Pakistan and World Bank Tuesday signed loan agreement worth $ 918 million for three projects. The agreement signing ceremony was witnessed by Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh. Secretary Economic Affairs Division (EAD) Noor Ahmed signed the financing agreements on behalf of government of Pakistan while the representatives of Higher Education Commission (HEC) and government of Khyber Pakhtunkhwa signed their respective project agreements. Country Director World Bank, Patchamuthu Illangovan signed the agreements on behalf of the World Bank.
The World Bank on June 14 approved a package of $518 million for two projects in support of Pakistan's ambitious efforts to raise revenue and reduce compliance cost with a goal of providing better services to the people. The $400 million Pakistan Raises Revenue Project will support the Federal Board of Revenue's (FBR) focus to create a sustainable increase in Pakistan's domestic tax revenue. The project will assist in simplifying the tax regime and strengthening tax and customs administration. The programme's targeted results include: (i) increasing Pakistan's tax to GDP ratio to 17 percent; (ii) increasing the number of active taxpayers to 3.5 million; (iii) reducing the compliance burden of paying taxes; (iv) and improving the efficiency of customs controls.
It will also support the FBR with technology and digital infrastructure and technical skills. This will enable more effective use of taxpayer information and more targeted compliance. The government has set improving tax revenue with low compliance costs as a high priority.
"Creating fiscal space through revenue mobilisation is critical to reduce the country's budget deficit, enabling people of Pakistan to benefit from better public investments and services," said Illango Patchamuthu.
According to the project documents, the objective of the Raises Revenue Project for Pakistan is to contribute to a sustainable increase in domestic revenue by broadening the tax base and facilitating compliance.
The project is a five-year investment project financing (IPF) operation with disbursement-linked indicators (DLIs) that has two components: (a) component one: results-based component, and (b) component two: a traditional IPF component that finances investments in ICT. Component one will disburse against documented execution of eligible expenditures under the Eligible Expenditure Programmes (EEPs) and the achievement and verification of the DLI targets. This US $320 million component comprises four objectives areas with 10 DLIs. The DLIs have been selected to capture the key interventions and intermediate results that directly contribute to the PDO and PDO indicators.
The names of the DLIs and formulations of DLRs are designed for clarity to the FBR and its officers charged with the implementation of the project. Verification protocols are intentionally specific and provide more details of the content of the targets to facilitate monitoring and verification.
The component two (traditional IPF) comprises investment in the FBR's ICT systems. This US $ 80 million component will finance the supply and installation of ICT equipment and software, and of cargo weighing, contactless scanning, and laboratory equipment for customs inspections (goods). It will also finance consulting and non-consulting services for software development, technical assistance (TA), and training for complex interventions (e.g. business process improvement, change management).
Higher Education Development in Pakistan (HEDP) worth US $ 400 million: The development objective of the programme is to support research excellence in strategic sectors of the economy, improve teaching and learning and strengthening governance in the higher education sector.
The project will finance the following components: (i) nurturing academic excellence in strategic sectors; (ii) supporting decentralised higher education institutes for improved teaching and learning; (iii) equipping students and higher education institutions with modern technology; (iv) higher education management information system and data drive services; and (v) capacity building, project management and monitoring & evaluation.
According to HEC statement, HEDP project was successfully negotiated between the HEC and the World Bank in May 2019, for a $400 million IDA credit support. Subsequently the project was approved by the World Bank Board in May.
The Component-2 of the project, Supporting Decentralised HEIs for improved teaching and learning, aims to improve the quality of education delivered by tier-2 universities and affiliated colleges through strengthening affiliation systems and technological interventions. The objective of the Component-3 is to leverage technology to improve the teaching, learning and research environment in Pakistan and strengthen the existing IT resources available to institutions for research and higher education in Pakistan.
The Component-4, higher education management information system and data driven services, aims to improve the collection and use of data for national level policy-decisions, while automating business processes in higher education institutions.
The fifth component will support HEC in strengthening its core functions of regulation, capacity building, and funding of Pakistan's higher education sector through strategic and targeted technical assistance, including establishment of National Higher Education Academy.
Khyber Pakhtunkhwa Revenue Mobilization and Resource Management Programme worth US$118 million: The development objective of the programme is to increase collection of KP's own-source revenues and improve the management of public resources.
This objective is to be achieved through (a) efficient revenue mobilisation and (b) effective public resource management and (c) capacity building to enhance e-government functionality.
The project is anchored in the provincial government's Public Financial Management Strategy (2017-2020) and will strengthen the government's public financial management system. The programme will help the government of Khyber Pakhtunkhwa mobilise own source revenue to address the constraint of limited fiscal space for investment and public service provision and efficient and strategic use of the province's financial resources. Later, the World Bank country director held a meeting with the Adviser to the Prime Minister on Finance Hafeez Shaikh. The adviser thanked the World Bank team for extending their continuous support to the government of Pakistan in its efforts to achieve the sustainable economic development of the country.
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