Pakistan conditionally approves digitisation project for $200m ADB loan — Dawn
In Pakistan, the Central Development Working Party (CDWP) has conditionally approved the TADRA tax administration digitalisation project worth 57 billion Pakistani rupees. The project was recommended for consideration by the Executive Committee of the National Economic Council (ECNEC), which is necessary to obtain a $200 million loan from the Asian Development Bank, Dawn reports.
The decision was made at a meeting chaired by Planning Minister Ahsan Iqbal. He recommended the project for ECNEC consideration on condition that the state analytical centre, the Pakistan Institute of Development Economics (PIDE), thoroughly review its business model.
Loan objectives and terms
TADRA is part of the 2024–2028 transformation plan of Pakistan's Federal Board of Revenue (FBR). The FBR said the project is intended to accelerate the digitalisation of the revenue administration system, improve operational efficiency, tax compliance and the transparency of customs clearance.
The agency expects to increase the tax-to-GDP ratio from the current 11.1% to 13.5% by 2029 and expand the taxpayer base. The loan, which requires formal approval by the ADB board, is provided under the bank's investment financing. Its standard concessional term is 25 years, including a five-year grace period, with an annual interest rate of 1.5% to 2%.
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Concerns about the project
The Planning Commission required an assessment of the results of previous tax administration reform programmes. According to a PIDE study, Pakistan has attracted approximately $4.7 billion from development partners for tax system reform, while the tax-to-GDP ratio remains close to 11%.
The commission also requested verification of TADRA's alignment with the overall 350 billion-rupee FBR transformation plan, an analysis of available resources and needs, preparation of a feasibility study, and the definition of measurable performance indicators. External experts pointed to the lack of a comprehensive gap analysis, a data protection system and a clear description of the artificial intelligence model for the new systems.
The project provides for upgrades to hardware and software, including an increase in server storage from 850 TB to 3 PB. The additional capacity is needed to store and process video data from production lines in five major sectors, including the sugar, cement, tobacco and textile industries.
