IBRD/IDA Board Briefing on Domestic Resource Mobilization (DRM) - Supporting Green, Resilient and Inclusive Development (GRID) - Key Messages

Jul 19, 2026

IBRD/IDA Board Update (June 2021) presents how COVID-19 worsens domestic resource mobilization (DRM) challenges, with revenues falling in real terms and many countries expected to see tax-to-GDP ratios drop. It frames DRM as a political and economic priority under high deficits and pre-COVID debt burdens, balancing fiscal consolidation with growth. The briefing highlights “more and better” revenues aligned with equity, climate objectives, digital tax administration reforms, and global advocacy to support developing-country needs and capacity.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages44

Reading Time1 h 51 min

Part I. Executive summary

COVID-19 has exacerbated pre-existing DRM challenges

WB DRM approach should focus on more and better revenues

Promote digitalization of revenue administrations

Continue to foster international cooperation and advocacy for global tax reform

Part II. DRM approach and COVID-19 impact

Part III. Momentum for tax reform

Part IV. Public Goods and Partnerships

Part V. Forward Looking

ed Public Disclosure Authorized Pub lic Disclosure Authorized Public Disclosure Authorized EFI Board Update June 2021 IBRD/IDA Board Briefing on DOMESTIC RESOURCE MOBILIZATION (DRM) Supporting Green, Resilient and Inclusive Development (GRID) KEY MESSAGES • The pandemic is exacerbating pre-existing DRM challenges. Revenues have dropped by 12%(real terms) in 2020. For many countries tax-to-GDP ratios are expected to fall below 15% in 2021, and there is high uncertainty about future trends. • With high fiscal deficits and already high pre-COVID levels of debt, enhancing DRM is a key priority in political and economic agendas. During the recovery phase, countries need to get the right timing to move towards fiscal consolidation without hurting growth. However, there is scope for raising revenues in the short run, targeting especially undertaxed bases and increasing the progressivity of the tax system. • This calls for a Bank’s DRM approach focused not only on more revenues (resilient part of GRID) but also better – meaning, equity focused – revenues (the inclusive part of GRID) . Further, tax systems should contribute to better environment outcomes (green part of GRID) . To this effect, tax administration reforms (including acceleration of digitalization) will be essential. • The Bank also needs to continue to play a leading role in representing the developing countries’views on international tax issues at the global level. • This increased focus on DRM will require scaling up Bank’s human and financial resources on DRM. Background for EFI Board Update on DRM June 2021 Update Outline Part I. Executive summary | Part II. | DRM approach and COVID-19 impact | | --- | --- | | Part III. | Momentum for tax reform | | Part IV. | Public Goods and Partnerships | | Part V. | Forward Looking | Background for EFI Board Update on DRM June 2021 Executive summary – Bank’s DRM approach 1. COVID 19 HAS EXACERBATED PRE-EXISTING DRM CHALLENGES ▪ Revenues have dropped by 12%(real terms) as a result of the COVID economic crisis. For many countries tax-to-GDP ratios are expected to fall below 15% in 2021, and there is high uncertainty about future trends. ▪ With high fiscal deficits and already high pre-COVID levels of debt, enhancing DRM is a high priority in political and economic agendas. During the recovery phase, countries face the challenge to find a right balance between more revenues while also supporting economic growth. 2. WB DRM approach SHOULD FOCUS ON MORE AND BETTER REVENUES It should help to : ▪ mobilize resources above pre-COVID levels by broadening the base and promoting broader objectives (climate change and reducing harmful consumption (e.g., sin/health related taxes) and supporting the fight against illicit financial flows (IFFs) ▪ address inequality through more progressive taxation of income and wealth ▪ address weaknesses in the international tax system (including tax avoidance) | 3. PROMOTE DIGITALIZATION OF REVENUE ADMINISTRATIONS<br>▪ Scaling-up support on tax and customs administration reforms is key to ensuring an effective implementation of tax policy decisions. Countries face an urgent need for accelerating the move to a digital revenue administration.<br>▪ Maintaining business continuity and strengthening compliance strategies are also critical elements of success. | 4. CONTINE TO FOSTER INTERNATIONAL COOPERATION AND ADVOCACY FOR GLOBAL TAX REFORM<br>▪ The Bank is boosting cooperation with international partners (IMF, OECD, UN) to address the DRM challenges that countries face.<br>▪ Bank’s advocacy needs to ensure that developing countries’ needs, priorities and capacity are addressed at the global level (including G7 and G20) . | | --- | --- | Background for EFI Board Update on DRM June 2021 Update Outline Part I. Executive summary | Part II. | DRM approach and COVID-19 impact | | --- | --- | | Part III. | Momentum for tax reform | | Part IV. | Public Goods and Pa

FAQs

How has COVID-19 affected domestic resource mobilization outcomes?

COVID-19 has sharply reduced tax revenues in real terms and increased uncertainty around future revenue trends, with many countries expected to see tax-to-GDP ratios fall below 15%.

What is the proposed World Bank DRM approach during the recovery phase?

Enhancing DRM is positioned as a priority, requiring the right timing to move toward fiscal consolidation without harming growth, while expanding revenue through broader bases and short-run measures.

What reforms are emphasized to improve revenue quality and implementation?

The briefing stresses equity-focused and green-aligned revenue outcomes, supported by tax administration reforms, including accelerated digitalization, and strengthened compliance and business continuity.

Jul 19, 2026

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