The World Bank is preparing to approve a $600 million loan for Pakistan’s “Public Resources for Inclusive Development Multiphase Programmatic Approach: Phase 1 – Federal,” a major initiative designed to enhance the efficiency, transparency, and inclusivity of public spending. The program targets improvements in both the quality and volume of government expenditure, with a particular focus on aligning fiscal policy with broader economic reform objectives.
The federal program, valued at $1.624 billion over a five-year period, is closely aligned with fiscal and primary balance targets under Pakistan’s agreement with the International Monetary Fund (IMF) and the government’s Medium-Term Fiscal Framework (MTFF). The World Bank’s share of $600 million will directly support initiatives to improve resource mobilization, optimize expenditure, and strengthen fiscal governance at the federal level.
At the heart of the initiative is a systematic approach to tracking budget formulation, execution, reporting, and accounting cycles, beginning with the enacted budget for fiscal year 2025. This structure will underpin the program’s key results framework and its disbursement-linked indicators (DLIs), which are critical for ensuring measurable progress. Areas not currently addressed under existing budget allocations will receive separate funding, including technical consulting services, institutional capacity assessments, and operational support.
The program forms part of Pakistan’s broader fiscal reform agenda, which seeks to address persistent fiscal deficits that have constrained economic stability and growth prospects. Through the Multiphase Programmatic Approach (MPA), the government aims to broaden the tax base, optimize public sector resource use, and improve fiscal accountability through strengthened transparency and oversight mechanisms.
Phase 1 of the program will prioritize fiscal reforms at the federal level. One of the key initiatives is the establishment of a dedicated tax policy unit, tasked with formulating and maintaining a medium-term tax policy framework. This framework will guide revenue mobilization efforts while ensuring predictability and stability in tax administration. Alongside revenue reforms, the program will focus on aligning public expenditure with national development priorities through enhanced administrative processes, more comprehensive budget documentation, and better monitoring mechanisms.
An important component of the program will be data-driven decision-making. To this end, the initiative will enhance the availability, quality, and integration of fiscal and economic data. Plans include the creation of a national statistical hub, supported by robust data governance and quality assurance frameworks. By improving the reliability and accessibility of data, policymakers will be better equipped to design and implement effective fiscal policies, improve service delivery, and meet international benchmarks for governance and transparency.
The World Bank’s backing of this program underscores the importance of well-targeted fiscal reforms in driving inclusive development. By strengthening public financial management, improving resource allocation, and reinforcing transparency, the initiative aims to lay the groundwork for sustainable economic growth while ensuring that fiscal policy supports social inclusion and equity.