Pakistan’s government has cleared another $200 million foreign loan to overhaul the Federal Board of Revenue.
The Central Development Working Party recommended the Transforming and Digitalising Revenue Administration project, worth Rs57.1 billion.
The proposal now goes to the Executive Committee of the National Economic Council for final consideration.
What The New Loan Will Fund
Officials say the project will be financed through an Asian Development Bank loan.About $81 million, or Rs22.5 billion, is set aside for consultancy services that the tax body will hire over five years.
Another $10 million is marked for project management.
The loan would be repaid over 25 years at an interest rate of 1.5 percent to 2 percent a year, paid by taxpayers.
A Long List Of Earlier Reform Loans
Planning officials noted that development partners have already provided roughly $4.7 billion to modernise the tax system.
This latest facility would take the total close to $4.9 billion, or almost $5 billion.
Previous programmes included the Tax Administration and Reforms Project, Pakistan Single Window, Integrated Transit Trade Management Systems, and the Pakistan Raises Revenue Programme.
The last of those, a $400 million facility, came with pledges to lift the tax-to-GDP ratio first to 18 percent and later above 13 percent.
Those targets were missed.
Stagnant Collection And Repeated Promises
The tax-to-GDP ratio stayed stuck at 10.3 percent in fiscal year 2025-26.
The authority also missed its collection targets in the last two fiscal years.
It now says the new investment will raise the ratio to 13.5 percent by 2029 and increase active registered taxpayers from seven million to 12 million.
Deputy Chairman of the Planning Commission Ahsan Iqbal asked for clearly defined, measurable results on revenue, the tax-to-GDP ratio, and the size of the taxpayer base.
The project was recommended on the condition that the Pakistan Institute of Development Economics review its business model.
Digital Plans And Expert Doubts
The tax body says the work forms part of its Transformation Plan for 2024-28, already approved by the Federal Cabinet at a cost of Rs350 billion.
That plan includes hardware and software upgrades, including an increase in server capacity from 850 terabytes to 3 petabytes.
Officials argue that earlier systems were built for ordinary transaction processing, not for GPU-heavy machine learning.University experts who reviewed the file raised gaps.
They pointed to missing gap analysis, a weak data-security framework, and limited clarity on the proposed artificial-intelligence models.
Some suggested open-source options and stronger data-governance rules.
An official from the Finance Division also called for a detailed feasibility study before work begins.
Loan negotiations are expected soon.
Whether this round of spending finally lifts compliance and collection, after nearly $5 billion already spent, will be judged by results rather than new assurances.