Pakistan plans to proceed with the full $1.7 billion World Bank financing programme despite slow progress on initial reforms and concerns over compliance with key policy commitments.
The programme, titled Public Resource for Inclusive Development, aims to expand the tax base, improve public spending and strengthen fiscal management across the federal government and all four provinces.
The first phase, worth $700 million, includes $600 million for the federal government and $100 million for Sindh. The World Bank has rated implementation of the federal component as moderately satisfactory in two consecutive reports. The programme became effective on May 14, 2026, with an advance disbursement of $164.5 million made on June 29.
However, concerns have emerged over the government’s compliance with the National Tariff Policy and National Fiscal Pact. Pakistan is expected to liberalise trade and reduce import tariff distortions, but recent increases in import taxes and additional customs duties have raised questions about its commitment to these reforms.
The National Fiscal Pact is also facing scrutiny after the federal government approved Rs87 billion for a project in Sindh, despite commitments to shift responsibilities and spending towards provincial governments following the 18th Amendment.
The remaining financing will be released through three overlapping phases. A $200 million operation for Khyber-Pakhtunkhwa is being processed, while Punjab and Balochistan are expected to receive financing in subsequent phases.
The programme will support agricultural income and property tax reforms, improved electricity subsidy targeting, digital land records, electronic procurement and stronger public financial management systems. It will also help establish a National Data and Statistics Hub to improve coordination between federal and provincial institutions.
The World Bank considers these reforms important for improving economic growth, creating employment and addressing rising poverty in Pakistan.
