An article was published in some section of the media on 12.3.2023 bearing the title “FBR project gets poor rating from lender”. The piece is factually incorrect on numerous accounts and quotes statistics without proper context which makes it misleading.
To begin with, the very title of the article is misleading in that the article itself states that the World Bank had accorded “moderately satisfactory” rating to the Pakistan Raises Revenue Program, whereas the title calls it “poor” – a rating which does not even exist in World Bank’s project performance ratings code book.
It is pertinent to mention that this code book has six categories in the rating scale and “moderately satisfactory” is at number three on this scale. The article, in clear contradiction to its own title, goes on to admit that “the World Bank has kept overall project development objective rating at “satisfactory”.
Another example of this glaring and out of context reporting is that the “moderately satisfactory” rating was accorded to the smaller component-II of the PRR Program which is only worth $80 M out of the total Program size of $400 M. As per the World Bank’s Aide Memoire “overall, the progress on Component 1 is satisfactory and improving”. Important to note that Component 1 is worth $320 M and thus makes 80% of the total $400 M PRR Program. The author didn’t track the progress that took place since World Bank completed its Medium Term Review (MTR) mission in October & November 2022 and based his story on stale data. FBR was able to successfully complete a host of DLI based policy actions under Component 1 that led to additional disbursement of $41.568 M in February 2023, bringing total disbursement to $ 250 M i.e. 62% of the total Program size and, to be correct on disbursement design, 78% of Component 1 allocation. The article, on the other hand, reported the old disbursement figure of $210 M under Component 1.
The article also misrepresented FBR’s plans to extend facilitation to taxpayers’ doorstep through Mobile Facilitation Stations (MFS). This twist on facts is based on using provocative words like “luxury vehicles” which damages taxation efforts in two major ways: frustrating taxpayer facilitation efforts of FBR and creating public’s mistrust in government institutions which results in dilution of revenue generation efforts during these hard economic times. Since this is the second time this issue has been misrepresented by the same author, FBR would like to provide the context to the readers so that they are aware of the whole story and not just cherry picked points. The World Bank team conducted a Mid-Term Review (MTR) in Oct-Nov 2022,
in order to review the progress and to determine any restructuring requirement of the Program. The article in question based its points, albeit selectively, on the reports of this MTR mission. The World Bank mission recommended project restructuring in two phases. As a result of rapid restructuring phase, FBR was able to achieve DLI targets and, consequently, get the disbursement of USD 41.568 M under Component 1. For the second phase of restructuring, the MTR mission agreed with the need for the revision of Component-II’s PC-I due to price escalation of the IT equipment/ system upgrades that FBR requires and changes in organization’s needs to achieve Component 1 policy actions. Under revised PC-I, the primary initiative designed to support Component 1 policy actions was undertaking the tax compliance initiatives and behavioral nudges through enhancement of FBR’s outreach through Mobile Facilitation Stations (MFS) in areas where outreach is less due to difficulty of access and resource shortage. Each of these stations was to be housed in a vehicle retrofitted with IT equipment (with all requisite FBR systems installed on it), internet connection, printer/ scanner, walkie-talkie, biometric device, bank card machines and GPS system. The mobile stations intend to perform various facilitation functions under the law at taxpayers’ doorstep for instance registration, return filing, broadening of tax base, POS invoice verification, correction of taxpayers’ data, CPR correction and Track & Trace related support, just to name a few. It was these 155 Mobile Facilitation Stations that the article incorrectly mentioned as “luxury vehicles” merely on the basis of their engine capacity which was proposed for the different terrains/ areas these were to be used on.
For urban areas low engine capacity stations were to be made operational and for rural & hilly areas higher engine capacity stations were to be deployed. Moreover, the MFS initiative was to be implemented in phases with the initial pilot of 25 stations made operational in phase 1 after World Bank’s approval. At present only FBR is creating a provision in revised PC-1. This was to be followed by an in-depth study into the successes of phase 1 and phase 2 was to be adjusted based on the learnings/ recommendations of this study. This initiative was to be funded from the ongoing $80 M Component-II of the Pakistan Raises Revenue Program without any additional funding.
This initiative has to be undertaken by 30th June, 2025 ie., the end of the PRR project. It is worth noting that neither the word “luxury” was ever used in any MFS proposal nor was any function other than facilitation and compliance was conceived for this initiative.
Similarly, the article also attributes the decline in tax to GDP ratio from 13% to 10% since June 2018 to the performance of FBR & provinces whereas the change is due to rebasing of GDP. FBR, being the primary revenue collection agency of the Federal Government, is fully cognizant of current economic challenges facing the country. It is, thus, fully committed to delivering on its statutory role and, in the process comply with all requisite rules and regulations of the Government. (PR)