Approval of $304 million loan has been granted by the World Bank for reforms in the taxation system of Punjab which was failing to meet provincial tax revenue targets for the past two consecutive fiscal years which happened to be the first two years of the Pakistan Tehreek-e-insaf (PTI) government.
According to a statement issued by the Washington-based lender on Friday, the loan is approved for financing the Punjab Resource Improvement and Digital Effectiveness Programme (PRIDE) by the World Bank’s board of executive directors.
Read more: World Bank to provide $1.15bn for two power projects in Khyber Pakhtunkhwa
The total cost of the tax reform project is estimated at Rs 90 billion or $554 million and the remaining $250 million equivalent financings will be arranged by the provincial government.
The World Bank said that the programme supports efficiencies in public resource management. It generates savings and creates fiscal space for growth generating investment in the province but the functions that the government of Punjab Chief Minister Usman Budzar listed in return for $304 million, need no financial assistance.
All these functions do not need any foreign money, rather they require political will to enhance the narrow provincial tax base. In return for the loan, the World Bank has imposed conditions of reducing “unbudgeted fiscal risks including the unfunded pension liability of the government of Punjab, and reducing variance between original and actual budget expenditures,” according to provincial government documents.
However, it was noted in the project documents that the expected net economic impact of the programme would be $1.5 billion over the 4 year implementation period.
“The PRIDE programme is integral to the World Bank’s whole-of-country approach in helping Pakistan strengthen public financial management systems at the federal and provincial levels,” said World Bank Country Director for Pakistan Najy Benhassine.
