Deficit, the Biggest Threat to the Economy

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– Says Wuli East NAM

By: Kebba AF Touray

The National Assembly Member for Wuli East, Hon. SuwaibouTouray has said that the budget deficit is the biggest threat to the Gambian Economy.

HonourableTouray said this on Monday, November 27, 2023 while delivering his perspective of the 2024 Budget Estimates during the debate on the Budget and after the laying of the Consolidated Report of the Finance and Public Accounts Committee.

He said: “Deficit is piling up and is the biggest threat to the Gambian economy. The best way for them to go about the budget deficits is to cut back spending and find ways of raising revenues and this should be a serious fiscal policy that would allow for increased economic growth.”

Citing the statement delivered by the Finance and Economic Affairs Minister on the Estimates and Expenditures at point 7, he quoted the Minister as saying, “The 2024 Budget is anchored on the reduction of the overall fiscal deficit, including the gradual reduction of Net-domestic borrowing as a percentage of the GDP over the medium term.”

Touray said If they are to hold the minister to account, this is what they NAMs must remember when doing their oversight.

“Let’s not forget that last year also this same Minister said his draft Estimates was anchored on renewed commitment to strengthen domestic resource mobilisationto support the provision of quality essential services in Agriculture, education, health and infrastructural development to promote a more inclusive and resilient growth,” he recollected, asking lawmakers to factor these in their minds.

He then went on to say that common sense teaches that when a government spends more than it could collect in tax revenue, it falls in a deficit; that if imports also exceed exports, it will still fall in a deficit.

This, Touray said, means that if nothing is done about it, the deficits will keep piling up on the national debt.

Hon. Tourayanalysed that this is why the minister on page 10 of his statement, said the debt service projected for 2024 is D5.11 Million but he (Touray) said if they add foreign amortization to it, it would amount to D7.49 Billion,which must be paid as the two budget items are statutory.

“The debt to GDP ratio was about 83% in 2022 but I believe it is now about 100% to GDP or even more and we are continually being told that the debt is sustainably managed,” said the Wuli East lawmaker.

He added that they are also told that the high interest payment on debt is as a result of the Monetary Policy Committee rate at the Central Bank which has risen to 17%, while submitting that if the MPC rate is hiked and taxes are also increased by 24%, then they can only expect higher inflation far more than the 18.5% being experiencing at the moment.

On point 35 of the minister’s statement which states that the deficit reduction strategy is anchored on robust domestic mobilisation and fiscal expenditure prudence, Touray asked whether they can reduce the deficit by domestic mobilisation. 

“Why don’t they just go ahead and do that and Why do they have to go in for recycling and which assets are being recycled and why?” he quizzed. 

Touray insisted that instead of tabling the assets recycling agreement for consideration, the Minister decided to now embed it in the budget for approval. He added that since it must be brought for approval and if it is rejected, the whole budget process could be distorted which would affect the whole disbursement of the expenditure budget as has happened to 2023.

Hon. SuwaibouTouray said since 2017, they have been experiencing deficit after deficit in the annual budgets and they are being told by the successive finance ministers that their aim was and is to reduce deficits. He however said they continued to witness the massive increase in expenditure rather than the cutting down in spending.

Even though the projected revenue stands for 2024 at D28.7 Billion, he said they have increased the overall expenditure to D34.9 Billion dalasi.

This is also the reason why the debt repayment also shoots up from D4 Billion plus in 2023 to 7.45 billion dalasi in 2024, he argued.

The Lawmaker insisted that this has been the trend since 1985 to date and as he said they cannot still put a spanner to it even though he said they all know it is not sustainable as it is piling up to the debt and making debt repayment a nightmare for the Gambian economy which is depriving them from putting scarce resources into productive uses to finance education, public infrastructure and agriculture.

He said the country should brace itself for more debt repayment for 2025 and beyond because according to him, the government had transacted with the international lenders to defer the debt which he believes should end by 2025. He added that when that happens they should expect debt repayment to reach 10 Billion Dalasi or even more; that debt dependency is not the answer to economic recovery.

Touray went on to ask the question how the government intends to improve domestic revenue if not by (Asset Recycling Program)?

He said recycling of assets, in this case the SeneGambia Bridge, even though it has not been explicitly mentioned, will allow them to collect revenue for 2024 but may deprive them from collecting anything or very little from that asset for the next 25 years and part of what is collected is likely to go to settling debt repayment.

Hon.Touray expressed the opinion that since they intend to take a new direction to support recovery it will be extremely necessary to be prudent in expenditure but as he said the trend of things does not seem to support that claim.

He then went on to cite an example referring to the budget of the Office of the President, the Chief of State that was allocated D591.4 Million Dalasi in 2023 but the office ends up spending more than 831.5 Million Dalasi; that that office was allocated D6 Million for Visit to the Provinces but ended up spending D43 Million and when allocated D10 Million for the President’s trip to the provinces, the office end up spending more than D25 million dalasi.

“It is this government that came up with an embargo on official travelling to reduce cost but the President’s Office ended up spending 153.1 Million instead of the 50 Million that was allocated for that purpose,” he disclosed. 

He then asked for proof that the objective of this year’s budget is anchored on consolidating recovery and accelerating reforms to build economic resilience and improve well-being of the people; that the President is the Chief of State and he needs to demonstrate that example for others to follow.

Hon.Touray asked the Minister to state exactly the areas where the 24%  increased revenue is expected to come from apart from the recycling of assets.

He emphasised that the country must learn to run its institutions’ affairs because only through that could it build the skills necessary to run its development.

Hon. Touray said revising the project grants downwards is a welcome idea but expressed the view that they should also revise the projection for the budget support as well. He said failure to receive them would result in failure in disbursement which would derail progress in project implementation.

He said the overall capital expenditure has decreased by 12% percent as a result of the projected decrease in project grant disbursement from donors also affecting implementation of projects.

“Since we will have more time to scrutinise the budget next year, we should ensure that wherever there is budget suppression, we refuse that as well, so as to ensure that we curtail expenditure,” he suggested.