Public resources programme: World Bank likely to approve $600mn

ISLAMABAD: The World Bank is likely to approve $600 million for ‘Pakistan Public Resources for Inclusive Development Multiphase Programmatic Approach: Phase 1 – Federal’ with the objective of increasing the level and quality of spending on inclusive development.

Official documents reveal that the federal government programme is estimated at $ 1,624 million over 5 years and aligned to fiscal and primary balance targets agreed under the International Monetary Fund’s Extended Fund Facility (EFF) and the government’s Medium Term Fiscal Framework (MTFF).

Of this, the World Bank’s contribution to the programme will be $600 million. The baseline for the expenditure framework is the enacted budget for fiscal year 25, following the government budget classification and the preliminary program expenditure framework constitutes selected budget heads of implementing agencies that are central to the results area and Disbursement-Linked Indicators (DLIs) of the programme. This allows tracking of budget formulation, execution, reporting and accounting cycle in line with the functional and economic classifications.

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Activities not covered under existing budget heads but necessary for programme results will be funded through a separate head, and include expenditures like technical consulting services, institutional assessments, and operational expenditures such as salaries, training, supervision, and monitoring.

Documents further noted that the Multiphase Programmatic Approach (MPA) is directly aligned with the government’s ongoing fiscal reform agenda, anchored within the intergovernmental National Fiscal Pact.

Pakistan’s persistently large fiscal deficit has been a key driver of macroeconomic instability and recurrent boom-bust cycles, suppressing long-term economic growth and productivity enhancing investments.

The MPA aims to support the ongoing fiscal reform agenda at the federal and provincial level by expanding the tax base, optimizing public expenditure through transparent and accountable fiscal governance, and efficient utilization of public resources in education and health, and by strengthening the data eco-system for effective tracking of social and economic outcomes.

Through its focus on structural fiscal issues underpinning macroeconomic growth and stability, the MPA supports the government’s 5-year National Economic Transformation Plan (Uraan Pakistan).

Under Phase one of the MPA, the proposed operation will support federal fiscal reforms under the National Fiscal Pact. Under Results Area 1, establishment of a new tax policy unit within the Finance Division will set the foundation for a thorough review of tax policy and development of a medium-term rolling tax policy framework, supporting reductions in tax expenditures, improved tax policy predictability, an increased number of compliant taxpayers, and increased overall revenues.

Under Results Area 2, efficiency of public expenditures and alignment of spending with policy priorities will be enhanced through a review of the government administrative structures, pension and subsidy review and reform processes, improvements to budget documentation to improve transparency, and roll-out of digital payment and financial management systems.

Under Results Area 3, the availability of data to inform fiscal policies and service delivery interventions will be improved through establishment of a national statistical hub, development and implementation of new Quality Assurance and Data Governance frameworks, and new systems for the integration of administrative data support reflected in improved scores on international benchmark scorecards.

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