IMF Resident Rep. To The Gambia, Mr. Mamadou Barry

IMF Executive Board Completes Third Review Under the Extended Credit Facility (ECF), Approves US$6.97 Million Disbursement, and Concludes 2021 Article IV Consultation with The Gambia

 

  • Economic activity shows signs of recovery, albeit fragile. The authorities are intensifying COVID-19 vaccination campaign to fight the pandemic and allow full resumption of activity, including tourism.
  • The ECF arrangement helps address the challenges from the pandemic, support inclusive growth, reduce debt vulnerabilities, and advance structural reforms. The completion of the ECF review allows a disbursement of US$6.97 million.
  • The Gambian authorities recognize the need to foster sustainable development, address the infrastructure gap through improved spending efficiency and revenue mobilization, and maintain financial and external stability.

Washington, DC: On November 24, 2021, the Executive Board of the International Monetary Fund (IMF) completed the third review of the arrangement under the Extended Credit Facility (ECF).[1] The completion of the review enables the release of SDR 5.0 million (about US$6.97 million), bringing total disbursements under the arrangement to SDR 40.0 million (about US$55.75 million). The Gambia’s 39-month ECF arrangement for SDR 35.0 million (56.3 percent of quota) was approved by the Executive Board on March 20, 2020 (see Press Release No. 20/99) and augmented in the context of the first review to SDR 55.0 million (88.4 percent of quota) to help meet financing needs associated with the COVID-19 pandemic (see Press Release No. 21/12). The ECF-supported program aims to address the challenges from the pandemic, support inclusive growth, reduce debt vulnerabilities, and advance structural reforms, including on public financial management, domestic revenue mobilization, business environment, and SOEs. The authorities are delivering on their commitment to the transparency of COVID-19 spending; they published the list of the related procurement contracts and their beneficial owners.

Following the Executive Board discussion, Mr. Bo Li, Deputy Managing Director and Acting Chair, made the following statement:

“The Gambia’s performance under their economic program supported by the Extended Credit Facility has been broadly satisfactory despite the challenging pandemic context. The economy is showing some signs of recovery but the third wave of the pandemic in mid-2021 has hampered a vigorous rebound.

“Fiscal policy will need to continue to contain the spread of the pandemic and support economic recovery while reducing debt vulnerabilities. The authorities are making strong communication efforts on COVID-19 vaccination and are delivering on their commitments regarding the transparency of pandemic-related spending. In the context of a weak tax base and elevated spending needs, it would be paramount to further streamline tax exemptions, rationalize subsidies to state-owned enterprises, and enhance the prioritization of public investment projects.

“While the accommodative monetary policy stance is warranted at this stage, it should be reassessed if inflation pressures resume. It is important for the central bank to continue strengthening its financial safeguards to bolster policy credibility and to step up bank supervision.

“In view of lingering vulnerabilities, maintaining exchange rate flexibility and adequate external buffers will be critical. The authorities’ decision to use part of the IMF’s recent general SDR allocation while saving the remainder is commendable. Adherence to the external borrowing plan under the program and seeking grants and concessional financing will help secure debt sustainability.

“The authorities should persevere in their ambitious structural reform agenda, especially in view of the upcoming election cycle, to fully reap the benefits from the country’s remarkable socio-political turnaround in recent years. Pursuing governance reforms, fighting corruption, improving public procurement processes, and enhancing the business environment are crucial for achieving inclusive and sustainable growth.”

The Executive Board also concluded the 2021 Article IV consultation[2] with The Gambia.

Prior to the onset of the COVID-19 pandemic, The Gambia had shown strong macroeconomic performance during the few years following the political transition in 2016/17. Economic growth accelerated, debt vulnerabilities decreased, external stability strengthened, structural and legislative reforms advanced, and key social indicators improved. However, the COVID-19 pandemic has disrupted some of the hard-won progress and has heightened socio-economic fragility. The authorities promptly implemented strong policies starting early 2020 to contain the spread of COVID-19 and protect lives and livelihoods. They are currently intensifying COVID-19 vaccination campaign to fight the pandemic and allow full resumption of economic activity, including tourism.

Some signs of economic recovery have emerged, albeit fragile. Economic growth is projected to rebound from a contraction of 0.2 percent in 2020 to an expansion of 4.9 percent in 2021 and an annual average of 6 percent in the medium term. Inflation accelerated during the first half of 2021 but eased to about 7 percent in recent months and is expected to decline to the central bank’s target of 5 percent in the medium term. The fiscal policy remains prudent despite the pandemic-induced challenges. The monetary policy remains accommodative; credit to the private sector resumed and the banking system remains broadly liquid. Foreign exchange reserves exceed 5 months of imports, bolstered by the general SDR allocation, development partners’ disbursements, and record-high private remittances.

The overall macroeconomic outlook is turning somewhat positive, but risks are tilted to the downside, including the uncertainty about the pandemic at the global level and the upcoming presidential and parliamentary elections at the national level.

Executive Board Assessment [3] 

Executive Directors agreed with the thrust of the staff appraisal. They commended the authorities’ prompt and effective response to the COVID-19 pandemic, which has supported the economic recovery. They welcomed the authorities’ satisfactory implementation of their ECF-supported program and their commitment to maintain macroeconomic stability and pursue reforms.

Directors noted that fiscal policy will need to continue to contain the spread of the pandemic and support economic recovery while reducing debt vulnerabilities. They welcomed the authorities’ efforts to reinforce domestic revenue mobilization, further fiscal discipline, and improve public spending efficiency and transparency, including in pandemic-related spending. They recommended a further streamlining of tax exemptions, reduction of subsidies to state-owned enterprises, and prioritization of public investment projects. They also urged the authorities to adhere to the external borrowing plan and focus on seeking grants and concessional financing. They recommended addressing shortcomings in debt data.

Directors agreed that the accommodative monetary policy stance remains appropriate. They supported the central bank’s intention to tighten the policy stance if inflation pressures resume. They underscored the need to continually strengthen financial supervision, sharpen macroprudential tools, step up preemptive crisis preparedness, and enhance the AML/CFT framework.

Directors stressed the importance of maintaining adequate external buffers. They welcomed the authorities’ balanced approach in using part of the general SDR allocation to address immediate financing needs while saving the remainder to further strengthen external buffers. Maintaining exchange rate flexibility will also support external reserves.

Directors encouraged the authorities to press ahead with their comprehensive structural reform agenda, in particular in governance, public procurement, and the business environment. Policies related to access to finance, promoting digitalization, supporting women and youth, and adopting climate resilience and adaptation will also be important. Capacity development support for policy design and data provision is also needed.

It is expected that the next Article IV consultation with The Gambia will be held in accordance with the Executive Board decision on consultation cycles for members with Fund arrangements.



[1] The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems. For more details, see:http://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21/04/Extended-Credit-Facility .

[2] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[3] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here:http://www.IMF.org/external/np/sec/misc/qualifiers.htm .

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Mr. Sainey M.K. Marenah is a Prominent Gambian journalist, founding editor The Alkamba Times and formerly head of communications at the Constitutional Review Commission (CRC) and Communications and PR Consultant for The Gambia Pilot Program, under Gamworks. Mr. Marenah served as the Social media Strategist and Editor at Gambia Radio and Television Services. He is also the Banjul Correspondent for Voice of America Radio. Sainey is a human rights and developmental journalist who has carved a strong niche particularly in new media environments in the Gambian media industry. Mr. Marenah began his career as a junior reporter with the Point Newspaper in the Gambia in 2008 and rose through the ranks to become Chief correspondent before moving to The Standard Newspaper also in Banjul as Editorial Assistant and head of News. He is a household name in the Gambia’s media industry having covered some of the most important stories in the former and current government. These include the high profile treason cases including the Trial of Former military chiefs in Banjul in 2009 to 2012. Following his arrest and imprisonment by the former regime of President, Yahya Jammeh in 2014, Marenah moved to Dakar Senegal where he continues to practice Journalism freelancing for various local and international Media organization’s including the BBC, Al-Jazeera, VOA, and ZDF TV in Germany among others. He is the co-Founder of the Banjul Based Media Center for Research and Development; an institution specialized in research and development undertakings. As a journalist and Communication Expert, focused on supporting the Gambia's transitional process, Mr Marenah continues to play a pivotal role in shaping a viable media and communications platform that engages necessary tools and action to increase civic participation and awareness of the needs of transitional governance to strengthen the current move towards democratization. Mr. Marenah has traveled extensively as a professional journalist in both Europe, Africa and United States and attended several local and international media trainings.

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