Published: 08:00 PM, 30 November 2025
Entrenched Corruption and Elite Wealth in Pakistan
"The IMF’s latest governance report exposes Pakistan’s deep-rooted corruption, elite capture, and unequal economic privileges, warning that without bold reforms, national stagnation will persist."
The recent International Monetary Fund (IMF) Governance and Corruption Diagnostic Report sheds light on Pakistan’s entrenched state corruption, elite capture, and the unique economic privileges enjoyed by senior leadership especially within the politics and military. The report warns that unless radical reforms target these systemic deficiencies, Pakistan’s present crisis of development will persist, locking the country in dependency and stagnation. Nowhere is the institutional decay more clear than in the distribution of national wealth and the practices that allow influential groups to perpetuate their dominance.[1]
The IMF report characterizes corruption in Pakistan as not only pervasive but also corrosive, noting its distortion of markets, misallocation of public resources, and erosion of both economic growth and public trust. Over two decades, governance indicators have consistently placed Pakistan among the world’s poorest performers in controlling corruption, reflecting chronic weaknesses in contract enforcement, property rights protection, and transparency in regulatory practices. According to the IMF, between January 2023 and December 2024 alone, Pakistan recorded corruption-related recoveries amounting to Rs 5.3 trillion, a figure described as only a “narrow slice” of the true extent of unaccounted graft. The inability to quantify corruption’s total economic impact reflects “systemic underreporting and lack of effective oversight.”
An important dimension highlighted by the IMF and corroborated by Pakistani analysts involves the wealth distribution among senior military and bureaucratic elites. Pakistan’s top 1% control much of the country’s wealth, earning annual revenues above $100 million each, with most benefiting from direct or indirect subsidies, tax breaks, land allotments, and privileged access to state facilities.[2] The military, in particular, dominates this with the Army Welfare Trust, Fauji Foundation, and Defence Housing Authorities collectively commanding assets worth tens of billions of dollars, rivaling the entire civilian economy and enjoying regulatory shelters unavailable to other sectors. Retired and serving officers of the Pakistan Army routinely receive generous pensions, plots in prime urban areas, and executive posts in commercial conglomerates often managed as “welfare initiatives” but functioning as profit-driven empires.
For instance, over half a million acres of land were granted to military officers between 1985 and 2005, with the most lucrative parcels reserved for the highest-ranking generals.[3] Housing authorities in Karachi, Lahore, Islamabad, and other major cities operate not only as centers for legitimate housing but also as conduits for speculative profit, insulated from normal market competition and regulatory scrutiny. The Fauji Foundation alone, valued at around $6 billion, stands as Pakistan’s richest business group by asset value its management overwhelmingly staffed by retired military brass.[4]
The report also talks about how state-dominated sectors, including extensive ownership of enterprises and monopolistic control, foster corruption vulnerabilities “by design.” The overlapping roles of the military and government, blurred regulatory frameworks, and “discretionary enforcement” enabled by opaque institutions such as Pakistan’s Special Investment Facilitation Council (SIFC) provide privileged actors channels for concentrated gain. These structures crowd out private competition and incentivize rent-seeking, reinforcing the cycle of elite capture.
Empirical studies show that corruption has a profoundly negative effect on Pakistan’s economic growth, investment climate, and social development. Analysis of longitudinal data indicates that a 1% increase in corruption correlates with up to a 90% reduction in the country’s growth rate, dramatically limiting prospects for sustainable advancement. Corruption delegitimizes the tax base, diverts funds from critical sectors (such as education and health, which often receive less than 1% of GDP combined), and prevents equitable distribution of resources compounding poverty and income inequality.[5] The IMF projects that, with meaningful reforms to procurement systems, tax frameworks, and judicial enforcement, Pakistan could boost its GDP by 5–6.5% within five years. However, absent concerted action, Pakistan risks remaining stuck in economic stagnation and dependency, reliant on perpetual external bailouts and vulnerable to political instability.
The IMF’s recommendations call for the institutionalization of transparency especially in investment and public sector decision-making, publication of annual reports on concession-granting bodies, tightening procurement oversight, and reformation of rent-extraction mechanisms. A comprehensive approach would also necessitate real accountability for elite interests and military-commercial assets, as well as strengthened judicial independence. Only by confronting these systemic failures can Pakistan hope to transcend its pattern of elite capture and economic brittleness and lay the foundations for inclusive growth and development. Reform, transparency, and a fundamental recalibration of how national wealth and power are distributed is the way for Pakistan. Until then, the corrosive legacy of corruption will continue to stand between Pakistan and its developmental aspirations.
Written by: Ankit Kumar (The Author is a, Assistant Professor, Research at SICSSL, specializes in modern warfare, geopolitics, and nuclear policy.)
>> Source: The Khaama Press News Agency
