KP revenue mobilisation programme: World Bank gives exceptional approval for time extension, restructuring

ISLAMABAD: The World Bank’s country director for Pakistan has provided exceptional approval for the proposed time extension and restructuring of the Khyber Pakhtunkhwa Revenue Mobilization and Public Resource Management programme of around $118 million, despite its less than satisfactory rating, it is learnt.

Official documents revealed that Khyber Pakhtunkhwa Revenue Mobilization and Public Resource Management Program (KPRMP) is a five-year Programme for Results (PforR) of $118 million, with a results-based component of $100 million and an Investment Project Financing (IPF) component of $18 million.

The Ministry of Economic Affairs proposed restructuring of the programme including, (i) extend the duration of the programme to June 30, 2026, to ensure adequate time for the achievements of key results and completion of the IPF component of the programme; (ii) revise selected PDO and DLI indicators and verification protocols to align with the updated methodology of consolidation of government’s cash deposits in commercial banks, reflect developments/methodological approaches not envisioned during the design of the programme, and (iii) reflect the extended programme duration. In addition, as mentioned above, the structure and scope of SSU and OSU have been revised, to be headed by a Director SSU and Project Director (PD), respectively. Relevant changes will be made in the financing agreement and operation agreement, including definition of the operating cost.

The results-based component (or Part 1) disburses against achievement of results and the achievement of the Disbursement Linked Indicator (DLI) targets. These DLIs are linked with two result areas: (i) efficient revenue mobilisation, and (ii) effective public resource management. The IPF component (or Part 2) mainly supports technical assistance, ICT investments and capacity building to enhance e-government functionality, complementing key areas under Part 1 of the programme, and providing operational support.

The programme is currently rated as moderately unsatisfactory against progress towards the achievement of its development objective, however, extension of the closing date and restructuring of the programme are being requested which are expected to lead to an improvement in performance. So far, the programme has disbursed $94.82 million, about 80 per cent of the total project amount of $118 million.

The Mid-Term Review (held in May 2023) and subsequent implementation support missions have found significant achievements under the results-based component on several DLIs. However, some indicators need to be updated to reflect data availability, align with revised methodology, and provide flexibility. The e-governance or paperless governance initiative, under the IPF component, requires additional time for implementation, as it was delayed due to Covid related restrictions.

Notwithstanding the less than satisfactory rating of the programme, the World Bank’s country director for Pakistan has provided exceptional approval for the proposed time extension and restructuring of the programme.

Khyber Pakhtunkhwa (KP)’s tax revenue has increased from Rs14.3 billion ($51.4 million) in fiscal year 2019 to Rs56 billion ($201.4 million) in fiscal year 2024 – surpassing the programme target of Rs21.50 billion ($ 77 million; PDO indicator). The improved revenue performance is mainly supported by general sales tax on services (GSTS) which accounts for 57 per cent of the tax revenue of the province. The GSTS Tax base has expanded from 3,938 registered taxpayers in 2018 to 20,275 in June 2023) and improved filing compliance for GSTS (from average 51 percent of registered taxpayers in 2018 to 72 percent in FY23; DLI 1).

The GovKP has approved the tax data integration plan, and KP Revenue Authority (KPRA) has established third party data linkages, which will be helpful for tax intelligence and audit (DLI 2). Another important source of KP’s tax revenue is Urban Immoveable Property Tax (UIPT). The UIPT records of 8 cities in Abbottabad, Nowshera and Mardan districts have been updated (based on survey), digitised and linked with the MIS and GIS map (DLI 3). As a result, the UIPT base in these cities has substantially expanded, which will support increased collections.

The improvement in management of public investment is supported by an increased share of Annual Development Programme (ADP) funds being spent on capital investment (from 47 per cent in fiscal year 2017 to 83 per cent in fiscal year 2024; PDO indicator).

Furthermore, only 16 per cent of ADP funds were allocated to unapproved projects in fiscal year 2024, compared to the 49 per cent baseline in FY18 (DLI 5). In addition, more than 120 Tehsil Municipal Authorities (TMAs) are using Centarlized Financial Management System (CFMS) to record their transactions according to the object code of the Chart of Accounts (DLI 6).

Copyright Business Recorder, 2025