World Bank downgrades $400 million Pakistan Raises Revenue programme 

World Bank has downgraded the $400 million Pakistan Raises Revenue programme from “satisfactory” to “moderately satisfactory” because of delays in meeting revised revenue, tax simplification and taxpayer facilitation targets.

According to the programme’s latest Implementation Status and Results Report, overall progress towards its development objectives is now rated moderately satisfactory, while data remains unavailable for two indicators covering customs clearance and taxpayer compliance facilitation.

Pakistan obtained the loan in 2019 for an initial five-year period, with the objective of increasing the tax-to-GDP ratio to 17%.

The target was later reduced to 10%, while the programme was extended after the original objectives were not achieved within the planned period.

Federal Board of Revenue’s tax-to-GDP ratio rose from 9% in fiscal year 2023-24 to 10% by the end of the previous fiscal year, according to the World Bank report.

FBR collected Rs11.7 trillion during the last fiscal year, falling Rs1.2 trillion short of its target.

The number of income tax return filers increased from 4.7 million to 7 million during the reporting period.

However, registered taxpayers rose to 16.2 million between July 2024 and June 2025, meaning only about 43% filed income tax returns.

The report said the gap showed that FBR had yet to secure return-filing compliance from most taxpayers already registered with the authority.

FBR has published a detailed tax expenditure report, while the Track and Trace System is being extended to a fourth sector.

A single portal for general sales tax and sales tax on services has also been introduced with four provincial tax authorities for the telecommunications, microfinance and oil and gas sectors.

The World Bank said several intermediate indicators remained behind target and progress would be subject to an independent third-party assessment.

Tax authorities attributed the downgrade partly to limited fiscal space, which prevented implementation of some programme conditions.

A World Bank team is scheduled to conduct the next implementation review in July 2026.