Webinar on policy loan reforms held

Islamabad: A webinar on “Reform programmes under policy loans in the power sector and tax administration” was hosted by Pakistan Institute of Development Economics (PIDE) in collaboration with RASTA.

Policy Research Institute of Market Economy (PRIME) CEO Dr Ali Salman has said that while policy loans from multilateral development partners shaped the country’s fiscal and energy reform agenda for decades, their effectiveness and long-term sustainability require careful reassessment through local research and evidence-based dialogue.

Dr Salman also stressed the importance of evaluating Pakistan’s reform programmes implemented under such loans. He highlighted that Pakistan’s repeated reform cycles under donor guidance point to a deeper governance and ownership challenge.

Dr Mahmood Khalid from PIDE stated that Pakistan’s tax-to-GDP ratio declined from 10.1 percent in 2023 to 9.6 percent in 2024, compared to an OECD average of 34 percent, while interest payments now consume over 75 percent of total tax revenues. He reviewed major donor-funded initiatives observing that despite substantial funding, their outcomes were limited and often short-lived.

He highlighted that only 2.4 percent of the population files tax returns, 55 percent of filers are nil-filers, and 3.3 percent of taxpayers contribute 90 percent of total income tax revenue, reflecting a system dependent on a narrow base. He emphasised that digitisation efforts like Asaan Tax, Maloomat TaxRay, and Track & Trace improved accessibility but not compliance and that true reform required institutional autonomy, enforcement incentives and coherent fiscal policy rather than technology upgrades alone.

Afia Malik from PIDE analysed four completed loan programmes since 1994 aimed at restructuring and improving efficiency in Pakistan’s power sector. She explained that while these loans targeted governance enhancement, financial viability and private sector participation, their implementation failed to achieve commercial independence or efficiency.