World Bank flags risks in Pakistan’s tax reforms

Summary

• The World Bank has reported moderate progress in Pakistan’s tax reforms and development programmes, while warning of substantial political, governance and economic risks that could affect implementation.
• The World Bank has also highlighted risks surrounding the $70 million Connected Punjab Programme, which runs until June 2031.
• Sustained coordination between the government and the World Bank will be important for meeting revenue targets and delivering the promised improvements in public services.

AI Generated Summary

The World Bank has reported moderate progress in Pakistan’s tax reforms and development programmes, while warning of substantial political, governance and economic risks that could affect implementation. The lender has assessed two major financing programmes, worth approximately $770 million combined, as moderately satisfactory or facing moderate-to-substantial risks, according to its latest disclosures.

The programmes aim to strengthen Pakistan’s macroeconomic stability, improve public service delivery, increase domestic revenue collection and expand digital services. One of the main targets is to raise the country’s tax-to-GDP ratio from 12.3 per cent in June 2025 to 15 per cent by June 2030.

The Pakistan Public Resources for Inclusive Development Multiphase Programmatic Approach is backed by a financing framework of around $700 million. The World Bank has rated its overall implementation as moderately satisfactory but assigned it a substantial risk classification. The assessment reflects concerns over political stability, governance, economic conditions, institutional capacity and compliance with financial and environmental standards.