The latest IMF report has come out clean on The Gambia’s economy and its
2014 fiscal slippages.
The report, published on 14 January 2015, captured the consequences of such slippages in the economic management of the country’s revenue and expenditure drive.
“Even before the (Ebola and late rains) crisis, 2014 was a difficult year for the Gambian economy. The consequences of past fiscal slippages put pressure on the government budget, public enterprises, the private sector, and households.
“Government borrowing lifted interest rates, which increased interest payments considerably. Banks have restricted their lending to the private sector, while higher debt burdens and import costs due to currency depreciation have weighed on the public enterprises.
“Difficulties in public enterprises have put further stress on the public budget. The local currency price of imported goods, especially basic foods, has risen,” the IMF report stated.
It is essential to avoid a repeat of this situation in 2015, as such fiscal slippages are harmful to the economy and development of the country in various ways.
Due to the government’s fiscal challenges, it had to borrow money from banks, an action which lifted interest rates and increased interest payments “considerably”.
As a result of the pressure and rapid depreciation of the dalasi caused by the slippages, import costs shot up into the stratosphere and weighed heavily on public enterprises.
“Difficulties in public enterprises have put further stress on the public budget…the local currency price of imported goods, especially basic foods, has risen,” the IMF report said.
Furthermore, these problems have been aggravated by a projected decline of about 60 per cent in tourism, as a result of the Ebola outbreak that hit the sub-region.
Delayed rains in 2014 have also caused distress in the economy, leading to a significant decline in crop production.
Combating the effects of these shocks will require concerted policy efforts, as well as greater support from the international community.
The government in its 2015 budget indicated that it is determined to fix the imbalances and restore macroeconomic stability through sound and fiscal monetary policies, aimed at increasing efficiency in expenditures, revenue generation and service delivery, as well as adopt new policy measures.
Adhered to, these measures might change things for the better, as the IMF also advised in its statement on the economy.
“I believe that through knowledge and discipline, financial peace is possible for all of us .”
Dave Ramsey