World Bank Sees Up to 5.3% GDP Fiscal Gains for Liberia | Business

Liberia could create additional fiscal space equivalent to between 3.9 percent and 5.3 percent of Gross Domestic Product (GDP) annually by 2030 if it implements reforms to boost domestic revenue, improve public spending and manage fiscal risks, the World Bank has projected.

The projection is contained in the 2026 Liberia Public Finance Review (PFR), launched in Monrovia Monday, September 7, under the theme “From Stabilization to Fiscal Transformation.”

World Bank Country Manager Georgia Wallen said the potential gains could provide additional resources to finance critical national priorities, including roads, electricity, healthcare, education, job creation and climate resilience.

“The PFR estimates that sustained implementation of the proposed reforms could generate annual fiscal gains of around 3.9 to 5.3 percent of GDP by 2030,” Wallen said.

She said Liberia has made significant progress in restoring macroeconomic and fiscal stability but must now transform those gains into sustainable development financing.

The projection comes as Liberia faces an estimated US$8.4 billion financing requirement over five years to implement the ARREST Agenda for Inclusive Development (AAID), while external development assistance is becoming increasingly constrained.

World Bank Liberia Senior Country Economist Mohamed Waheed said Liberia therefore needs to mobilize more domestic resources while ensuring that existing public funds deliver greater development results.

“The central message is not simply that Liberia faces a financing gap,” Waheed said. “There is also substantial opportunity, domestic potential, to help bridge this gap.”

According to the report, Liberia’s fiscal deficit fell from 7.1 percent of GDP in 2023 to 2.1 percent in 2025, while public debt declined and inflation moderated.

However, Waheed said much of the fiscal adjustment resulted from expenditure compression, including reductions in real wage spending, goods and services and capital expenditure.

“The next phase should not be simply about further compression,” he said, calling instead for stronger domestic revenue mobilization, improved expenditure management and better control of fiscal risks.

The World Bank identified four major opportunities for Liberia to create additional fiscal space.

The first is domestic revenue mobilization. The report estimates a tax gap of about 3 percent of GDP, suggesting that additional revenue can be collected through stronger compliance, enforcement, technology and tax administration without relying primarily on higher tax rates.

The World Bank also highlighted tax expenditures, estimated at between 5 percent and 6 percent of GDP, as an area requiring stronger management.

The second opportunity is the mining sector, where revenues increased more than fivefold from approximately US$27 million in 2016 to US$141 million in 2025.

Despite the growth, the World Bank says the sector has greater fiscal potential. Waheed noted that about 20 percent of gold production is estimated to remain outside formal registration, limiting government revenue and oversight.

The third area is public expenditure efficiency. Average capital expenditure execution stands at only 33 percent, prompting calls for better project preparation and execution, stronger procurement and payroll management, and improved coordination of investment financing.

The fourth is fiscal-risk management, including stronger oversight of state-owned enterprises, prudent debt management and better management of commodity-price and climate-related risks.

The Government said several of the recommended reforms are already underway.

Anthony Myers, Deputy Minister for Fiscal Affairs at the Ministry of Finance and Development Planning, speaking on behalf of Finance Minister Augustine Kpehe Ngafuan, said government interventions had helped restore stability in the banking and construction sectors while making public salary payments more predictable.

Myers said the government is also undertaking a comprehensive review of the Liberia Revenue Code, with about 70 amendments being considered to modernize the tax system, including provisions addressing the digital economy.

He said the government has enacted a Tax Expenditure Management Act and completed nationwide consultations, with reporting and monitoring mechanisms being developed.

On mining, Myers said an African Development Bank-supported domestic resource mobilization project is strengthening monitoring and revenue collection, bringing together mining authorities, the LRA, Customs, law enforcement and the judiciary to combat under-declaration and smuggling.

“Is that enough? Definitely not,” Myers said. “We still have several targets to achieve.”

Wallen said Liberia does not need to start from scratch, noting that many reforms identified in the PFR are already underway.

She said the report is intended to help policymakers prioritize, sequence and accelerate reforms with the greatest impact.