The World Bank-funded Trust Fund for Accelerating Growth and Reform (TAGR) project would update tax administration data centers of the Federal Board of Revenue (FBR) and set up Tax Intelligence Unit (TIU) and market monitoring and intervention unit (MMI) to increase domestic revenue mobilization. According to a WB paper on proposed project restructuring of strengthening tax systems and building tax policy analysis, the project aimed at strengthening tax systems and building tax policy analysis capacity, the project ($4.9 million) was approved by the Bank on April 28, 2017 and became effective on August 2, 2017.
The objective of the project is to support policy informed decisions in domestic revenue mobilization. The project, which is part of the Department for International Development (DFID)-funded Trust Fund for Accelerating Growth and Reform (TAGR), consists of two components: (1) updating tax administration data centers to strengthen the Federal Board of Revenue's (FBR) capacity in information technology, and (2) building FBR's fiscal research and tax policy analysis capacity.
Under component 1, the project will update the data centers, including storage, servers and network equipment, and support the implementation of a change management program. The expected outcome is an integrated information and communications technology (ICT) data center that effectively conveys tax information to decision makers.
Under component 2, the project will support the set-up of a tax intelligence unit (TIU) and a market monitoring and intervention unit (MMI), whose aim is to develop the Federal Board of Revenue's (FBR) capacity to carry out sound tax policy analysis. The units will be responsible for designing, organizing, and directing a wide range of macroeconomic and tax analyses (e.g., direct, indirect, customs, trade).
Project activities experienced initial delays but are now underway. The reasons for the delay were (i) a request by FBR for additional consultations prior to the start of the project, (ii) personnel changes within the government of Pakistan due to the departure of the Secretary of the Economic Affairs Division (EAD), the authorized representative for signing the grant agreement, and (iii) the fact that the project was initially not included in the Public Sector Development Program (PSDP) 2017-18 at the time of budget approval in June 2017, which effectively put a stop on implementation. All these issues are now resolved. The budget for the project was allocated in January 2018, allowing the opening of the revolving fund account and enabling the project to commence disbursement. Project implementation has also started. Under component 1, the procurement process for the data center has been launched and is tentatively expected to be completed by December 2018.
Under component 2, the terms of reference (TOR) for staff/consultants of the tax policy unit have been approved. Overall, the Project is currently being rated as moderately satisfactory (MS) and has no outstanding audits.
The proposed restructuring consists primarily of an extension of the project closing date and related revisions to the results framework. The proposed restructuring responds to a request by the Economic Affairs Department (EAD) of the government of Pakistan to restructure the Project through an extension of the project closing date by 14 months from April 30, 2018 to June 30, 2019 (Letter No. 4(3) WB-IV/17 of February 12, 2018).
Consistent with this request, the restructuring proposes an extension of the closing date until June 30, 2019 and related revisions of the dates and targets of the results framework, the disbursement estimates, procurement plan and implementation schedule. There are no other substantial changes to the project. In particular, the Project Development Objective (PDO), the implementation arrangements, the project cost and the project's risks and safeguards remain unchanged.
To allow for a successful completion of project activities following the initial delays, it is proposed to extend the project closing date by 14 months from April 30, 2018 to June 30, 2019. Consistent with the project's new closing date, the target dates of the results framework are being revised. The project's PC-1, the government's internal project concept document, was prepared and approved in January 2017.
The project's disbursement estimates have been updated reflecting the new closing date. It is estimated that the project will disburse its entire funds in fiscal year 2019. About USD 3.43 million (70%) of the project amount is expected to be disbursed by December 31, 2018, while the remaining USD 1.47 million (30%) is expected to be disbursed by June 30, 2019. The project's procurement plan has been updated in line with the new project implementation schedule. There are no fundamental changes in substance to the procurement.
The sequence of activities remains the same, but the implementation schedule of the Project has been updated reflecting the new closing date of June 30, 2019. Activities under component 1 (data center) are now expected to be implemented from February 2018 to December 2018. Activities under component 2 (establishment of two research units) are scheduled to be implemented between March 2018 and June 2019.