Liberia and Georgia Lead the Way in Improving Revenue Management, Despite Challenges

Date: March 10, 2023

Kigali, Rwanda

Two countries, Liberia and Georgia, have made significant strides in improving their revenue management systems, despite facing numerous challenges. According to a recent report by the International Monetary Fund (IMF), both countries have demonstrated impressive revenue growth over the past decade.

Improvements in Revenue Management in Liberia

• The government has implemented reforms aimed at increasing non-resource revenue, including:
  • Publishing financial accounts of revenue-generating agencies
  • Computerizing tax and customs administrations
• These efforts have yielded significant results, with non-resource revenue increases of around 2.6 percentage points per year over the past three years.

Comprehensive Tax Reform in Georgia

• Since 2003, Georgia has undertaken a comprehensive tax reform program, which has led to:
  • A drastic overhaul of its tax and customs legislation
  • Curbing tax fraud and evasion
  • Reducing smuggling
  • Simplifying the tax system
• The Georgian Revenue Service (GRS) was established as a separate agency in 2004, giving it greater autonomy and allowing it to perform state functions and earn revenue from consulting services.
• Electronic invoicing and a one-time amnesty on undeclared taxes and arrears have also been implemented.

Challenges Faced by Liberia and Georgia

• Both countries have faced significant challenges in implementing their reform agendas:
  • Liberia has struggled with low capacity and delays in implementing structural reforms related to eliminating tax exemptions
  • Georgia has had to contend with serious macroeconomic shocks, including the impact of the Ebola crisis and commodity price shocks

Impressive Revenue Growth Despite Challenges

• In Liberia, non-resource revenue increased from 10.4% of GDP in 2003 to 14.2% in 2017.
• In Georgia, tax revenues as a percentage of GDP increased from 22.1% in 2003 to 33.6% in 2017.

Key Takeaways and Recommendations

• The IMF report highlights the importance of transparency and accountability in revenue management:
  • Publishing financial accounts of revenue-generating agencies has helped to improve public trust and reduce corruption
• The report recommends the continued strengthening of institutional capacity and the introduction of comprehensive IT solutions for tax and customs administration.

Conclusion

As other countries seek to improve their own revenue management systems, Liberia and Georgia serve as models of what can be achieved with determination and commitment to reform.