The IMF has warned that major policy slippages by the Gambia Government have led to worsening economic outlook IMF Managing Director Christine Lagardeconsiderably, especially since budget support from donors will not be forthcoming. It warned that the recent policy slippages are threatening near and medium term growth prospects and therefore called for strong corrective measures to address the growing macroeconomic imbalances and bring policies back on track. They recommend the restoration of the flexible exchange rate.

The remarks are contained in the following press release issued upon conclusion of its Article IV consultation with the Gambia:


September 21, 2015

The Gambia has experienced large balance of payments and fiscal

imbalances, caused by persistent policy slippages in recent years

and financial difficulties in public enterprises. This was

exacerbated by sizable exogenous shocks from the impact of the

regional Ebola outbreak on tourism and the delayed summer

rains in 2014. The authorities embarked on an economic program

based on a strong 2015 budget and structural reforms, and

efforts to secure donor support. The Fund supported the

authorities’ efforts through a Rapid Credit Facility (RCF)

disbursement in early April 2015 and a Staff-Monitored Program


However, major policy slippages have occurred since the RCF

disbursement, pushing the SMP off track and worsening the

outlook considerably especially since budget support from donors

will not be forthcoming. In early May 2015, the President’s office

issued a directive imposing an exchange rate overvalued by more

than 20 percent compared to the prevailing market rates, which

the Fund staff assessed to be broadly in equilibrium. The fiscal

position too has deteriorated significantly since mid-April, while

inflationary pressures and T-bill rates have increased, reflecting

the inconsistent macroeconomic policies. In the absence of

corrective policies, The Gambia’s external viability and fiscal

sustainability could be at serious risk.

Executive Board Assessment

Executive Directors noted that a cycle of exogenous shocks

followed by policy slippages had led to weaker real GDP growth

in The Gambia than in other countries of the region. Directors

regretted that recent policy slippages have worsened an already

difficult macroeconomic situation and are threatening The

Gambia’s near- and medium-term growth prospects. Accordingly,

they called for strong corrective measures to address the

growing macroeconomic imbalances and bring policies back on

track to achieve the objectives of the authorities’ economic

program monitored by Fund staff. Directors agreed that bold

action on a variety of fronts, including targeted structural

reforms, is urgently needed to restore policy credibility, rebuild

policy buffers, re-engage development partners and achieve The

Gambia’s poverty alleviation goals.

Directors stressed that an ambitious and sustained fiscal

adjustment is necessary to bring the fiscal situation under

control. They encouraged the authorities to implement the

measures in the current budget and to identify soon additional

measures for a deep budget restructuring beginning in 2016.

Such an adjustment will create space for development spending while

fostering macroeconomic stability and social progress over

the medium term. Directors also highlighted the need to

articulate a strategy to overhaul public enterprises in the energy

and telecommunication sectors to stem their demand on budget


Directors welcomed the Central Bank of The Gambia’s continued

efforts to shore up financial stability. They commended steps

underway to improve bank supervision and crisis management

capacity. Directors observed that the flexible exchange rate

regime had served The Gambia well, and agreed that the

exchange directive currently in force to limit exchange rate

flexibility should be rescinded immediately.

Directors welcomed The Gambia’s significant social gains over the

past years but noted that there remains ample room to enhance

inclusive growth and competitiveness. They encouraged the

authorities to step up agricultural reforms and improve

infrastructure in energy and transport to enhance economic

diversification and resilience to shocks.