Islamabad, Pakistan: Pakistan has decided to secure two major foreign loans totaling $1 billion (approximately PKR 281 billion at current rates) for the stated purpose of improving the efficiency of its tax system, enhancing transparency in public expenditures, and ensuring the rule of law in state institutions.
According to official documents, the funds will be sourced from two multilateral development banks:
- World Bank (WB): $600 million will be acquired under the “Pakistan Public Resources for Inclusive Development Program.”
- Asian Development Bank (ADB): $400 million will be sourced through the “Accelerating State-Owned Enterprise Transformation Program.”
Purpose and Scrutiny: While the $1 billion sum is substantial—enough to construct a new airport or build hundreds of schools—sources indicate that the loans will be acquired as budgetary support and will not be used to create new physical assets. Ministry of Finance sources clarified that the debt is primarily intended to bolster foreign exchange reserves, especially since the path for major foreign loans has not been fully cleared by the IMF yet.
Scope of Reforms: The WB’s $600 million program targets reforms across several key departments, including the Ministry of Finance, the FBR (Federal Board of Revenue), the Bureau of Statistics, the Ministry of Commerce, Power Division, the Ministry of IT, PPRA, and the Auditor General’s office. Key objectives include strengthening FBR’s tax reform measures, enhancing expenditure transparency, and reinforcing reliable data reporting systems.
However, the Ministry of Planning has raised objections to the new borrowing, noting that similar loans, such as the “Pakistan Raise Revenue Program” and the “Online Billing System,” are already in effect for the FBR and the Auditor General. Conversely, the ADB’s $400 million loan is specifically aimed at improving the performance and financial sustainability of 40 large State-Owned Enterprises (SOEs).
Expert Caution: Economic experts have warned that for Pakistan, genuine improvements in governance and transparency hinge more on “political will and reformist intent” than on simply acquiring more debt. Sustainable reforms are unlikely to materialize through continuous borrowing alone.
