to Rs210 billion. Five ministries – Energy, Defence, Interior, Cabinet and National Health – accounted for 91% of cumulative overspending.

The report added that the GCDA does not embed anti-money laundering and combating financing of terrorism reforms within a broader accountability ecosystem tied to elite financial disclosure or asset verification.

In Pakistan, where 80% of the population does not use banks, the stringent and mechanical imposition of AML/CFT requirements exacerbates de-banking and can push small and micro businesses into informality, it added.

The report further stated that ensuring an independent judiciary, empowering oversight institutions, creating a truly autonomous parliament, supporting a free press and encouraging a robust civil society are essential. However, the GCDA does not address these foundational horizontal reforms that are critical to tackling corruption.

“Instead, it opts for quick fixes – such as proposing asset declarations by senior state officials, which are considered basic anti-corruption measures,” according to GTTN.

Declarations are limited in coverage and oversight, and no autonomous authority is mandated to conduct regular audits or investigate discrepancies. In practice, politicians and members of the judiciary remain outside a robust and enforceable disclosure framework. While transparency is formally encouraged, deterrence is not institutionally embedded.

However, the GCDA reform agenda remains largely technocratic. It approaches the judiciary as an institution facing administrative constraints rather than as a constitutional body whose independence underpins credible enforcement, said the GTTN.

Issues such as appointment procedures, tenure security and potential executive influence receive limited substantive treatment. The question of ensuring judicial accountability for performance remains largely unexamined, especially given uncertainty over whether audits of judicial finances are conducted, it added.