By: Kebba AF Touray
The Gambia Government, through the Finance Ministry, has said that deficit in the pension fund has increased from D30 million in 2017 to D41 million in 2021. This was unveiled in the Fiscal Risk Statement Report, recently published by the Government.
On the Pension Fund, Government stated that the mandate of the Social Security and Housing Finance Corporation (SSHFC) is to provide social security and housing for Gambians, making them responsible for the administration of the three funds (social security, industrial injuries compensation, and housing funds).
The SOE, as stated in the report, has been consistently making profits and almost all the financial metrics from the Health Check Tool (HCT) indicate that it is exceptionally low risk except the Return on Equity (ROE), which is categorised as moderate risk while noting that its overall risk rating is exceptionally low. It added that this means low probability of financial risk to the Government in the short and medium term.
According to the latest HCT assessment, the SOE has no liquidity challenges and is solvent. The report also stated that there is less fiscal risk to the Government with no expected negative impact on macro-economic conditions in the medium term, adding that the latest actuarial report and current value of the Federated Pension Scheme’s assets, is not enough to cover its liabilities.
“This could be a major source of fiscal risk. There has been an increase in the deficit for the fund from GMD 30 million in 2017 to GMD 41 million in 2021 which is a 36.7 percent increase. This deficit can be financed by increasing the level of contributions over a period between 5 to 15 years,” the Government report said.
The Government however stated that assuming there is a discontinuation of the fund using 2020 financial figures, the available assets (GMD2.6 billion) will be enough to cover liabilities (GMD1.9 billion).
“There are data challenges to enable the quantification of potential fiscal risks. For example, information regarding the number of civil servants and age profile is not available. This is because the data is still being captured manually. The lack of reliable pension data can lead to an increase in fiscal risks,” Government said in their report.
