Pakistan plans to continue pursuing the full $1.7 billion World Bank financing programme despite delays in implementing key economic reforms and concerns over meeting agreed conditions. The initiative aims to strengthen tax collection, improve public expenditure and enhance fiscal management at both federal and provincial levels.
The programme, titled Public Resource for Inclusive Development, is being implemented under the World Bank’s Multiphase Programmatic Approach (MPA), covering the federal government and all four provinces.
First Phase Receives $700 Million Approval
The initial phase includes $600 million for the federal government and $100 million for Sindh. However, implementation of the federal component has progressed slowly, with the World Bank maintaining a moderately satisfactory rating in its April and October 2026 assessments.
The programme became effective on May 14, 2026, and Pakistan received an advance disbursement of $164.5 million on June 29.
Despite these developments, the government intends to proceed with the remaining financing rather than abandon the programme.
Concerns Over Tariff and Fiscal Reforms
Pakistan’s implementation of the National Tariff Policy has raised questions about compliance with the World Bank’s reform commitments.
The government increased import taxes in June 2026 and subsequently approved additional customs duty through the Economic Coordination Committee (ECC) in October to protect a tyre manufacturer. These decisions have prompted concerns about consistency with the policy’s objective of reducing trade barriers and encouraging liberalisation.
Implementation of the National Fiscal Pact has also attracted attention. The agreement requires the federal government to reduce spending on responsibilities assigned to provincial governments following the 18th Amendment.
However, federal approval of Rs87 billion for a project in Sindh in June has raised questions about adherence to the agreed division of financial responsibilities.
More Funding Planned for Provincial Governments
The World Bank’s financing programme is divided into four overlapping phases. Following the initial allocations, a $200 million operation is being processed for Khyber-Pakhtunkhwa, while Punjab and Balochistan are expected to receive funding in subsequent phases.
Sindh’s allocation focuses on improving provincial revenue collection, particularly through agricultural income taxation and property taxes.
Focus on Tax Collection and Public Spending
Broadening Pakistan’s tax base is one of the programme’s major objectives. The World Bank will support provincial governments in improving agricultural income tax and property tax collection through digital land records, improved property valuations and better tax information systems.
The programme also aims to strengthen General Sales Tax on Services collection through greater integration of digital data.
Another important area is public expenditure management. Proposed reforms include improving budget monitoring, expanding electronic procurement systems and reducing inefficient government spending.
Electricity subsidies are also targeted for reform through a welfare-based system designed to direct financial assistance towards deserving residential consumers.
Improvements in Data and Statistical Systems
The initiative will support institutional reforms at the Pakistan Bureau of Statistics (PBS), including the establishment of a Governing Council and Users’ Council.
It also proposes creating a National Data and Statistics Hub to improve information sharing between federal and provincial institutions.
These measures are intended to strengthen government planning, fiscal management and public service delivery.
Conclusion
Pakistan’s decision to pursue the full $1.7 billion World Bank financing programme reflects its intention to continue with economic and fiscal reforms despite implementation delays.
The programme covers tax mobilisation, provincial financial management, electricity subsidy reforms, public expenditure efficiency and improvements in statistical infrastructure.
However, progress will depend on the government’s ability to fulfil its commitments under the National Tariff Policy and National Fiscal Pact. Effective implementation of these reforms will be essential to strengthening public finances, improving economic management and supporting sustainable growth in Pakistan.