KARACHI: The World Bank has downgraded the implementation progress of its $100 million public sector reform program in Sindh province to "moderately satisfactory" from "satisfactory," citing delays in key institutional reforms, pending technical assistance approvals and weaknesses in health financing, education budgeting and statistical capacity.
In its latest Implementation Status and Results Report, the bank said that although some reforms were underway and initial results achieved, several critical activities were at risk of delays. It said approval of the PC-I for the technical assistance component remains essential to sustaining reform momentum.
The program, titled Pakistan Public Resources for Inclusive Development – Phase I (Sindh), aims to strengthen the provincial fiscal system to support macroeconomic stability and improve public service delivery.
The report said the program had disbursed $19.97 million, or about 20% of its revised $99.81 million financing, since becoming effective on March 6, 2026. The program is scheduled to close on Dec. 31, 2030.
The bank identified delays in establishing institutional arrangements, strengthening the Sindh Bureau of Statistics, improving primary healthcare financing and introducing greater transparency in school expenditure management.
The approval of the technical assistance PC-I is holding up several activities, including preparation of a costed primary healthcare financing framework, strengthening statistical institutions, developing data governance arrangements and introducing improved monitoring systems.
The report said approval of a costed primary healthcare financing framework, originally due by June 30, 2026, remained delayed. The framework is intended to introduce clear performance indicators and improve evidence-based allocation of resources to primary healthcare facilities.
Similarly, the introduction of gender-disaggregated reporting on school management committee allocations and expenditures has also been delayed, partly because of pending PC-I approval.
The bank noted that Sindh's school funding policy had been prepared and discussed with stakeholders but was still awaiting approval from the Finance Department and provincial cabinet. The delay has also affected timely releases and utilization of non-salary school budgets.
The report highlighted institutional weaknesses in the Sindh Bureau of Statistics, including limited human resources, technical capacity and institutional arrangements. Although a draft institutional assessment and provincial data governance framework had been prepared, these remained under review at the Sindh Planning and Development Department, with legal review still pending.
The province is also facing gaps in health, education, agricultural and economic statistics, while integration of administrative databases and development of the proposed Sindh Data Bank remain key reform challenges.
On the revenue front, however, the program has registered progress. Sindh's own-source tax collection increased to 593 billion rupees ($2.1 billion) in August 2026, compared with 424.8 billion rupees in March 2026, against a target of 750 billion rupees by June 2030. The fiscal 2026 figure is subject to verification by the third-party verification agent.
The number of general sales tax on services filers increased to 38,015 in June 2026 from 34,373 in June 2025, exceeding the annual target of 35,500. Registered services sales taxpayers also increased to 67,464 from 61,607, although the fiscal 2026 target of 68,000 was narrowly missed.
GST on services collection reached 342.1 billion rupees in June 2026 against 284 billion rupees a year earlier, while advance income tax collection increased to 1.05 billion rupees from 780 million.
The bank also reported progress in digitizing government payments, with 40% of government payments processed through electronic fund transfers by the Accountant General Sindh, pending third-party verification. It has set targets to increase electronic payments through the Accountant General Sindh to 80% and through District Accounts Offices to 60%.
The report also highlighted weaknesses in risk-based tax audits, property valuation and tax administration automation. Delays in PC-I approval have prevented business process mapping and the development of a comprehensive plan for harmonized property valuation.
Overall, the bank maintained the program's development objective rating at satisfactory but downgraded implementation progress to moderately satisfactory, while retaining the overall risk rating at substantial. Political and governance risks were assessed as high, reflecting challenges in institutional capacity and implementation of the reform agenda.
