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Gambia faces heavy debt burden despite progress - IMF mission
Monday, 15 November 2010 12:36
PANA - The International Monetary Fund (IMF) on Friday disclosed that despite Gambia's
good economic performance in 2010, mainly because of continued strong growth in agriculture, the West African country continues to face a heavy debt burden, PANA reported from here."Interest on debt consumes about 20 per cent of government revenues, mostly in interest on domestic debts," the IMF said in a statement, obtained here by PANA.
The IMF statement followed its two-week mission to the Gambia during which it assessed the country's performance under the seventh review of the Gambian economic programme, supported by the IMF under the Extended Credit Facility (ECF).
According to the statement, to generate fiscal savings that could be used for other spending priorities such as a possible stepping-up of infrastructure investment under the government's forthcoming Programme for Accelerated Growth and Employment, preparations for the 2011 budget have focused on reducing T-bill yields by minimizing government's domestic financing needs.
"At the same time, strong ongoing efforts to improve budgeting procedures and public financing management would help achieve greater value-for-money from government spending," the statement noted, adding that building upon the success of the
Ministry of Basic and Secondary Education, which has made excellent progress towards achieving the Millennium Development Goals, the government intends to pilot a medium-term expenditure framework in some line ministries in 2011.
The IMF mission expects real growth in the Gambia’s Gross Domestic Product (GDP) to be about five and half to six per cent in 2010, up from its previous projection of about five per cent.
"Also, sectors dependent on tourism and remittances from abroad, which were hit hard by the global economic crisis are beginning to show signs of recovery. Looking ahead, real GDP growth is projected to remain strong, about five and half percent in 2011," the mission revealed.
According to the statement, inflation edged up to just over six per cent in recent months, prompting the Central Bank of Gambia (CBG) to raise its rediscount rate by one per cent point (to 15 per cent) in September.
The IMF mission expects inflation to decline slightly to 5 percent in the years ahead.
Since June, the IMF noted, performance under the ECF programme has improved considerably.
"In the first half of 2010, severe revenue shortfalls led to an excessive fiscal deficit. The rising cost of fuel imports, in particular, sharply cut into fuel t ax revenue, which were squeezed by fixed pump prices," the statement said, adding that the Gambian government took difficult but appropriate actions with mid-term increases to some fuel prices and by adjusting expenditures in line with a tighter overall resource envelop.
"The rapid expansion of the banking system in recent years is providing much needed financing for the Gambian economy. At the same time, it creates challenges f o r banking supervision. The mission welcomes the CBG's progress in building its s u pervisory capacity and its commitment and vigilance to further strengthen the re gulatory framework," the IMF stated.
The mission welcomed the Gambian authorities' corrective actions for the missed March-end 2010 performance criterion on the basic fiscal balance, notably by making difficult adjustments to execute a more balanced budget.
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Comments
To be paying out so much of GDP in interest and loan repayments is a recipe for disaster. However The Gambia limps on and the IMF...would be satisfied that The Gambia has not yet defaulted on any of its loan repayments.
The IMF are only bankers anyway.What would they know about "African" economics?
The Governor of The Bank of Gambia is much cleverer than these guy's...anyway.
The Gambia must get behind the "PAGE" regeneration..programme and attract its assets {people} in the dispora to return to create business's...and employment..and exports.
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