South Asia’s growth prospects have weakened amid increasing uncertainty in the global economy. Regional growth is projected to slow to 5.8 percent in 2025—0.4 percentage points below October projections. Multiple shocks over the past decade have left South Asian countries with limited fiscal buffers. The region needs targeted reforms to strengthen economic resilience and unlock faster growth and job creation. Stepping up domestic revenue mobilization could help the region strengthen fragile fiscal positions and increase resilience against future shocks. Although tax rates in South Asia are often above the average in developing economies, most tax revenues are lower. The report recommends a range of policies to improve tax revenues by eliminating loopholes, streamlining tax codes, tightening enforcement, and facilitating tax compliance.The report recommends a range of policies to improve tax revenues by eliminating loopholes, streamlining tax codes, tightening enforcement, and facilitating tax compliance. This includes paring back tax exemptions; simplifying and unifying the tax regime to reduce incentives to operate in the informal sector; and using digital technology to identify taxpayers and facilitate collection. The report notes the potential of adopting pollution pricing, which could help address the high levels of air and water pollution while raising government revenues.