World Bank and the Gambia government on Tuesday signed a US$56 million grant in
a bid to assist the government with budgetary support to aid in the policy and
institutional requirement of the country.
Held at the Kairaba Beach Hotel, the signing ceremony was attended by both government and World Bank officials.
In his remarks on the occasion, the Minister of Finance and Economic Affairs, Hon. Amadou Sanneh, briefed the gathering about the development of the Gambian economy.
He said macroeconomic developments in 2016 have been impacted considerably by “the economic mismanagement or fraudulent practices of the previous regime” and external shocks.
He said Economic growth in 2016 is now estimated to have reached 2.2 per cent, markedly lower than the 4.3 per cent growth in 2015, due to limited availability of foreign exchange, weak agricultural output and the effect of the political impasse on tourism during high season.
With erratic rainfall during the summer, some 90 per cent of the groundnut cash crop “will be lost according to the pre-harvest report”, the finance minister said.
He added that headline annual inflation stood at 8.8 per cent in February 2017, well above the CBG [Central Bank of The Gambia] target of 5 per cent, driven by high food prices and the depreciation of the dalasi against the US dollar.
Net International reserves have fallen to a precariously low level of only US$22.3 million in February 2017 , less than one month of imports cover, he disclosed.
According o the finance minister, in recent times, the government has faced challenges in the increasing cost of operational expenditures.
These expenditures have been faced with consistently above government resources, leading to increasing government borrowing, thus generating a debt to GDP ratio of about 120 per cent as at end 2016 compared to 108 per cent in 2015.
“This is clearly unsustainable,” he said, adding: “Interest payments, personnel emoluments, subsidies and transfer and purchase and maintenance of government vehicles as well as the size of our diplomatic mission have been the main areas of high expenditures.
In the face of these challenges, he noted, the government is committed to reforms that would return the country to macroeconomic stability and restore the economy.
These reforms include reducing net domestic borrowing to 1 per cent, by December 2017 compared to 11% in 2016.
It is in this light that the government engaged the World Bank group for assistance through a budget support.
The World Bank has since then worked closely with the government, which culminated in the World Bank Board’s approval of $56 million as budget support. “And we are delighted to be signing today this agreement for the development policy financing.”
This development policy financing DPF will support the government in ensuring the provision of essential public services, restore macro-economic stability to help to shield the poor and vulnerable households from the impacts of the economic crisis inherited.
The finance minister stated that in their mutual commitment to renewed strong partnership, he would, on behalf of President Adama Barrow and his government and the people of The Gambia, register deepest appreciation to the World Bank group for their continued support to The Gambia at “a time of great and trying challenges in meeting the socio-economic development goals of the government”.
He said the government and people of the country have “embarked” on the road to the transformation of the new Gambia to provide all with sound and sustainable landmark transformation in energy, health, education, agriculture, infrastructure, environment, youth development among others.
For her part, Mrs Louise J. Cord, World Bank country director, said that since the trip of the vice president of the World Bank for the Africa region and his meeting with President Barrow and the new government, last February, “I have to say that there has been a very positive tension within our team”.
She added: “We have to keep the promise made to the Gambian people to support the government’s reform efforts proactively, in this time of formidable economic challenges and opportunities.
“I think the promise has been fulfilled since our board of executive directors has approved of June 30 the $56 million Emergency Development policy financing we are pleased to sign.”
The DPF was prepared at defining moments in The Gambia history, she said.
Since January, the government has been striving to address the political, social and economic turbulence generated by a momentous political transition, and a legacy of macroeconomic imbalances and challenging public sector situation.
Concluding, she noted, the government will be carrying out its reforms, saying he would like to reiterate the strong commitment of the World Bank group to support their efforts in the future.