Published: September 9, 2026
MONROVIA — Tax breaks meant to make rice cheaper for poor Liberians cost the government about US$41 million in 2024, but most of the benefits went to importers and wealthier families, the World Bank said Monday.
By Lennart Dodoo
The rice waivers accounted for 17 percent of the US$240.3 million Liberia gave up through tax exemptions and concessions that year, according to the Liberia Public Finance Review 2026.
The finding challenges the government’s longstanding justification that exempting imported rice from duties primarily protects low-income households from high prices. Household survey data cited in the review show that commercial importers and higher-income families captured most of the benefits.
Tax Exemptions Drain the Treasury
The rice waivers are part of a broader system of tax concessions that cost the government US$270.7 million in 2023 and US$240.3 million in 2024. The annual losses were equivalent to between 5 percent and 6 percent of gross domestic product and more than 40 percent of the tax revenue Liberia collected.
Liberia’s tax expenditures as a share of GDP are nearly three times the sub-Saharan African average of 1.8 percent and among the highest in the region, the review found.
A significant portion of Liberia’s exemptions consists of discretionary concessions granted under Section 16 of the Revenue Code, often without public disclosure or systematic analysis of whether their economic benefits justify the revenue lost.
In Côte d’Ivoire, Senegal and Ghana — countries Liberia identifies as aspirational peers — tax expenditures average less than 1 percent of GDP. Those countries also subject the exemptions to parliamentary oversight and disclose them in annual reports.
“The core message of the Public Finance Review is about opportunity,” said Georgia Wallen, World Bank Group country manager for Liberia. She said the country has an opportunity to move “from fiscal stabilization to fiscal transformation.”
The review estimates that improved tax compliance, tighter control of exemptions, better management of mining revenue and more efficient public spending could generate annual gains equivalent to between 3.9 percent and 5.3 percent of GDP by 2029-30.
The measures would not require an increase in statutory tax rates, the World Bank said.
The findings come as the government seeks US$8.4 billion to finance its five-year ARREST Agenda for Inclusive Development amid declining foreign aid, rising debt-service costs and growing liabilities from state-owned enterprises.
Government Accepts the Findings
Deputy Finance Minister for Fiscal Affairs Anthony Myers accepted the report’s central findings.
“The report is correct. These are shortcomings and opportunities we have also identified, and we intend to work together,” Myers said.
He said the government plans to modernize the Revenue Code through 70 amendments, introduce a value-added tax in January 2027 and enforce a new tax-expenditure regime that year.
Wallen credited the government with narrowing the fiscal deficit, reducing public debt and restoring economic growth. But she warned that the ARREST Agenda cannot be financed without Liberia unlocking more of its domestic resources.
“This is Liberia’s moment for fiscal transformation,” Wallen said, citing the value-added tax, the Integrated Tax Administration System and stronger oversight of tax exemptions as foundations for improving domestic revenue collection.
World Bank Senior Country Economist Muhammad Waheed said the review comes at a critical point as foreign development assistance becomes increasingly constrained.
“The central message is not simply that Liberia faces a financing gap,” Waheed said. “There is also substantial domestic potential to help bridge this gap.”
Liberia’s fiscal deficit declined from 7.1 percent of GDP in 2023 to 2.1 percent in 2025. But Waheed said the improvement resulted largely from spending cuts, including the erosion of government wages by inflation, rather than sustained revenue growth.
The review found that capital projects were postponed rather than executed more efficiently. Budgets for medicines, textbooks, equipment maintenance and other operational needs were also squeezed to levels that undermined basic services.
Liberia has 11.8 health workers for every 10,000 people, compared with a World Health Organization benchmark of 23.
Waheed said the government could close much of its revenue gap without imposing higher tax rates.
“We are not proposing increasing the statutory tax rates,” he said, pointing instead to stronger compliance, risk-based audits and greater use of technology.
The difference between the taxes owed under existing law and what the government collects is estimated at about 3 percent of GDP.
Separately, exemptions and concessions cost the government between 5 percent and 6 percent of GDP annually. The figures measure different weaknesses and should not be added together.
The World Bank’s estimate of annual gains between 3.9 percent and 5.3 percent of GDP represents what it believes a coordinated and sequenced reform package could realistically produce by 2029-30.
Mining presents another significant revenue opportunity.
Government revenue from the sector increased from US$27 million in 2016 to US$141 million in 2025, but corporate income tax accounted for only 1.4 percent of total mining revenue over the decade.
Waheed said Liberia collected just US$1.6 million in corporate income tax from the mining sector in 2025.
In Guinea and Sierra Leone, corporate income tax accounts for between 30 percent and 40 percent of mining revenue. Liberia captures an estimated 15 percent to 20 percent of its mining sector’s overall fiscal value, compared with between 50 percent and 60 percent in Guinea, Sierra Leone, Tanzania and Zambia.
“The gap cannot be explained by geology, commodity prices or the scale of operations,” the report said, attributing the difference to the fiscal arrangements governing Liberia’s mining industry.
Several mineral development agreements establish terms that supersede the Revenue Code and contain stabilization clauses locking in preferential royalty rates, tax holidays and duty concessions for 15 years or longer.
When iron ore prices exceeded US$120 per metric ton in 2022 and 2023, those provisions limited the government’s share of the windfall.
Gold has since replaced iron ore as Liberia’s leading source of mining royalties, accounting for 66 percent in 2025. But about 20 percent of gold production remains outside formal channels through undeclared sales and informal exports, the review found.
Development Money Goes Unspent
Waheed warned that raising revenue would not be enough unless the government also improves its ability to turn budgetary allocations into roads, schools, clinics and other public investments.
“Mobilizing domestic revenue alone is not enough,” he said. “We also need to improve the ability to convertbudget allocation into actual investments.”
Capital-budget execution averaged just 33 percent between 2018 and 2025.
“For every three dollars appropriated for infrastructure and investment, barely one was spent,” the report said.
Fewer than 60 percent of government contracts are awarded through competitive processes. About 60 percent of the national budget goes to governance and administrative functions, including public administration, security and the rule of law, leaving agriculture, infrastructure, health and education to compete for much of the remainder.
Between 80 percent and 90 percent of Liberia’s public investment is financed by donors and managed outside the national budget system.
The World Bank estimated that Liberia could achieve the same infrastructure results while saving the equivalent of 1.8 percent of GDP if its public investment system operated as efficiently as better-performing systems.
The review assigned efficiency scores of 58 percent to education and 67 percent to health.
Debt Threatens Any Fiscal Gains
Waheed also warned that liabilities held by state-owned enterprises could offset any gains from tax and spending reforms.
Those liabilities total about US$800 million, or about 17 percent of GDP. Of Liberia’s 46 state-owned enterprises, only one had independently audited financial statements in 2022.
“If you create fiscal space, but then these shocks consume whatever effort you have done, that will not yield us the development outcomes,” Waheed said.
Public debt stands at 54.6 percent of GDP and carries a high risk of distress. Debt-service payments reached US$196 million in 2025, consuming about 24 percent of domestic revenue.
Foreign assistance is also declining. Official development assistance financed as much as 90 percent of Liberia’s public investment program and reached 12 percent of GDP between 2022 and 2024.
A 20 percent decline in aid would reduce external financing by US$200 million or more annually — an amount greater than Liberia’s domestically financed capital budget and recurrent spending on health and education combined.
Myers said government measures had restored economic stability by addressing nonperforming loans and ensuring more predictable salary payments.
“Today, the confidence of the banking sector has returned,” he said.
Liberia Revenue Authority Commissioner General James Dorbor Jallah promised stronger enforcement against under-declaration and better integration of government data systems.
He said annual domestic revenue is approaching US$1 billion for the first time in Liberia’s history.
“September is our month of the billions,” Jallah said.
The World Bank recommended that the Finance Ministry centralize approval of discretionary exemptions and publish an annual report detailing how much revenue the government gives up, who receives the benefits and whether the concessions deliver the promised economic returns.
It also wants the LRA and Ministry of Mines and Energy to establish a consolidated database of concession terms, exemptions, waivers, production figures and payment records.
The value-added tax is scheduled to take effect in January 2027. But the review warned that reducing the proposed rate from 18 percent to 15 percent would limit its yield. The number of exemptions written into the VAT system would further determine how much revenue it produces.
If fully implemented, the overall reform package could generate annual gains of between 3.9 percent and 5.3 percent of GDP by 2029-30 and put the government’s target of raising tax revenue to 16 percent of GDP within reach.
“The central challenge is no longer diagnosis, but execution,” the report said.
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