ISLAMABAD: Pakistan is seeking additional financial and technical support from the World Bank, including developing an effective and transparent budget-making process and a uniform provincial mechanism for agricultural tax and climate resilience.
The bank has already committed to a financial pipeline of about $10 billion over the next five years, with an average of $2bn per annum, under the next Country Partnership Strategy (CPS), which will be finalised next month.
In this context, Finance Minister Muhammad Aurangzeb and the WB’s Country Director Najy Benhassine led their respective sides at a meeting on Tuesday. The minister eulogised the importance of collaboration with the World Bank to support Pakistan’s economic reforms and development agenda and appreciated financial and technical assistance across various sectors. An official statement said that the minister assured the government’s commitment to fiscal discipline, sustainable growth, and efficient resource utilisation.
Discussions focused on establishing a robust and transparent tax policy framework to enhance revenue mobilisation and improve compliance while ensuring equitable taxation.
$10bn partnership strategy to be finalised next month
The World Bank team also offered technical assistance to streamline the budget-making process, adopting modern practices to improve transparency and accountability in public financial management and an effective debt management mechanism to ensure fiscal sustainability and reduce risks.
“Issues related to Agricultural Income Tax Regime and GST harmonisation in coordination with provinces and enhanced focus on the active role of National Tax Council (NTC) also came under discussion”, said the statement. NTC is to comprise federal and provincial ministers for finance and revenue to coordinate uniformity of taxes and a greater share of provincial taxes in future.
Mr Najy Benhassine appreciated the government’s reform initiatives and assured continued support from the World Bank in key areas identified during the discussions. He said the bank would continue its assistance in addressing economic challenges and achieving its developmental objectives.
The upcoming CPS will focus on climate resilience, clean energy transition, out-of-school children, child stunting, and a better business climate. Not only this but also the agriculture sector revenue also fall in the provincial jurisdiction, mostly in line with the devolution process. Given the new initiative under the economic reforms, the government wants external knowledge to develop federal and provincial capacity for effective agriculture tax.
Some of the priorities include decarbonisation, particularly in hydroelectric power and air quality improvement in Punjab, followed by fiscal reforms for macroeconomic stability and inclusion and then improving the business environment for the private sector expansion.
Published in Dawn, November 27th, 2024
