ADB Announces $200 Million More Loan to Modernize Pakistan’s Revenue Administration

The Asian Development Bank (ADB) has announced a further $200 million loan to assist Pakistan in modernizing its revenue administration. ADB Vice President for South, Central and West Asia, Yingming Yang, encouraged Pakistan to expand its limited tax base and enhance tax compliance. The Transforming and Digitalising Revenue Administration Project is slated to be reviewed by the ADB board this year.

This project will support the Federal Board of Revenue's transformation agenda through investments in digital infrastructure, modern tax and customs systems, advanced data analytics, AI-driven compliance tools, improved cybersecurity, and institutional development. Yang praised Pakistan's progress in restoring macroeconomic stability and economic resilience, but highlighted the need to mobilize domestic resources more efficiently and equitably.

He emphasized that Pakistan's tax reform agenda is gaining traction, with the Prime Minister's FBR Transformation Plan and new tax operating model laying the groundwork for a more advanced, technology-driven revenue system centered on taxpayers. Successful implementation could enhance tax compliance, improve taxpayer services, and streamline data utilization, while decreasing discretionary actions.

Yang stressed that bolstering domestic revenue is not merely a fiscal objective, as increased collections would provide the government greater flexibility to invest in people, infrastructure, and public services, fortifying economic resilience and curbing reliance on debt and external financing. He identified Pakistan's narrow tax base, high informality, and low compliance as significant challenges, while acknowledging the ADB's efforts to broaden the tax base, refine tax policies, and fortify public financial management.

Yang welcomed the Tax Policy Office, asserting its potential to facilitate evidence-based policymaking and a more equitable tax system with fewer exemptions and lower compliance costs.