A flagship World Bank-backed programme to modernise Pakistan’s public finances has made no disbursements, with nearly all reform targets remaining at baseline levels months after approval.
The World Bank approved a $600 million Pakistan fiscal reform programme on 19 December 2025, targeting revenue growth, public spending efficiency, and improved national statistical systems.
The programme, titled Pakistan Public Resources for Inclusive Development, remains non-effective because critical administrative approvals from Pakistani authorities are still outstanding.
Pakistan’s Central Development Working Party is currently reviewing the project’s PC-1 document, delaying the formal launch of all planned reform activities across federal and provincial institutions.
Despite these delays, the World Bank has rated overall progress as Moderately Satisfactory, while classifying the programme’s total risk level as Substantial across political and institutional dimensions.
Fiscal targets
The programme aims to raise Pakistan’s tax-to-GDP ratio from 12.3 percent to 15 percent by 2030, while reducing overall tax expenditures by 30 percent from current levels.
Authorities also intend to increase the share of direct taxes in total government revenue, though no measurable movement on these indicators has been recorded yet.
Progress on fiscal targets remains at baseline levels, and clearer performance data is expected only after the conclusion of the current Pakistani fiscal year.
Tax and digital reforms
Plans to modernise tax administration, including implementing a unified goods and services tax portal and expanding the number of active taxpayers, have faced structural and coordination bottlenecks.
A persistent lack of coordination between federal and provincial governments continues to hinder harmonisation of tax collection systems across Pakistan’s four provincial administrations.
Reforms to digitise vendor payments and expand e-governance services have not yet begun, with targets for digital public service access remaining unchanged from their baseline starting points.
The programme targets enabling two million citizens to access digital government services and shifting 70 percent of vendor payments onto digital platforms by the project’s end.
Government rightsizing and power subsidies
The government’s rightsizing initiative, designed to reduce public sector payroll costs, has completed its analytical groundwork, but cabinet approval is still awaited before implementation can proceed.
Expected fiscal savings from the rightsizing reform have not yet materialised, as the reform remains at an early preparatory stage without any formal cabinet endorsement so far.
Separately, reforms targeting Pakistan’s power sector subsidies, which currently cost approximately Rs 1.19 trillion annually, remain in their design phase despite ongoing advisory support from the Bank.
Institutional capacity
Key positions within the Project Management Unit, including the director post and several technical specialist roles, have not yet been filled by the relevant Pakistani authorities.
Governance and oversight mechanisms, including procurement systems and internal audit frameworks required to administer the programme, remain under development and are not yet operational.
The programme also targets raising Pakistan’s Statistical Performance Indicator score from 68 to 90 and establishing new data and intelligence units within statistical institutions.
Progress across all statistical capacity indicators remains at zero, as no activities have formally launched since the programme received World Bank board approval in December 2025.
What happens next
The World Bank plans to conduct its first formal implementation support mission later in 2026, which will provide an updated assessment of progress on the ground.
Until that mission concludes, the programme remains in a preparatory phase, with its outcomes depending on swift administrative approvals, institutional readiness, and sustained government political commitment.
