Islamabad: The World Bank is set to approve an additional USD 70 million in International Development Association (IDA) credit for the Pakistan Raises Revenue (PRR) project, aimed at supporting the Federal Board of Revenue’s (FBR) Transformation Plan.
With this approval, the total funding for the PRR project will increase to USD 470 million, extending its duration by two years until June 30, 2027. The additional financing will help FBR strengthen tax administration, enhance digital infrastructure, improve enforcement mechanisms, and modernize anti-smuggling efforts as part of broader economic reforms under Pakistan’s new IMF Extended Fund Facility (EFF) program.
Initially launched with USD 400 million, the PRR project includes a results-based financing component of USD 320 million and an investment financing component of USD 80 million. The additional funds will be directed toward upgrading FBR’s ICT systems, modernizing customs infrastructure, and boosting enforcement capacity.
Pakistan’s low tax-to-GDP ratio, recorded at 10.5% in FY24, has contributed to persistent fiscal deficits and rising debt. Tax exemptions alone accounted for 4% of GDP in FY24, while weak compliance and enforcement have resulted in a narrow tax base, with only 13.4 million registered income taxpayers and 396,000 sales taxpayers.
The government’s long-term goal is to raise FBR’s tax collection to 10% of GDP by FY27 and achieve a 15% tax-to-GDP ratio by 2035. The transformation plan focuses on digitization, institutional reforms, and human resource capacity building, aligning with World Bank indicators on debt sustainability and private sector growth.
In addition to World Bank support, Pakistan is also seeking financial assistance from the Asian Development Bank (ADB), which is expected to approve a separate project in mid-FY26 to further support tax system modernization.
The Economic Coordination Committee (ECC) has already reviewed the proposal, and the World Bank’s formal approval of the additional USD 70 million is expected soon, enabling the rapid implementation of FBR’s modernization initiatives.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
