ISLAMABAD: The World Bank (WB) and the Asian Development Bank (EDB) have agreed to provide Pakistan $750 million in loans, but conditions apply.
Formal discussions for the release of $350 million for the Poverty Reduction Strategy Paper II (PRSP-II) have started between Pakistan and the WB while talks for the release of $400 million for economic reforms with the ADB will start Wednesday. The World Bank, officials said, has told Pakistan to raise electricity tariffs by June 30 to qualify for the loan.
The WB team is also reviewing the poverty alleviation programme, reforms in the Federal Board of Revenue (FBR) and preparations for the implementation of the Value Added Tax (VAT) in place of sales tax from July 2010. Officials told The Express Tribune that the review mission had a detailed meeting with the chairman Federal Board of Revenue (FBR) and his team on Monday in which the tax administration reforms project was reviewed.
The FBR reportedly has informed the WB team that all preparations have been made to implement VAT from July 1. They said as soon as VAT is passed by parliament and signed by the president, the government will direct the Federal Board of Revenue to implement the new tax and notifications regarding issues relating to VAT including its rules and regulations will be released. Sources said the World Bank had also agreed to an extension in the tax administration reforms project (TARP) until 2011 as long as its conditions were met.
The WB team has stressed upon the FBR that in addition to setting targets for net receipts, targets of gross receipts should also be set. Besides, implementation of reforms, audit enforcement plan be made effective and smuggling stopped. The WB team has also advised to extend the tax net and taxto- GDP ratio by including more
Published in the Express Tribune, May 25th, 2010.