By: Kebba AF Touray
Suwaibou Touray, the National Assembly Member for Wuli East, in his intervention on the 2021 Budget estimates cited among other issues that the domestic debt now stands at 32.26 percent and the external debt at 35.5 percent; that this has led to a total of 67.7 percent of the Gross Domestic Product.
Below is Suwaibou’s intervention on the said estimates:
‘‘Looking at the 2021budget figures, it tells us that we have a total revenue and grants totaling D25, 760,000.000 dalasi, compared to D24,472,615 for 2020. This means that Government is spending more for 2021 with as expected revenue loss of 2.9 billion dalasi. The Domestic debt stands at 32.26% percent and the External debt at 35.5% percent amounting to 67.7% percent of the Gross Domestic Product.
I am concerned about the debt stock and percentage to GDP and I am afraid that it may reach 100% of GDP and we do not want this to happen, because it has repercussions on the economy as a whole.
If you also look at expenditure and net lending for 2020, it was 28,336,947.00 dalasi compared to D31, 902,412.00 for 2021. Here too. the expenditure is going up and accumulating a deficit of more than 3 billion dalasi.
The Minister informed them that they have a significant slowdown in GDP growth, a decline in tax revenues, an increase in health expenditures as well as multiple pressures on the 2020 budget, such as relief support for the vulnerable and a stimulus package for businesses.
We are also adequately informed by the Minister, that domestic growth rates have also been revised downwards from 6.3 percent, to 1.5 percent, with an anticipated 3 percent of GDP loss in tax revenue for 2021, which is a significant decline from the 6.2 percent GDP growth rate in 2019.
This is the state of affairs we found ourselves and we must now be looking for solutions to address this crisis.
‘‘Since there is both increase in Government expenditure as well as a decrease in revenue, both are responsible for the deficits which amounts to D6 billion.
How can we address this deficit? The minister did not hide this fact. In terms of financing the deficit, domestic borrowing is projected to reach D3.45 billion compared to D2.26 billion in 2020. This is clear because they have deviated from their path to growth and must now issue more bonds that will raise interest rates leading to a reduction in net exports.
What is happening is that fiscal deficits are impacting negatively on the economy and this is what affects private borrowing.
‘The trend is that eventually we will be left with no option but to print more money in order to cover the deficits. This has a tendency of creating inflation which means prices will definitely go up. I did not get what the Minister is telling us because in my view, their objective is to reduce Government expenditure with a view to reduce the deficit and to reduce borrowing. But what he heard the Minister say is to borrow more money with a view to engage in spending which is the cause of the deficit in the first place.
‘‘Net lending is projected to increase from 547.4 million in 2020, to 617 million. Personal emoluments will increase from 85.1 million in 2020, to 94.7 million in 2021 and non-interest expenditure will also increase from 353.5 million in 2020 to 366.9 million in 2021. With all these increases, what do we expect? The answer is always an increase in taxation which will defeat the strategy of reducing poverty. Since there is a silver lining in the area of agriculture according to the Minister, we should be careful not to engage in big stimulus packages as it has a tendency of increasing Government expenditure over and above their revenue. So if we want to contain inflation, we must as well check on expenditure.
‘‘On the debt situation, we were clearly told that the country is in debt distress. And according to the debt sustainability analysis conducted by the Ministry of Finance and the International Monetary Fund (IMF), the Gambia remains in debt distress because our current debt levels have become unsustainable; that prudent fiscal measures therefore need to be taken by Government to ensure that the country’s debt is reduced to sustainable levels. This is indeed funny.
‘‘Instead of taking prudent measures, they are on a spending spree. I would have thought that with the relief provided to low income countries on official bilateral debt-service payments mentioned by the Minister that will be able to address more practically, the debt distress when combined with prudence in spending. But this is not the case they should stop saying that since there is debt deferral, prudence in spending should now put aside.
‘‘They are diverting from their earlier position to reduce domestic borrowing with a view to allowing Banks provide funding to private investors to invest and boost employment which has been confirmed by the Minister’s statement at point 21. The widening of the deficit in the goods account reflects an increase in imports due to the rise in economic activities and exports which forecast a decline from US$202.5 million in 2020 to US$124.5 million in 2021. I would have expected that the silver lining in agriculture mentioned by the Minister would be utilized to cover the loss in the decline in cashew and timber trade. I therefore call on my colleagues to be careful because as law makers, we have a very important role to play in shaping the annual budget as well as having oversight authority. After our debate, whatever laws we adopt, we must own up the strategies and policies as representatives of the people.
There is need for the Minister to explain the strategy of the Budget and we can look at other strategies as well, to see if they have met our expectations, before adopting them’’.