Pakistan plans to draw full $1.7 billion World Bank loan for federal, provincial use
Pakistan plans to draw the full $1.7 billion multi-tranche World Bank package. Implementation of the first phase has been slow, but officials say the programme will not be dropped.
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- The package totals $1.7 billion, of which $700 million was approved last year.
- The federal government and all four provinces are beneficiaries.
- The World Bank rated the $600 million federal tranche moderately satisfactory in two reports.
- A $200 million tranche is being approved for Khyber-Pakhtunkhwa.
Pakistan plans to draw the full $1.7 billion multi-tranche World Bank loan package, according to The Express Tribune and Express News. The money is meant to widen the tax base, improve public spending and align it with constitutional powers.
The package is being taken under the name Public Resource for Inclusive Development, within the Multiphase Programmatic Approach. The federal government and all four provincial governments will benefit. Government officials said there are no plans to abandon it despite slow implementation of the first phase.
Of the $700 million approved last year, $600 million went to the federal government, which took it in December 2025. The other $100 million was a loan for the Sindh government. The $600 million operation became effective on May 14, 2026, and an advance disbursement of $164.5 million was made on June 29, 2026.
The World Bank has twice rated implementation of the $600 million tranche as moderately satisfactory. Its April 2026 report gave that rating because the operation was approved by the Board on December 19, 2025 but, in the bank's words, was "not yet effective". The second report, released last month, kept the rating and noted some improvements.
The Express Tribune reported that the government breached the National Tariff Policy condition twice: in June by raising taxes on imports, and last month when the ECC approved additional customs duty to protect a tyre manufacturing company. It also reported that the government approved Rs87 billion for a Sindh project in June, despite its commitment to the National Fiscal Pact under the $600 million loan.
The next $200 million tranche is being approved for the Khyber-Pakhtunkhwa government. Balochistan and Punjab would receive loans under the third and fourth phases.
The World Bank set three objectives: raising tax revenue, improving the efficiency and prioritisation of public spending, and strengthening fiscal and service delivery data systems. Express News said key conditions include effective taxation of agricultural income, better property tax collection, digitised land records and uniform property valuation.
The bank will also fund expenditure reviews and reforms to electricity subsidy policy, including a welfare-based subsidy system for residential consumers. It will support improvements at the Pakistan Bureau of Statistics, including a Governing Council, a Users' Council and a National Data and Statistics Hub.
Background
khabr.pk reported on 2 November that Sindh and the World Bank reviewed 12 active projects with a combined commitment of $3.849 billion, of which $2.334 billion had been disbursed. khabr.pk also reported that a World Bank energy mission was due in Pakistan from November 9 to 13.
Why it matters for Pakistan
The federal government and all four provincial governments are beneficiaries, so the loan affects public spending and taxes. Khyber-Pakhtunkhwa is due a $200 million tranche, while Balochistan and Punjab are in later phases. The loan conditions cover agricultural income tax, property tax and electricity subsidies for residential consumers, which touch landowners and households..
