IMF Urges Pakistan to Strengthen Tariff Policy and Public Finance Transparency

The International Monetary Fund (IMF) has released its Governance and Corruption Diagnostic Assessment Report on Pakistan, highlighting critical areas for reform in the country’s tariff and public finance systems. The report emphasizes the urgent need for strict implementation of the National Tariff Policy 2025–30 to streamline Pakistan’s tariff structure and ensure that trade and fiscal policies support economic stability. According to the IMF, simplifying tariffs must remain a priority, as complexity in the current system undermines efficiency and creates opportunities for rent-seeking and corruption.

The report specifically calls on the National Tariff Commission (NTC) to strengthen its internal capacity and reduce its dependence on external consultants. It also stresses limiting the influence of lobbying groups on tariff decisions to enhance institutional credibility and technical independence. Enhancing transparency, curbing rent-seeking, and improving decision-making processes within the NTC are essential steps recommended by the IMF to ensure that tariff reforms have meaningful impact.

Customs enforcement was also identified as a major area of concern. Weaknesses in customs administration are undermining the effectiveness of tariff reforms, according to the assessment. The IMF recommends removing structural flaws within the customs system, abolishing Section 18-A of the Fifth Schedule, and limiting exemptions allowed under Section 19 of the Customs Act. Reducing discretionary tax exemptions and enforcing consistent application of tariffs are seen as critical to creating a coherent and fair trade regime.

In parallel, Pakistan has agreed to key IMF conditions regarding budget management and fiscal accountability. This includes conducting a special audit of supplementary grants issued over the past ten years, a move aimed at increasing transparency and accountability in public spending. Discussions between Pakistan and the IMF, which concluded after ten days of technical review, also addressed limiting the federal government’s discretionary authority to issue supplementary grants.

The IMF technical mission, which arrived in Pakistan on November 11, focused on reviewing progress toward budget-related targets, reforms in public finance management, and measures to improve transparency in the budget process. Officials confirmed that Pakistan has agreed to adopt the IMF’s recommended measures, signaling a commitment to stronger fiscal governance, greater institutional integrity, and long-term economic sustainability.

In essence, the IMF report underscores that effective implementation of the National Tariff Policy, coupled with strengthened customs enforcement and enhanced budget transparency, will be crucial for Pakistan to curb corruption, improve trade efficiency, and achieve sustainable economic growth.