(JollofNews) – The International Monetary Fund (IMF) has called on the Gambian regime of Yahya Jammeh to end the restrictions on foreign-exchange trading.
At the beginning of May, Mr Jammeh issued a presidential decree restricting foreign nationals and Gambians to taking US$10,000 in foreign currency. He also pegged the value of the Dalasi to stop its rapid depreciation against major international currencies particularly the US Dollar.
But Gaston Mpatswe, IMF’s resident representative to Gambia has described the restrictions as counter productive and harmful and the sooner President Jammeh lifts them, the better for the Gambian economy.
“The depreciation of the Dalasi is a symptom of what is happening in the economy,” he told local journalists.
“It is just a symptom of the problems that were in the economy over a period of time and we believe that fixing the exchange rate is not helping the economy. When you fix it, people will keep their foreign currency and that will make matters even worse. It also will increase speculation, excess demand pressure, makes export of Gambian goods and services expensive and it will have direct impact on the poor because it will not reduce inflation or depreciation of the Dalasi and families that are relying on remittances will have to spend on those expensive goods after the exchange rate has gone down.”
Mr Mpatswe added: “We have engaged the government on economic implications of fixing foreign exchange rate. We will have a consultation with the government on the economy in future and we will provide fiscal advice on what the government might do to tackle certain problems in the economy.
“Gambia has been registering a volatile growth rate over the years. The country needs 3.3 percent over a sustained period to be able to reduce poverty. I cannot say if The Gambia is in an economic recession; the economy is facing severe challenges that have to be corrected. The economy is at a crossroads. The government has been borrowing to finance its increasing deficit, both domestically and externally. The Gambian economy needs structural adjustment. The Gambia’s first challenges are related to structure of the economy and repeated spending pressures that have been affecting the country over a period of time.”