Ethiopia publishes its first National Medium-Term Revenue Strategy

In October 2024, the Government of Ethiopia published its first National Medium-Term Revenue Strategy (NMTRS), setting out a roadmap for reform of key elements of tax policy and administration for the period spanning 2024/25 to 2027/28. The NMTRS was prepared by a joint team from the Ministry of Finance (MoF) and Ministry of Revenues (MoR) in collaboration with other government agencies and with support from the World Bank, United Nations Economic Commission for Africa (UNECA), the International Monetary Fund (IMF) and TaxDev.

The NMTRS outlines a comprehensive framework of tax policy and administrative reform measures aimed at simplifying the tax system and creating a more favourable environment for private investment to strengthen revenue collection efforts in support of Ethiopia’s economic growth, development and poverty reduction objectives.

The NMTRS aims to improve overall domestic resource mobilisation, reversing the declining trend in the tax-to-GDP ratio, by setting an ambitious target of 6.9% of GDP increase in the tax-to-GDP ratio by the end of the NMTRS period through the following measures:

• Tax policy measures aimed at broadening the tax base and simplifying the tax system are expected to raise approximately 3% of GDP.
• Tax administration measures, primarily focusing on enhancing tax administration and service delivery at sub-national revenue bureaus, are anticipated to generate additional revenue of 2.9% of GDP.
• Macroeconomic measures, including reforms to the foreign exchange regime, are expected to raise an additional 1% of GDP.

TaxDev supported the NMTRS team throughout the development of the strategy, including in identifying and reviewing policy measures, participating in meetings and workshops, and preparation of the strategy document.

TaxDev is grateful for the following acknowledgement in the NMTRS:

Similar appreciation goes to IFS/TaxDev, the World Bank and UNECA for their crucial feedback. The IFS/TaxDev has played decisive role during the preparation from inception to the final stage of the NMTRS.

The NMTRS is available on the MoF website.