Pakistan is negotiating two foreign loans totalling $1 billion to enhance its tax system and reform state-owned enterprises. The government plans to seek $600 million from the World Bank and $400 million from the Asian Development Bank (ADB) for budgetary support, according to official documents.
This substantial financing package, equivalent to approximately Rs281 billion, arrives amid calls for greater parliamentary oversight of national debt.
The World Bank loan targets the “Pakistan Public Resources for Inclusive Development” program. Meanwhile, the ADB funds will support the “Accelerating State-Owned Enterprise Transformation Programme.”
This development coincides with a proposal from Syed Naveed Qamar, Chairman of the National Assembly Standing Committee on Finance. He recently advocated for parliamentary ratification of foreign debt deals to ensure transparency and better utilisation of funds.
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The Ministry of Finance intends to use these loans as direct budget support to bolster foreign exchange reserves. Unlike project financing, this type of lending does not involve the creation of new physical assets.
The $600 million World Bank loan will fund reforms across several key institutions. These include the Finance Division, the Federal Board of Revenue (FBR), and the Pakistan Bureau of Statistics (PBS).
The program sets specific targets, such as increasing the share of income tax in total revenue to 55% over a five-year period. The government’s official stance is that this program will address structural constraints and enable more efficient public spending.
However, the Planning Commission has reportedly raised objections, noting that existing lending programs for the FBR and other agencies overlap with this new proposal.
The separate $400 million ADB loan aims to transform 40 of Pakistan’s commercial state-owned enterprises. Key objectives include strengthening corporate governance, ensuring compliance with the SOE Act, and improving the financial sustainability of the National Highway Authority (NHA).
This initiative addresses long-standing challenges in SOE performance. Systematic monitoring has historically been weak due to limited institutional capacity.
