ISLAMABAD: As the government struggles to increase the tax revenue, the World Bank conceded its tax administration reform project implemented by the Federal Board of Revenue (FBR) failed in raising revenues.

The independent evaluation group which evaluated the Country Partnership Strategy (2010-14) for Pakistan says in its report that the World Bank’s 2005 tax administration reform project was unsuccessful in raising revenues. It identified five main weaknesses in tax policy and collection: complexity, a narrow tax base, low compliance, inefficient tax administration, and low and declining provincial tax revenues.

Furthermore, the World Bank provided advice to Punjab government in 2012 to reform its property tax. They did not yield results.

The country partnership strategy expected that improved compliance management and introduction of a broad-based value added tax would raise revenues to above 10 per cent of GDP.

The evaluation report says that the Banks electricity distribution and transmission project launched in 2008 achieved some progress but below target in electricity supply, customers served, and reduction of losses. The 2012 natural gas efficiency project and Tarbela-IV extension project have not had impacts yet.

The net commitments if International Finance Corporation (IFC) in energy amounted to $413 million and with MIGA guarantees they reached $430 million by 2014. Some of these investments were found mostly unsuccessful.

However, the thermal power project consisting of development, construction and operation of a combined cycle dual fuel – gas and high sulpher diesel – power plant has shown very good economic and financial results, excellent environmental and social outcomes. The evaluation group recommended focusing on reducing losses, corporatizing and privatizing energy companies.

The independent evaluation group rates the outcome of World Bank group support to Pakistan moderately unsatisfactory. It rated the pillar on improving economic governance as unsatisfactory, with three outcomes partially achieved, and two not achieved. The pillar on human development and social protection as moderately satisfactory, with one outcome achieved, one mostly achieved, and two partially achieved.

The strategy’s third pillar on improving infrastructure remained moderately unsatisfactory, with one outcome mostly achieved, three outcomes partially achieved and one not achieved; and fourth pillar on improving security and reducing the threat of conflict, as moderately unsatisfactory. Outcomes achieved or mostly achieved covered safety nets, rural livelihoods, and urban services.

Outcomes partially achieved covered public expenditures, public sector management, governance of markets, access to education, health, nutrition and population services, transport and logistics, irrigation and agriculture, environmental sustainability employment and livelihood opportunities in conflict areas, and responsiveness and effectiveness of the state in conflict areas.

The evaluation report says that the 2010 country partnership strategy planned a 2010-12 “high priority” IBRD/IDA lending programme of 23 projects amounting to $3,634 million, plus $150 million in grants for four projects under MDTF. It envisaged total financing of up to $6,200 million for the full four-year strategy period.

Due to the slow pace of structural reforms, IBRD/IDA approved only one development policy loan for social safety nets; it accounted for 6.8pc of total financing, well below the 25pc share of development policy lending envisaged by the strategy, or the 32.3pc share of financing approved during the previous strategy.

The pre-existing portfolio of 21 projects (3,281.27 million was similarly concentrated on infrastructure and human development as actual strategy lending. Trust funds approved $404.6 million, largely concentrated on human development activities.

The report says that the share of projects at risk declined from 22.7pc in 2010 to 16.7pc in 2014, but the share of commitments increased from 9.7pc to 15.1pc. The disbursement ratio

declined from 26.9pc in 2010 to 20.6pc in 2014, according to the evaluation report.

Published in Dawn, May 18th, 2014