IMF warns Pakistan’s weak audit system is putting trillions at risk

The International Monetary Fund has raised fresh alarm over Pakistan’s fragile system of financial checks, warning that weak internal controls and limited parliamentary oversight are putting vast sums of public money at risk.

The Fund’s latest governance assessment paints a troubling picture of how state institutions handle nearly Rs40 trillion at the federal level, with even larger sums flowing through provincial coffers.

At the centre of the concern is the lack of an effective internal audit system. The IMF notes that Pakistan committed to creating a Chief Internal Auditor in every federal division under the Public Finance Management Act of 2019, yet the plan has never moved beyond paperwork. Six years on, ministries still operate without these auditors, and even the alternative financial managers already posted are missing in several key divisions.

The Fund warns that this vacuum leaves the door open for mismanagement and irregularities, many of which continue to appear in audit reports each year. Officials say the absence of basic internal scrutiny means major decisions involving public money are often taken without proper checks or follow up. The IMF argues that no government can hope to improve governance without strong internal controls that help detect mistakes early and prevent corruption from taking root.

One of the most pointed criticisms centres on the Office of the Auditor General. Although the Constitution grants the office autonomy, the IMF notes that it still operates as an attached department of the Federal Secretariat. This means the country’s top audit authority does not report directly to parliament, but instead sends its findings through layers of government. According to the Fund, such a structure limits the independence of the audit process.

The Auditor General’s own complaints reinforce the picture of strain. The office is short of about 1,500 staff members, with hiring held back by tight fiscal controls and the need for external approvals. Even with a budget marked as charged expenditure, meaning it cannot be blocked by a parliamentary vote, the office still relies on the Finance Division to release funds. IMF officials say this dependence weakens the institution at a time when stronger oversight is urgently needed.

The audit process is also bogged down by sheer volume. More than 6,000 audit reports are produced every year, yet follow up from the Public Accounts Committee remains minimal. The Fund notes that three quarters of the committee’s recommendations are still pending, and many reports run into thousands of pages because the same problems continue to surface.

The IMF is now urging Pakistan to streamline the audit system, strengthen parliamentary scrutiny and hold ministries accountable for ignoring audit findings. It has suggested changes in laws and procedures to give oversight bodies more authority, along with clearer and more concise reports that highlight the most urgent risks.