The recent International Monetary Fund’s (IMF) Governance and Corruption Diagnostic Report has, as often happens, sparked a lively debate in the media. Many voices have been quick to interpret it as a harsh indictment of Pakistan’s current government. However, this widely circulated narrative misses the fundamental purpose and nature of the report.
A Collaborative Effort, Not a Censure
Let’s set the record straight: this exercise was undertaken at the explicit request of the Government of Pakistan itself, and completed with its full cooperation. Far from being an audit of the current administration or a judgment on its past year’s performance, the report delves into governance practices that have evolved over decades, under various governments. Its true aim is to pinpoint systemic weaknesses that are currently hindering Pakistan’s economic potential and to recommend concrete reforms to unlock long-overdue improvements in governance and economic management. Think of it as a guide to support reform and future IMF program execution, not a finger-pointing exercise.
The report casts a wide net, covering five critical areas: fiscal governance, market regulation, financial-sector oversight, anti-money laundering frameworks, and the rule of law. While all are vital, this post will focus on one particularly important and costly example highlighted by the IMF: tariff policy.
Tariff Policy: A Game-Changer for Growth
According to the diagnostic, reforming tariff policy alone could be transformative, potentially “increasing growth by approximately two percent over a five-year period while having a meaningfully positive impact on reducing inequality.” This isn’t just a minor adjustment; it’s a pathway to significant economic upliftment for the entire nation.
Crucially, the IMF acknowledges that Pakistan is not standing still. Meaningful steps are already being taken to realign tariff policy with an export-oriented growth strategy. After years where protectionist lobbies heavily influenced tariff decisions, policy is now shifting towards greater discipline and transparency – a truly positive development.
Two Key Reforms on the Horizon
The report highlights two particularly significant reforms already underway:
- Shift in Tariff-Setting Powers: The authority for setting tariffs is being moved away from the revenue-driven Federal Board of Revenue (FBR) to the National Tariff Commission (NTC). This transition has established a more coherent, whole-of-government structure through the National Tariff Board and the technical Tariff Policy Centre, providing a much-needed institutional anchor for tariff policy.
- Approval of the National Tariff Policy 2025–2030: Building on earlier efforts, this new policy outlines an ambitious, time-bound plan for tariff rationalization and gradual liberalization. If implemented faithfully, the IMF believes these reforms can help Pakistan break free from a cycle of ad hoc tariff changes and establish a trade policy that genuinely strengthens productivity, investment, and export competitiveness.
While the IMF cautions that the sustainability of this progress will depend on the government’s steadfastness in resisting historical pressures that have derailed reform, the overall trajectory is unmistakably positive. A predictable, rules-based tariff regime is not just desirable; it’s essential for a country aiming for export-led growth rather than reliance on protectionism and special interests. Pakistan has indeed taken important steps in this direction and must now stay the course.
Strengthening the National Tariff Commission (NTC)
Looking ahead, the IMF strongly emphasizes the need to strengthen the NTC, which now bears the expanded mandate of not only enforcing trade remedy measures but also setting tariffs. Currently, it remains severely understaffed and lacks the specialist expertise required to fulfill its crucial role. Without enhanced capacity, tariff policy remains vulnerable to arbitrary decision-making and rent-seeking pressures. The diagnostic makes it clear: if Pakistan is serious about developing a credible, modern tariff regime, expanding and professionalizing the NTC is indispensable.
The good news is that the government is already on it. A comprehensive review of the commission’s performance has been launched, identifying key gaps and evaluating options for meaningful reform. The Prime Minister’s Office is actively steering this effort, drawing inspiration from leading trade-remedy authorities globally 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.
A Roadmap to Prosperity: The Untapped Opportunity
In essence, the IMF’s diagnostic report is not a critique but a practical roadmap, offering actionable insights across five core areas that encompass much of the government’s most critical work. Reform is urgently needed, and what Pakistan requires now 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 unlock a cumulative GDP gain of 5–6.5% over five years. This is a monumental opportunity that the economy can ill afford to miss. By following this path with real commitment, the government can significantly improve governance, rebuild confidence among both domestic and foreign investors, and bring Pakistan’s economic management closer to international best practices.
Opportunities where there is such clarity about the problems and broad agreement on the solutions do not come 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 simply 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.
Source: Original Article
