By Nelson Manneh
The International Monetary Funds (IMF) has recently wrapped up discussions for the Sixth Review under the Extended Credit Facility (ECF) Arrangement for The Gambia. The Mission in a press statement stated that repercussions of the war in Ukraine continue to strain the socio-economic environment in The Gambia, with growth estimated to have remained moderate in 2022, amid persistent inflationary pressures, but with foreign exchange shortages eased.
According to the Mission, the Gambia government has maintained prudent fiscal management despite measures to support the population, but some expected important resources did not materialize.
“The authorities remain committed to structural reforms, and good progress has been made in key areas including revenue administration, public financial management, public contracts procurement and the institutional framework of State-Owned Enterprises,” the Mission stated.
It could be recalled that a team from the International Monetary Fund (IMF) led by Mr Ivohasina Fizara Razafimahefa as Mission Chief for The Gambia, held discussions with Gambian authorities during March 14th to 24th, 2023, on the Sixth Review of the country’s economic program which is supported by the IMF’s Extended Credit Facility (ECF) arrangement. At the conclusion of that mission, Mr Razafimahefa issued the following statement:
“The mission team reached staff-level agreement with the authorities on the economic and financial policies that could support the IMF Executive Board’s completion of the Sixth Review under the ECF arrangement. Despite multiple shocks that affected the country’s economy including the spill overs from the war in Ukraine, five out of six quantitative performance criteria and three out of four indicative targets at end December 2022, were met. Two structural benchmarks were met and one structural benchmark was completed after the deadline. The IMF Executive Board’s consideration of the staff report on the review is tentatively scheduled for June 2023, and upon the Board’s approval, SDR 5 million (equivalent to about US$6.7 million), will be made available to The Gambia.
“The multiple external shocks that hit the Gambian economy obstructed rapid economic recovery in 2022, when growth was estimated to have remained around its 2021 level or 4.4%, despite a strong recovery in the tourism sector as well as robust public and private construction. Inflation persisted at 13.6% in February 2023, fuelled by high food and energy prices amid the protracted war in Ukraine. Fiscal policy remained broadly prudent despite pressures from significant revenue losses due to measures taken by the Government to alleviate the passing through of high international oil prices, to domestic pump prices. The Central Bank took appropriate measures to help tame inflationary pressures and anchor inflation expectations, by increasing the policy rate four times for a total of 4 percentage points, to 14%. It also took decisive action to address foreign exchange shortages observed in the second half of 2022, to ensure a smooth functioning of the forex market.”
“The Gambian authorities continue to advance important structural reforms, and regulations related to the recently approved public procurement are under finalization. The National Assembly approval process is progressing well for the Bills on State Owned Enterprises and anti-corruption. The PFM Act has been approved by Cabinet and will be submitted to the National Assembly. These efforts are supported by extensive and coordinated capacity development from development partners.”
“Going forward, economic growth is expected at 5.6% in 2023 and 6.3% in 2024, predicated on the improvement of the external macro-economic environment, including a full recovery of the tourism sector and the continued resilience of domestic activity, particularly in the construction and agriculture sectors. Despite strong pressures on spending including from higher debt servicing amid a rapid increase in domestic financing conditions and Dalasi depreciation, the Government is determined to maintain fiscal discipline by anchoring the 2023 fiscal framework on the approved budget. The Central Bank is committed to closely monitor inflation developments and further tighten the monetary policy stance if needed, while safeguarding the fragile economic recovery. It also remains committed to an exchange rate policy that ensures equilibrium between supply and demand on the foreign exchange market.”
The Mission Team met with President Adama Barrow and Hon. Fabakary Tombong Jatta, Speaker of the National Assembly, and held discussions with Seedy Keita, Minister of Finance and Economic Affairs; Baboucarr O. Joof, Minister of Trade, Industry, Regional Integration, and Employment; Ebrima Sillah, Minister of Transport Works and Infrastructure; Buah Saidy, Governor of the Central Bank of The Gambia; and other senior government and Central Bank officials. The mission team also had fruitful discussions with representatives of the private sector, civil society, and development partners, and thanked the Gambian authorities for the constructive discussions and good collaboration they had.