World Bank flags Pakistan’s $600 million fiscal reform programme as rollout yet to begin months after approval

Pakistan’s $600 million fiscal reform programme backed by the World Bank has yet to begin implementation months after its approval, with key administrative steps still pending, according to the bank’s latest Implementation Status & Results Report.

The “Pakistan Public Resources for Inclusive Development” programme, approved on December 19, 2025, remains ineffective as its PC-1 is under review by the Central Development Working Party (CDWP). No disbursement has been made, and formal implementation has not started.

Despite the delay, the World Bank has assessed overall progress and implementation as “Moderately Satisfactory,” while assigning a “Substantial” risk rating, citing political, macroeconomic and institutional challenges.

The programme aims to improve revenue mobilisation, enhance public spending efficiency and strengthen statistical systems. However, with no activities launched, performance indicators remain unchanged from baseline levels.

Key targets include increasing the tax-to-GDP ratio from 12.3 per cent to 15 per cent by 2030, reducing tax expenditures by 30 per cent and raising the share of direct taxes in total revenue. Progress on these indicators remains stalled.

Reforms in tax administration, including the rollout of a unified GST portal and efforts to expand the tax base, have faced coordination issues between federal and provincial authorities, slowing implementation.

On the expenditure side, planned measures such as digitising vendor payments and expanding e-governance services have not commenced. Targets include shifting 70 per cent of vendor payments to digital platforms and enabling two million people to access digital public services.

The report also noted delays in reforms related to the government’s rightsising initiative, where analytical work has been completed but cabinet approval is still pending. Similarly, measures to reduce power sector subsidies, currently estimated at Rs1.19 trillion annually, remain at the design stage.

Institutional capacity constraints have also affected progress, with key positions such as the Project Management Unit director and technical staff yet to be filled. Governance mechanisms, including procurement and audit systems, are still being developed.

The programme also includes targets to improve Pakistan’s statistical performance, including raising its Statistical Performance Indicator score from 68 to 90 and establishing new data systems, but no progress has been recorded so far.

The World Bank plans to conduct its first implementation support mission later this year to assess progress. Until then, the programme remains in a preparatory phase, dependent on approvals and institutional readiness for execution.