Monday, May 27, 2013

The Gambia gets more funding from the IMF

Photo credit: Oh Crap, I'm

The International Monetary Fund, IMF, on Thursday approved the disbursement of US$2.3 million to the Government of The Gambia to support programmes and structural reforms necessary to reduce the high rate of poverty and boost economic growth in the country.

IMF, a Britton Woods institution, said this last disbursement makes the total disbursements under the Extended Credit Facility (ECF) arrangement to about US$16.2 million.  

The disbursement followed an IMF Executive Board’s completion of the first review of The Gambia’s economic performance under a programme supported by the ECF, an IMF May 23, 2013 press statement said.

Economy is still recovering

In May last year, the IMF approved a three-year ECF arrangement with an amount equivalent to about US$28.3 million for The Gambia. That funding was also meant to support the Government's economic programme.

At the end of the Board’s discussion of The Gambia on Thursday, IMF’s Deputy Managing Director and Acting Chair, Naoyuki Shinohara, noted that “the Gambian economy is still recovering from the severe drought of 2011”.

Mr Shinohara claims the Government’s policies and the support of the international donor community played an important role in enabling the recovery in agriculture to take hold.

Risks to macroeconomic stability

Yet, he said there are downside risks related to The Gambia’s economic recovery which include a high domestic debt burden, weaknesses in the balance of payments, and inflationary pressures.

The IMF noted that the domestic debt of the President Jammeh-led Government increased to D11.3 billion, as at end-March 2013.

Shinohara declared that high public indebtedness continues to pose risks to macroeconomic stability and significant costs to the budget.

More tax reform

Nonetheless, he said the Government plans to sustain the fiscal adjustment and reduces domestic borrowing in order to address this problem.

Also, he noted that the recent introduction of the Value-Added Tax (VAT) and the planned phasing-out of fuel subsidies are welcome steps towards a stronger fiscal position, while also generating resources for better targeted pro-poor spending.
The IMF Deputy Managing Director and Acting Chair suggested additional tax reforms for the poor West African country. 

“Looking ahead, there is further scope to pursue additional tax reforms and enhance the quality of government spending, including by developing a medium-term expenditure framework,” Shinohara recommended.  

Inflation increases

He also recommended that measures be taken to improve the “quality of economic data” to enhance policy making and programme monitoring.

On Monday, The Gambia’s Central Bank Governor Amadou Colley, admitted that inflation, the rate at which the prices of goods and services soar, have increased more than the targeted 5 per cent.
“This is primarily because the national currency, the Dalasi, continues to weaken in value against all major international currencies,” Mr Colley said at the start of a “Regional course on fundamentals of macro-economic analysis”. 

The Dalasi has depreciated against the British Pound by 12.62 per cent, the US dollar by 11.87 per cent and the Euro by 12 per cent.  

Written by Modou S. Joof
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