Medium-Term Revenue Strategies: Are They Realistic for Developing Countries?

Domestic revenue mobilization (DRM) is critical for developing countries to finance the spending necessary to enable sustainable development. The importance of DRM now takes on greater urgency given the fiscal implications of the COVID-19 crisis. The international community has committed to assisting developing countries to address DRM. The concept of a Medium-Term Revenue Strategy (MTRS) was launched in 2016 as a key initiative for enhancing countries’ revenue mobilization efforts. This paper reviews the experience so far with the MTRS, including the lessons learned, and whether those lessons can guide operationalizing the concept in the future. The original aim was for 3-5 MTRS by July 2017, and by 2019 almost 20 countries were working with partners discussing, designing or implementing an MTRS. However, published MTRS are available for only three countries: Papua New Guinea; Indonesia and Uganda. The number of countries showing interest in an MTRS is encouraging, but progress has been disappointing, indicating that developing and implementing an MTRS is challenging. The experience so far provides guidance on what can be done to overcome some of the existing constraints on developing an MTRS, and to speed up the process. The paper concludes that it is worth pursuing the concept for now.