IMF Urges Pakistan to Curb FBR Corruption, Reform Tax System

The International Monetary Fund (IMF) has presented a detailed report to Pakistan’s Finance Division, urging the government to take swift action to address corruption within the Federal Board of Revenue (FBR) and to enhance overall governance standards.

The “Governance and Corruption Diagnostic Assessment” highlights several key recommendations. The IMF has asked Pakistan to reduce tax exemptions provided to specific sectors and investments, curtail special tax regimes, and phase out advance and additional withholding taxes. The FBR has been directed to prepare a comprehensive strategy on these issues.

In a bid to improve tax policy effectiveness, the IMF advised the separation of tax policy planning from FBR’s operational duties. It further recommended that the Auditor General of Pakistan be granted full autonomy through legal reforms. A restriction on supplementary budget grants—those introduced without parliamentary approval—was also proposed to ensure greater fiscal transparency.

The Fund has set a deadline of May 2026 for the government to submit a progress report detailing the steps taken to meet these targets. In addition, a formal governance action plan based on the recommendations has been requested for public release.

These suggestions were made after IMF representatives held consultations with nearly 30 public institutions during a mission to Pakistan in April. The report is expected to guide future reforms as part of Pakistan’s continuing engagement with the IMF.