Gambian economy thriving despite lingering effects of economic crisis

“Preliminary data indicate that the Gambian economy continued to perform well in 2010, despite lingering effects of the global economic crisis on tourism receipts,” a statement from the International Monetary Fund has said on March 17, 2011.

This achievement, according to the IMF is led by another strong expansion in agriculture; real gross domestic product (GDP) growth is estimated to have grown by about 5½ percent. However, inflation edged up in 2010, mainly because of rising international food and fuel prices, but the economic outlook for 2011 is generally positive, especially if hints of improvements in the tourism sector develop further.

 “The government’s basic fiscal balance slipped into a substantial deficit during the final quarter of 2010, leading to a large issuance of Treasury bills late in the year. The impact on yields was dampened, however, due to strong demand for government paper by commercial banks arising from the end-year increase in the minimum capital requirement,” Mr. David Dunn, IMF Mission Chief to The Gambia said.

The team of officials where in Banjul from March 14 to 17, and has observed that official international reserves remained at comfortable levels. The structural reform agenda continues to progress steadily. However, IMF reiterated that the Gambia still faces a heavy debt burden.

Mr. Dunn said in 2010, interest on debt consumed about 20 percent of government revenues, most of which was paid on the large stock of outstanding Treasury bills. Going forward, the authorities place a high priority on curbing the government’s domestic borrowing.

 “The Gambian authorities are making good progress with their preparations of the Programme for Accelerated Growth and Employment (PAGE), which will succeed the current poverty reduction strategy beginning in 2012. The PAGE will emphasize government support for agriculture and infrastructure investment,” he said.

He also noted that the financing of the PAGE will pose a significant challenge in light of the country’s already heavy debt burden and falling tax revenues (relative to GDP). The authorities plan to seek donor support for the PAGE, but avenues for private sector participation should also be explored. 

“The current arrangement under the IMF’s Extended Credit Facility will expire at the end of this month. An IMF team will return to The Gambia later in the year to discuss a possible new credit arrangement,” the Monetary Fund revealed.