ISLAMABAD (Ahmed Mughal):- The World Bank Executive Board approved $518 million for Pakistan to help for two different projects related to revenue mobilization.

Pakistan Raises Revenue Project

Pakistan and World Bank are initiating a project named Pakistan Raises Revenue Project. Out of total amount, The World Bank will give $400 million to this project to support the Federal Board of Revenue for creating a sustainable increase in Pakistan’s domestic tax revenue. 

The project will assist in simplifying the tax regime and strengthening tax and customs administration.

It will also support the FBR with technology and digital infrastructure and technical skills. This project will enable more effective use of taxpayer information and more targeted compliance. The Government has set improving tax revenue with low compliance costs as a high priority.

“Revenue mobilization plays an essential role in Pakistan’s fiscal sustainability,”said Muhammad Waheed, Task Team Leader of the Project.

“The project will target raising the tax-to-GDP ratio to 17 percent by financial year 2023-2024. It will also widening the tax net from the current 1.2 million to at least 3.5 million active taxpayers.”

Pakistan’s revenue performance has improved significantly from tax policy measures in recent years. It raised from 9.5 percent of GDP in financial year 2011-2012 to 12.9 percent in financial year 2017-2018. This is still lower than the level needed for developing countries of at least 15 percent of GDP.

Creating fiscal space through revenue mobilization is critical to reduce the country’s budget deficit, said Illango Patchamuthu. It is also difficult to enabling people to benefit from better public investments and services , said World Bank Country Director.

KP Revenue Mobilization

The $118 million will be given to KP provincial government to mobilization of revenue and the management of the province’s resources. The project is anchored in the provincial government’s Public Financial Management Strategy (2017-2020). It will also strengthen the government’s Public Financial Management system.

While the KP government has made progress in revenue mobilization and management of public finances, its revenues remain low. Enhancing the tax revenue could increase its capacity to provide better services to residents. It will also reduce its dependence on federal transfers.

“Mobilizing domestic revenue is crucial to improving human development outcomes in KP,”said Raymond Muhula, Task Team Leader of the Project. This project will support the government’s priority to increase its own source revenue and to better manage its resources.”

Both projects also address the priority areas identified in Pakistan@100: Shaping the Future, a flagship initiative that identifies frontier interventions for Pakistan to become a prosperous country by 2047.

The International Development Association (IDA), the concessional financing arm of the World Bank, is financing both projects.

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