World Bank to approve $70 million for Pakistan's FBR

The World Bank is likely to approve an extra $70 million to support tax reforms in Pakistan. This funding will help the Federal Board of Revenue (FBR) implement its new Transformation Plan. With this addition, the total funding for the Pakistan Raises Revenue (PRR) project will rise to $470 million. The project will also be extended until June 30, 2027. The funding is aimed at improving FBR's tax administration, digital systems, enforcement efforts, and anti-smuggling measures. This fits into a broader economic reform plan linked to Pakistan's International Monetary Fund (IMF) program. Originally, the PRR project had a budget of $400 million. It includes a $320 million results-based component and an $80 million investment financing component. The new funding will allow FBR to upgrade its information technology systems, customs facilities, and enforcement strategies. Pakistan faces challenges with a low tax-to-GDP ratio of 10.5% for fiscal year 2024. Exemptions have further strained the budget, accounting for 4% of GDP. Poor compliance and enforcement have narrowed the tax base, with only about 13.4 million income taxpayers registered. The Transformation Plan aims to increase FBR collections to 10% of GDP by 2027 and to reach a 15% ratio by 2035. It focuses on digitization and strengthening FBR's institutions. Besides the World Bank, Pakistan is also seeking assistance from other organizations, such as the Asian Development Bank (ADB). ADB is expected to approve a new project to support tax reforms by mid-2026. The Economic Coordination Committee (ECC) has already evaluated the proposal, and the World Bank's approval for the additional funding is anticipated soon. This will enable quick advancement of FBR's modernization efforts.