Latest news with #NationalFiscalPact
Business Recorder
08-08-2025
- Business
- Business Recorder
Public resources programme: World Bank likely to approve $600mn
ISLAMABAD: The World Bank is likely to approve $600 million for 'Pakistan Public Resources for Inclusive Development Multiphase Programmatic Approach: Phase 1 – Federal' with the objective of increasing the level and quality of spending on inclusive development. Official documents reveal that the federal government programme is estimated at $ 1,624 million over 5 years and aligned to fiscal and primary balance targets agreed under the International Monetary Fund's Extended Fund Facility (EFF) and the government's Medium Term Fiscal Framework (MTFF). Of this, the World Bank's contribution to the programme will be $600 million. The baseline for the expenditure framework is the enacted budget for fiscal year 25, following the government budget classification and the preliminary program expenditure framework constitutes selected budget heads of implementing agencies that are central to the results area and Disbursement-Linked Indicators (DLIs) of the programme. This allows tracking of budget formulation, execution, reporting and accounting cycle in line with the functional and economic classifications. PRR project: World Bank approves additional $70m credit Activities not covered under existing budget heads but necessary for programme results will be funded through a separate head, and include expenditures like technical consulting services, institutional assessments, and operational expenditures such as salaries, training, supervision, and monitoring. Documents further noted that the Multiphase Programmatic Approach (MPA) is directly aligned with the government's ongoing fiscal reform agenda, anchored within the intergovernmental National Fiscal Pact. Pakistan's persistently large fiscal deficit has been a key driver of macroeconomic instability and recurrent boom-bust cycles, suppressing long-term economic growth and productivity enhancing investments. The MPA aims to support the ongoing fiscal reform agenda at the federal and provincial level by expanding the tax base, optimizing public expenditure through transparent and accountable fiscal governance, and efficient utilization of public resources in education and health, and by strengthening the data eco-system for effective tracking of social and economic outcomes. Through its focus on structural fiscal issues underpinning macroeconomic growth and stability, the MPA supports the government's 5-year National Economic Transformation Plan (Uraan Pakistan). Under Phase one of the MPA, the proposed operation will support federal fiscal reforms under the National Fiscal Pact. Under Results Area 1, establishment of a new tax policy unit within the Finance Division will set the foundation for a thorough review of tax policy and development of a medium-term rolling tax policy framework, supporting reductions in tax expenditures, improved tax policy predictability, an increased number of compliant taxpayers, and increased overall revenues. Under Results Area 2, efficiency of public expenditures and alignment of spending with policy priorities will be enhanced through a review of the government administrative structures, pension and subsidy review and reform processes, improvements to budget documentation to improve transparency, and roll-out of digital payment and financial management systems. Under Results Area 3, the availability of data to inform fiscal policies and service delivery interventions will be improved through establishment of a national statistical hub, development and implementation of new Quality Assurance and Data Governance frameworks, and new systems for the integration of administrative data support reflected in improved scores on international benchmark scorecards. Copyright Business Recorder, 2025
Business Recorder
08-08-2025
- Business
- Business Recorder
Public resources programme: World Bank likely to approve $600m
ISLAMABAD: The World Bank is likely to approve $600 million for 'Pakistan Public Resources for Inclusive Development Multiphase Programmatic Approach: Phase 1 – Federal' with the objective of increasing the level and quality of spending on inclusive development. Official documents reveal that the federal government program is estimated at $ 1,624 million over 5 years and aligned to fiscal and primary balance targets agreed under the International Monetary Fund's Extended Fund Facility (EFF) and the government's Medium Term Fiscal Framework (MTFF). Of this, the World Bank's contribution to the program will be $600 million. The baseline for the expenditure framework is the enacted budget for fiscal year 25, following the government budget classification and the preliminary program expenditure framework constitutes selected budget heads of implementing agencies that are central to the results area and Disbursement-Linked Indicators (DLIs) of the program. This allows tracking of budget formulation, execution, reporting and accounting cycle in line with the functional and economic classifications. PRR project: World Bank approves additional $70m credit Activities not covered under existing budget heads but necessary for program results will be funded through a separate head, and include expenditures like technical consulting services, institutional assessments, and operational expenditures such as salaries, training, supervision, and monitoring. Documents further noted that the Multiphase Programmatic Approach (MPA) is directly aligned with the government's ongoing fiscal reform agenda, anchored within the intergovernmental National Fiscal Pact. Pakistan's persistently large fiscal deficit has been a key driver of macroeconomic instability and recurrent boom-bust cycles, suppressing long-term economic growth and productivity enhancing investments. The MPA aims to support the ongoing fiscal reform agenda at the federal and provincial level by expanding the tax base, optimizing public expenditure through transparent and accountable fiscal governance, and efficient utilization of public resources in education and health, and by strengthening the data eco-system for effective tracking of social and economic outcomes. Through its focus on structural fiscal issues underpinning macroeconomic growth and stability, the MPA supports the government's 5-year National Economic Transformation Plan (Uraan Pakistan). Under Phase one of the MPA, the proposed operation will support federal fiscal reforms under the National Fiscal Pact. Under Results Area 1, establishment of a new tax policy unit within the Finance Division will set the foundation for a thorough review of tax policy and development of a medium-term rolling tax policy framework, supporting reductions in tax expenditures, improved tax policy predictability, an increased number of compliant taxpayers, and increased overall revenues. Under Results Area 2, efficiency of public expenditures and alignment of spending with policy priorities will be enhanced through a review of the government administrative structures, pension and subsidy review and reform processes, improvements to budget documentation to improve transparency, and roll-out of digital payment and financial management systems. Under Results Area 3, the availability of data to inform fiscal policies and service delivery interventions will be improved through establishment of a national statistical hub, development and implementation of new Quality Assurance and Data Governance frameworks, and new systems for the integration of administrative data support reflected in improved scores on international benchmark scorecards. Copyright Business Recorder, 2025
Business Recorder
22-05-2025
- Business
- Business Recorder
National Fiscal Pact
EDITORIAL: The formation of a high-level political committee to oversee the implementation of the National Fiscal Pact was, on paper, an essential step forward. With looming fiscal pressures and critical IMF targets at stake, the need for national consensus is urgent. But the committee's composition — conspicuously excluding the government of Khyber Pakhtunkhwa — has already compromised the credibility of what ought to have been a constitutional and inclusive exercise. The stakes are high. The fiscal pact, signed in September 2024, is not just another intergovernmental agreement. It is a structural reform benchmark agreed with the IMF, designed to rationalise federal and provincial expenditure responsibilities, devolve project financing, and ensure policy coherence in taxation. If implemented earnestly, it could improve public finance management and reduce unsustainable federal deficits. But for such structural reforms to take root, especially under the 18th Amendment, consensus across all federating units is not optional — it is a constitutional necessity. The exclusion of Khyber Pakhtunkhwa from the newly-constituted eight-member oversight committee, therefore, would be incomplete both in letter and the spirit of the federal structure. No matter how noble the intent or pressing the deadline, excluding a province from decisions that directly affect its fiscal autonomy weakens national cohesion and risks turning a national reform into a partisan compact. If the goal is to build consensus on complex issues such as debt burden sharing, development financing, and water security — all of which require delicate negotiation and joint ownership — then leaving out any provincial government could be counterproductive. The committee's terms of reference include preparing budget proposals for both federal and provincial budgets within ten days. How can such input be complete or credible if one province is absent from the table? The matter becomes even more urgent considering the content of the new IMF staff-level report, which highlights that, starting in FY2026, all new Public Sector Development Programme (PSDP) projects benefiting only one province must be financed directly from provincial budgets. This will inevitably require all provinces — KP included — to shoulder more fiscal responsibility. They deserve a voice in shaping how that responsibility is structured. There is also the matter of principle. If the Federation intends to pass on a portion of the Rs8.7 trillion debt servicing cost to provinces, as is being quietly discussed, then it must first establish a consensus through mechanisms that are both constitutional and participatory. The 18th Amendment has already redefined the contours of fiscal and administrative authority. Any effort to rebalance burdens and responsibilities must begin with a respect for that framework. Otherwise, not only will the reforms falter, but they will likely invite legal and political pushback that the economy can ill afford. The committee is also tasked with coordinating the development of critical water infrastructure — an area where KP is a key stakeholder. As Pakistan prepares to counter India's unlawful obstruction of its water share under the Indus Waters Treaty, national unity is vital. Excluding a frontline province from this strategic conversation can be described as a flawed decision, given the real import of the economic challenges facing the country. If the goal is to demonstrate fiscal discipline and political maturity to the IMF and international partners then the current path risks doing the opposite. The National Fiscal Pact will be judged not by the optics of a high-powered committee, but by the integrity and inclusiveness of its process. Copyright Business Recorder, 2025
Express Tribune
20-05-2025
- Business
- Express Tribune
PM orders swift rollout of FBR reforms to tackle tax evasion
Listen to article Prime Minister Shehbaz Sharif directed on Tuesday the immediate implementation of ongoing reforms within the Federal Board of Revenue (FBR), stressing the importance of digitisation and automation to overhaul Pakistan's tax system. Chairing a high-level review meeting, the prime minister highlighted the need to rectify what he described as '70 years of mismanagement' in the country's taxation framework. Shehbaz promised maximum facilitation for honest taxpayers and businesses but vowed strict legal action against those involved in tax evasion, with no concessions. The meeting discussed the launch of a National Targeting System designed to curb sales tax evasion. This system will employ e-tags and digital devices to track goods transport, supported by an e-Bilty mechanism integrated into the FBR system. Digital monitoring installations are planned at key highways and city entry points to reduce smuggling and ease commuter delays. Officials also briefed the prime minister on a Customs Targeting System to automate import and export monitoring at ports and airports. This system will use artificial intelligence and link with domestic and international databases to tackle smuggling and tax fraud. Plans to train FBR staff on these new technologies were also reviewed, with a phased rollout set to begin with a pilot project in a major city. Key sectors like cement, hatcheries, poultry feed, tobacco, and beverages will face stricter sales tax surveillance, expanding monitoring systems similar to those used in the sugar industry to tobacco, beverage, steel, and cement sectors. The prime minister stressed that all measures be implemented swiftly, efficiently, and sustainably. Meanwhile, Prime Minister Shehbaz Sharif has constituted a high-level political committee to oversee the implementation of the National Fiscal Pact. The committee will also work toward building consensus on sharing the debt burden between the federation and provinces, and coordinate the development of critical water infrastructure amid Indian aggression. Deputy Prime Minister Ishaq Dar of the Pakistan Muslim League-Nawaz (PML-N) and Pakistan Peoples Party (PPP) Chairman Bilawal Bhutto Zardari will be the co-chairs of the eight-member committee, according to instructions issued by the Prime Minister's Office. According to the decision taken after a meeting between the PML-N and the PPP in Lahore on Sunday, the other members include ministers for defence, planning, finance, economic affairs, and law, as well as the attorney general for Pakistan (AGP).
Express Tribune
19-05-2025
- Business
- Express Tribune
Shehbaz forms panel to oversee fiscal pact
Prime Minister Shehbaz Sharif has constituted a high-level political committee to oversee the implementation of the National Fiscal Pact. The committee will also work toward building consensus on sharing debt burden between the federation and provinces, and coordinate the development of critical water infrastructure amid Indian aggression. Deputy Prime Minister Ishaq Dar of the Pakistan Muslim League-Nawaz (PML-N) and Pakistan Peoples Party (PPP) Chairman Bilawal Bhutto Zardari will be the co-chairs of the eight-member committee, according to instructions issued by the Prime Minister's Office. According to the decision taken after a meeting between the PML-N and the PPP in Lahore on Sunday, the other members include ministers for defence; planning; finance; economic affairs and law, as well as the attorney general for Pakistan (AGP). Notably, the government has not included any representative from the opposition Pakistan Tehreek-e-Insaf (PTI), which governs Khyber-Pakhtunkhwa (K-P). Without PTI's involvement, achieving consensus on the National Fiscal Pact and meeting the fiscal targets agreed with the International Monetary Fund (IMF) may prove difficult. The fiscal pact had been signed by the finance ministers of the federal and provincial governments in September 2024 as an IMF condition. But the implementation remains slow as provinces, particularly Sindh, have concerns regarding taking some expenditure responsibilities. The fiscal pact is aimed at rebalancing spending responsibilities and better aligns the provincial and federal taxation policies. Provinces agreed to the devolution of specific expenditures from the federal governments in line with the 18th Constitutional Amendment but the implementation could not begin. "Starting in fiscal year 2026, all new PSDP [Public Sector Development Programme] projects impacting just one province are expected to be financed directly from provincial budgets," reads the new IMF staff-level report released on Saturday. "The Prime Minister has been pleased to constitute the following High-Level Committee to oversee, coordinate, and ensure the effective implementation of the National Fiscal Pact," stated the instructions issued by the Prime Minister's Office. The Finance Division will notify the committee and serve as its secretariat, according to the decision. The committee will share the proposals requiring consideration in the federal and the provincial budgets within 10 days. One of the most important terms of reference of the committee is to build consensus and way forward on issues and challenges of national significance, including, inter alia, debt burden, critical infrastructure development and water security. The debt servicing cost is expected to be Rs8.7 trillion or half of the new fiscal year's budget. There has been thinking within the federal government to pass on some of this cost to the provinces. However, under the Constitution, the provinces are not obligated to share these responsibilities. Pakistan also needs to build new water storage facilities at war-footing to deal with India's unlawful act of blocking Pakistani share of water under the World Bank guaranteed Indus Basin Treaty (IWT). According to the Prime Minister's Office, the high-level committee will provide strategic oversight and direction to ensure effective and timely implementation of all commitments under the National Fiscal Pact by both federal and provincial governments. The committee will monitor implementation of revenue measures, including alignment of agricultural income tax with the FBR's income tax regime, transition of services GST to a negative list, development of a common framework for property taxation, and efforts to improve overall tax compliance and administration. Although the provincial governments have passed the respective agriculture tax laws, their implementation remains challenging. Due to this fact, the IMF has imposed a new condition under the $7 billion package for developing a delivery mechanism. "Implement the new AIT laws through a comprehensive plan, including the establishment of an operational platform for processing returns, taxpayer identification and registration, a communication campaign, and a compliance improvement plan," reads the second out of 11 new conditions. The Prime Minister's Office stated that the high level committee will oversee implementation of spending reforms, including increased provincial contributions to higher education and social protection, Benazir Income Support Programme (BISP), realignment of the PSDP responsibilities, and phasing out of provincial support price regimes. The committee will also track progress on governance measures such as the rollout of the electronic Pakistan Acquisition and Disposal System (e-PADs), adoption of green budget tagging, digitalisation of government payments and records, and coordination on anti-money laundering and combating terror financing together with relevant agencies. The IMF report stated that the Pakistan Public Procurement Regulatory Authority (PPRA) is expanding the e-PADS to federal agencies and provincial governments. As of end-February 2025, a total of 623 procuring agencies, belonging to 51 federal ministries and departments are already integrated into the system. In line with the National Fiscal Pacts, two provinces are continuing to ramp up their usage of the e-PADS; with another province already piloting their use in 2025 and the fourth province reviewing their current system for integration with e-PADS, said the IMF. So far, out of the 32,359 planned procurement contracts worth Rs821.1 billion at the federal level in the e- PADS, 21,339 contracts costing Rs74.5 billion have been completed. The high-level committee will also serve as the platform for resolving implementation challenges and facilitating consensus between the federal and provincial governments and relevant stakeholders, according to the decision. The IMF report stated that it "recommended the authorities develop a framework to guide provincial investment of their accumulated cash surpluses in government securities through non-competitive bidding".
