News Desk |
Pakistan and World Bank signed on Tuesday three loan agreements worth a total of $918 million for different development projects across Pakistan. Adviser to the Prime Minister on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Shaikh witnessed the signing of the loan agreements.
Country Director World Bank Patchamuthu Illangovan signed the agreements on behalf of the World Bank while Economic Affairs Division Secretary Noor Ahmed signed the financing agreements on behalf of the government of Pakistan. The representatives of the Higher Education Commission (HEC) and Government of Khyber Pakhtunkhwa signed their respective project agreements.
After the agreements were signed, the World Bank’s country director held a meeting with Dr Sheikh, who thanked the World Bank “for extending their continuous support to Pakistan’s government in its efforts to achieve the sustainable economic development of the country.”
The World Bank had prepared the project information document of $1.5 billion to approve a $400 million loan for tax reforms. It was reported that the remaining $1.1 billion would be contributed by the federal government.
A press release from the Economic Affairs Division stated that the program is aimed at “contributing to a sustainable increase in domestic revenue by broadening the tax base and facilitating compliance.” It is hoped that the program will increase Pakistan’s tax to GDP ratio to 17 per cent, increase the number of active taxpayers to 3.5 million, reduce the compliance burden of paying taxes and improve the efficiency of customs controls.
The development objective of the program is to “support research in strategic sectors of the economy, improve teaching and learning and strengthening governance in the higher education sector.”
The statement said that the finances will be used towards nurturing academic excellence in strategic sectors, supporting decentralized higher education institutes for improved teaching and learning, equipping students and higher education institutions with modern technology, higher education management information system and data drive services and capacity building, project management, and monitoring & evaluation.
No Need to Impose New Taxes: World Bank
In May, World Bank said that Pakistan does not need to impose new taxes or increase rates because the existing taxes have the potential to generate the amount – Rs10 trillion revenues annually – to take the country’s tax revenue potential to 26 percent of GDP if tax compliance were raised to 75 percent.
Calling the 75 percent tax compliance a realistic level of compliance for lower-middle-income countries, the Washington-based lender had revealed that Pakistan’s revenue gap widened from Rs3.3 trillion to Rs5 trillion – 26 percent of the size of its economy.
The World Bank has been in Pakistan since 1952 – almost since the inception of the country – and has seen Pakistan going through its high and low points.
The details had emerged from the World Bank’s published report titled Pakistan Revenue Mobilization Project. The World Bank had prepared the project information document of $1.5 billion to approve a $400 million loan for tax reforms. It was reported that the remaining $1.1 billion would be contributed by the federal government.
The project information document stated Pakistan’s tax authorities were currently capturing only half of the revenue potential and the gap between actual and potential receipts was 50 percent.
How Pakistan went from being the Best in Region to a Debt-laden Country?
The World Bank has been in Pakistan since 1952 – almost since the inception of the country – and has seen Pakistan going through its high and low points. Many of the projects which today provide us with energy security were set up under the aegis of World Bank, such as the Mangla and Tarbela dams.
Recently, World Bank Pakistan’s country director Patchumuthu Illango shed light on the institution’s projects and goals in the country in an interview with the Global Village Space. Here is the link to the interview.