Pakistan faces growing challenges in securing international aid, as concerns over financial transparency and regulatory oversight gain global attention. The International Monetary Fund (IMF) has raised serious concerns over illicit trade in Pakistan’s cigarette sector, highlighting that illicit cigarettes account for up to 54% of the market. These concerns were reportedly discussed in detail during negotiations for the release of a $1 billion loan tranche, with the IMF urging authorities to strengthen oversight of the illegal tobacco trade. While the Federal Board of Revenue’s (FBR) Track and Trace system was praised for improving tax compliance in several industries, the IMF remained unconvinced about its enforcement in the retail sector, where substantial revenue losses persist.
Adding to this financial credibility crisis, the United States Agency for International Development (USAID) allocated $840 million for Pakistan’s education sector, promising to uplift learning opportunities for underprivileged children. However, reports have emerged that $136 million was allocated for 120 schools that do not exist. Another $20 million was funneled into television programs meant for students who were left without schools in the first place. Such discrepancies highlight the need for stricter oversight in managing foreign-funded projects to ensure that resources reach their intended beneficiaries. In light of such concerns, the Trump administration has frozen $845 million in aid to Pakistan as part of a broader decision to halt USAID funding to multiple countries while conducting a sweeping review of U.S. foreign assistance programs.
At the same time, INGOs such as the Campaign for Tobacco-Free Kids (CTFK) and Vital Strategies—both funded by Bloomberg Philanthropies—have come under scrutiny for operating in Pakistan without proper registration. Investigations into their financial conduct led to the Interior Ministry ordering the State Bank to freeze accounts linked to these INGOs, citing a lack of transparency and legal documentation. While these INGOs claim to be working in public health, their apparent disregard for addressing the illicit cigarette trade has raised questions about whether their operations align with Pakistan’s national interests or primarily serve external agendas.
Against this backdrop, Trump’s recent decision to freeze aid programs and conduct a sweeping review of U.S. foreign assistance further complicates matters. While this move impacts multiple countries, Pakistan’s history of financial mismanagement puts it in an especially vulnerable position. When aid programs come under scrutiny, cases like the missing USAID education funds, INGOs operating without oversight, and former President Arif Alvi’s allegations that $17 million of USAID funds were misused only reinforce donor skepticism.
Experts suggest that “Pakistan’s economic challenges are already severe, and losing the confidence of key international donors could push the country into deeper financial distress. We cannot afford to let mismanagement and lack of accountability define our aid partnerships, especially when every dollar counts toward stabilizing our economy.”
For Pakistan to strengthen its position in the global economic landscape, a commitment to transparency and regulatory improvements will be key. Ensuring efficient use of foreign aid, enhancing oversight of financial inflows, and fostering responsible partnerships will not only reassure donors but also contribute to sustainable national progress.
