Federal government clears $200m World Bank reform proposal for KP

Pakistan’s federal government has cleared a concept proposal for a $200 million World Bank-funded reform programme in Khyber Pakhtunkhwa aimed at improving tax collection, public spending and data systems, with implementation planned until October 2031.

ISLAMABAD: Pakistan’s federal government has cleared a concept proposal for a $200 million World Bank-funded reform programme in Khyber Pakhtunkhwa aimed at improving tax collection, public spending and data systems, with implementation planned until October 2031.

The proposal for the Public Resources for Inclusive Development programme was cleared on October 23. It envisages $180 million in programme financing and $20 million in technical assistance through the World Bank’s International Development Association (IDA). The clearance of the concept proposal should not be confused with final approval of the financing by the World Bank.

The programme has three main objectives: increasing provincial revenue, improving the efficiency and accountability of public expenditure, and strengthening the availability of data for policymaking.

Under the revenue component, the provincial government plans to broaden the tax base, introduce risk-based audits and strengthen compliance systems. It will also update property valuation tables and review tax exemptions to improve revenue collection.

The reforms will involve the KP Revenue Authority, Board of Revenue, Excise and Taxation Department, and Mines and Minerals Department.

The public expenditure component aims to improve budget allocation and spending, particularly in health and education. Measures include ensuring timely releases of non-salary funds to schools and primary healthcare facilities, digitising payments and strengthening internal financial controls.

The third component will strengthen the Khyber Pakhtunkhwa Bureau of Statistics to improve the collection, integration and publication of provincial data. The aim is to support evidence-based policymaking, budget preparation and monitoring of human development outcomes.

Within the first 12 to 18 months, the programme is expected to introduce risk-based tax audits, establish a harmonised property valuation framework, improve the timely release of operational funds to public facilities and integrate monitoring of key human development indicators.

By the end of the programme, the initiative aims to increase the province’s own-source revenue, improve taxpayer compliance and make spending on education and primary healthcare more predictable and efficient.

The initiative follows earlier World Bank-supported public finance reforms in the province. The $118 million Khyber Pakhtunkhwa Revenue Mobilisation and Public Resource Management Programme was approved by the Central Development Working Party (CDWP) on December 5, 2017. It comprised $100 million in results-based financing and $18 million in investment project financing, with implementation scheduled through June 2026.

Another provincial initiative, the Khyber Pakhtunkhwa Spending Effectively for Enhanced Development programme, also focused on public financial management reforms and was scheduled to run through June 2026.