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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”.
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.
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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