Pakistan's governance crisis deepens as IMF criticises SIFC's unchecked authority

Islamabad [Pakistan], January 9 (ANI): Pakistan's Ministry of Finance has acknowledged that the Special Investment Facilitation Council (SIFC) lacks institutionalised transparency, an omission the International Monetary Fund (IMF) warns could further damage investor confidence and weaken policy stability.

The admission appears in the government's 240-page Prime Minister's Economic Governance Reforms Agenda, as reported by The Express Tribune.

According to The Express Tribune, the ministry prepared the report to fulfil the requirements of the IMF's Governance and Corruption Diagnostic Assessment under the USD 7 billion loan programme.

The document notes that unclear decision-making mechanisms within the SIFC, especially regarding strategic investment concessions and regulatory relaxations, create information gaps that heighten perceived governance risks.

Established in 2023 to act as a single-window facility for investment after Gulf nations voiced concerns over Pakistan's bureaucratic disarray, the SIFC succeeded in removing some procedural obstacles.

However, major structural problems, unpredictable taxation, soaring energy tariffs, weak external buffers and limited fiscal space continue to overshadow investment prospects.

Despite its mandate to attract foreign capital in sectors ranging from agriculture and mining to defence, tourism and IT, the SIFC has not delivered any major foreign investment. Last month, its National Coordinator, Lt Gen Sarfraz Ahmed, publicly identified several bottlenecks inhibiting FDI inflows.

The Finance Ministry admits in its report that Pakistan still lacks consolidated, publicly available information on tax concessions, fiscal impacts and regulatory exemptions.

Without consistent disclosure, investors remain uncertain about the justification and consequences of the state's strategic investment decisions, as highlighted by The Express Tribune.

To comply with IMF conditions, the government has pledged to publish the first draft of the SIFC's annual report in December and finalise it by March 2027.

The IMF has also raised concerns over Articles 10F and 10G of the Board of Investment Act, which grant sweeping powers and immunity to SIFC officials, potentially diluting accountability. The Fund further criticised the parallel functioning of the Board of Investment and the SIFC, arguing that overlapping mandates fuel confusion and weaken governance.

The IMF has urged Pakistan to address deeper structural issues rather than create multiple bodies with conflicting roles, as reported by The Express Tribune. (ANI)

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