Sunday, October 17, 2021

IMF Completes Third Review of Gambia’s Extended Credit Facility

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By Nelson Manneh

Their findings indicated that the economy of the Gambia is showing some early signs of recovery, but the third wave of COVID-19 is weighing on a vigorous rebound and the government continues to take the necessary measures to fight the pandemic.

“Performance under the Extended Credit Facility (ECF)-supported program has been good. Budget management remains prudent and monetary policy is appropriately accommodative. Structural reforms are advancing, albeit with delays in some areas. Accelerating the vaccine rollout, better targeting of social programs, improving the business environment, unlocking the potential of digitalization, and adopting gender and climate-oriented policies will support an inclusive, robust, and sustainable recovery,” the report stated.

Mr. Ivohasina Fizara Razafimahefa, the IMF Mission Chief for The Gambia, said they held a virtual mission with Gambian authorities during September 9-22, 2021 to conduct the 2021 Article IV consultation and discuss the third review of The Gambia’s economic program supported by the IMF’s Extended Credit Facility (ECF).

Mr. Razafimahefa said the mission team made significant progress in agreeing with the authorities on the financial and economic policies that could support the completion of the third review of the ECF program. Performance under the ECF program was good despite the challenges caused by the COVID-19 pandemic, he said.

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He also said all quantitative performance criteria at end-June 2021 were met, adding structural reforms are advancing, albeit with delays in some areas. Razafimahefa further said discussions will continue in the coming days, particularly on the 2022 budget, with a view to submitting the program review to the IMF Executive Board for approval. Upon this approval, he said SDR 5 million (about US$7 million) will be made available to The Gambia.

“Economic growth stood at -0.2 percent in 2020 primarily due to a sharp decline in the tourism sector, partly cushioned by good agricultural production and robust private construction financed by record-high remittances. Economic activity is showing early signs of recovery, but the third wave of the pandemic is weighing on a vigorous rebound. Inflation increased during the first half of 2021 but decelerated to 6.9% (year-on-year) in August 2021. Strict cash management helped contain the fiscal deficit at about 2.5% of GDP at end-June 2021 despite weak revenue collection and delays in budget support,” he said.

Mr. Razafimahefa said the Central Bank of The Gambia continues to maintain an accommodative monetary policy stance; credit to the private sector expanded by 5.7% (year-on-year) in June 2021.

“Foreign exchange reserves strengthened further, exceeding 5 months of prospective imports in August 2021, also reflecting the recent SDR allocation. The Gambian authorities are delivering on their commitments to full transparency of COVID-19-related spending. They published the list of all COVID 19-related procurement contracts and their beneficiary owners up to end-June 2021 on the Gambia Public Procurement Agency’s (GPPA) website,” he said.

He said the National Audit Office (NAO) has completed the first phase of an ex-postaudit of COVID-19 spending and it is now conducting the second phase of the audit. He said good progress has also been made on strengthening revenue administration and public financial management, including on rationalizing tax expenditures, digitalizing tax systems and budget processes, improving debt management, and enhancing the Central Bank internal audit. He said the performance of some key State-Owned Enterprises is also improving.

“Going forward, economic growth is expected at around 4.9% in 2021 and strengthening further in the medium term to an average of 6% per year. These projections are conditioned by a rapid expansion of vaccination coverage, gradual recovery in tourism, and continued good performance of private construction and agriculture. The authorities are committed to using the one-off revenue from the petroleum sector and a part of the recent SDR allocation to fight against the COVID-19 pandemic and support the post-pandemic recovery, including closing the infrastructure gap and supporting gender and climate-oriented policies, while reducing debt vulnerabilities,” he said.

He said the mission team held discussions with several ministries and the governor of the Central Bank of The Gambia, Buah Saidy.

“The mission team also had a fruitful discussion with the Inter-Party Committee (IPC) as well as the two National Assembly committees in charge of Public Enterprises and Finance and Public Accounts who all showed strong support for the reforms under the ECF program. The mission team also discussed with representatives of the private sector, civil society, banking and microfinance institutions, and development partners,” he said.

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