ISLAMABAD: The World Bank is poised to approve a $600 million loan for Pakistan’s “Public Resources for Inclusive Development Multiphase Programmatic Approach: Phase 1 – Federal,” aimed at improving the quality and volume of public spending on inclusive development, according to a news report.
The federal program, estimated at $1.624 billion over five years, is aligned with fiscal and primary balance targets under Pakistan’s agreement with the International Monetary Fund (IMF) and the government’s Medium-Term Fiscal Framework (MTFF). The World Bank’s $600 million contribution will be directed towards enhancing public resources and improving government spending efficiency.
The program will track budget formulation, execution, reporting, and accounting cycles, following the enacted budget for fiscal year 2025. This system will support key results and disbursement-linked indicators (DLIs) critical to the program’s success. Areas not covered under existing budget heads will be funded separately, including technical consulting, institutional assessments, and operational costs.
This initiative is part of Pakistan’s broader fiscal reform agenda, which aims to address the country’s large fiscal deficit that has hindered economic stability and long-term growth. The Multiphase Programmatic Approach (MPA) aligns with the National Fiscal Pact and aims to optimize public spending, expand the tax base, and improve fiscal governance through greater transparency.
Phase 1 will focus on strengthening fiscal reforms at the federal level, including the establishment of a new tax policy unit to review and develop a medium-term tax policy framework. The program will also work on enhancing public expenditure efficiency and aligning spending with national priorities through administrative reforms and improved budget documentation.
Additionally, the program will work to improve data availability and integration to inform fiscal policies, including the creation of a national statistical hub and the development of quality assurance and data governance frameworks. This will support better service delivery and fiscal policy decision-making, with an emphasis on improving international benchmark scores.
