IMF approves SMP with Gambia

Friday, May 10, 2019

The International Monetary Fund (IMF) on Tuesday announced the approval of its Staff-Monitored Programme (SMP) with The Gambia covering January to December 2019.

SMP is an informal and flexible instrument for dialogue between the Fund staff and a member country on its economic policies. However, SMPs are not accompanied by financial assistance nor endorsed by the IMF Executive Board.

IMF stated that the Staff-Monitored Programme would help build an adequate track record of performance for a potential Fund-supported programme; Enhanced domestic revenue mobilization and expenditure control to help create room for much-needed public investment and poverty-reducing social spending and restoring debt sustainability which requires a combination of debt relief; prudent fiscal policy supported by reforms of state-owned enterprises (SOEs) and predominantly grant financing for The Gambia’s development programme.

In the past two years since the peaceful political transition, The Gambia’s economy rebounded, with growth exceeding 6½ percent in 2018, giving rise to good prospects for sustained growth over the medium term.

 “Inflation eased to 6½ percent at end 2018 and gross official reserves more than doubled, reaching 2.7 months of prospective imports. However, debt sustainability continues to pose a major challenge, given the high public debt and debt service, with the latter absorbing more than half of domestic revenue,” IMF stated .

 The main objectives of the 2019 SMPs are to consolidate gains and help anchor debt sustainability.

“The programme will focus on enhancing further domestic revenue mobilization and public financial management, including via improvements in SOE governance, while stepping up the pace of structural reforms to stimulate private investment with a view to sustaining growth and making it more inclusive. Under the SMP, the authorities commit to tightening external debt contracting and to pursuing mainly grant financing. To support this, they are developing a Medium-Term Debt.”  

The Gambia, the monetary institution further explained, has been assessed to be in external debt distress and restoring debt sustainability remains a primary concern, acknowledging that the authorities are continuing discussions with external creditors to seek debt relief and to catalyze additional donor support.

Author: Pa Modou Cham