The International Monetary Fund (IMF) has warned that persistent corruption and “state capture” in Pakistan are at the root of its ongoing economic crisis, where public policy is manipulated to benefit a narrow circle of political and business elites.
The findings are part of the Governance and Corruption Diagnostic Assessment (GCDA), finalised in November 2025 and requested by the Pakistani government.
The 186-page report paints a grim picture of dysfunctional institutions unable to enforce the rule of law or safeguard public resources, reported Aljazeera According to the IMF, corruption in Pakistan is “persistent and corrosive”, distorting markets, eroding public trust, and undermining fiscal stability. The report warns that without dismantling structures of “elite privilege”, economic stagnation will continue. “Failure of implementation [of laws and principles of accountability] gives vested interests too often free rein and addressing this must be at the core of efforts for economic reform,” said Stefan Dercon, professor of economic policy at the University of Oxford. Ali Hasanain, associate professor at Lahore University of Management Sciences, said the IMF’s conclusions are consistent with prior domestic and international studies.
Pakistan has turned to the IMF 25 times since 1958. The current programme, initiated under Prime Minister Shehbaz Sharif, is a 37-month, $7 billion arrangement, with a $1.2 billion tranche expected next month. The country narrowly avoided default in 2023.