Pakistan’s $600 million fiscal reform program is facing delays despite approval from the World Bank, as practical work on the plan has not yet started.
According to documents, the program remains ineffective because of delays in key government approval processes, with the project’s PC-1 still under consideration by the Central Development Working Party.
Documents show that practical work on revenue and expenditure reforms could not be started. The plan remains limited to paperwork, while actual progress on the ground has been described as a major challenge.
A key reason behind the delay is that the PC-1 of the project is still under consideration by the CDWP. Because of this pending approval, the program has not become fully effective.
The delay has slowed the launch of reforms aimed at improving fiscal management, expanding revenue collection and controlling government spending.
Tax-to-GDP target set at 15% by 2030
Under the program, Pakistan has set a target to raise the tax-to-GDP ratio to 15% by 2030. The reform plan also includes a target to reduce tax expenditures and exemptions by 30%.
However, documents show that work on tax reforms has not begun in practical terms. Obstacles also remain in expanding the GST portal and broadening the tax net.
Documents point to continued challenges in implementing tax reforms, especially because of weak coordination between the federation and provinces.
The lack of communication between federal and provincial authorities is affecting progress on the broader fiscal reform agenda.
World Bank declares project risk level high
The World Bank has declared the overall risk level of the project as high. According to the documents, political and economic challenges remain major hurdles in implementing the program.
The assessment suggests that without stronger ownership and coordination, the reform plan may continue to face delays.
The program also includes targets for digital payments and e-governance. However, documents show that no progress has been made on these targets so far.
This lack of movement has further slowed efforts to modernize government systems and improve transparency.
Electricity subsidy reforms still in design stage
Reforms aimed at reducing electricity subsidies are also still in the design stage. These reforms are considered an important part of Pakistan’s expenditure management agenda.
But delays in finalizing the design mean implementation has not yet started.
The right-sizing plan for some government institutions is also pending. According to the documents, the plan is awaiting cabinet approval in certain institutions.
This has delayed efforts to improve efficiency and reduce unnecessary expenditure within the public sector.
Vacant posts, weak capacity
The World Bank has also pointed to vacant key positions and weak institutional capacity as major concerns. These gaps are affecting the ability of government institutions to implement the reform program.
The documents state that work could not even begin on targets related to improving the data system.
Despite World Bank approval and clear fiscal targets, the program has yet to deliver practical progress. The reform agenda remains largely limited to documents, while implementation continues to face bureaucratic, political and institutional hurdles.
With tax reforms, subsidy changes, digital governance and data improvements all delayed, Pakistan’s $600 million fiscal reform program remains stuck at a critical stage.
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