May 19, 2009, 7:43 AM
This was disclosed yesterday at the launch of The Gambia’s Debt Management Advisory Committee (DMAC) at the Kairaba Beach Hotel by the Ministry of Finance and Economic Affairs (MoFEA).
“The country’s recent domestic debt challenges is characterised by high interest cost and high rollover risks whilst external debt has lower cost and risk largely due to its concessionality,” stated Finance’s permanent secretary Abdoulie Jallow, while delivering his statement at the launch of the committee.
The status of the country’s debt portfolio has necessitated the setting up of the debt management advisory committee to provide guidance on meeting the government’s financing requirements at the lowest cost possible and prudent level of risk; guidance on meeting debt service payment obligations, and guidance on Domestic Debt Market Development.
Mr Jallow said his ministry’s debt management directorate, which had been responsible for advice and analysis on matters relating to debt management policy, would continue to work closely with Treasury, Central Bank of The Gambia (CBG), Gambia Revenue Authority (GRA) and other related institutions to improve the overall management of public debt.
He also said “significant progress” had been made in debt management, but there were “some ongoing debt management issues or concerns” which needed to be highlighted.
“Traditionally,” he stated, “the CBG was responsible for domestic debt issuance, but now the main responsibility will be under MOFEA, which implies the need to strengthen institutional capacity.
“The domestic debt section and function are not well integrated into the current organization structure of the Directorate.
“Furthermore, government arrears to suppliers are excluded from overall public debt and there is limited information or data on contingent liabilities.
“The capacity of the Directorate needs to be strengthened given the limited staff and expertise on the ground to effectively carry out their functions.”
In light of these developments, PS Jallow noted, it is achingly important to establish a Debt Management Advisory Committee entrusted with themandate to advise the minister on medium-term debt strategy and the desired structure of debt; advise on annual borrowing plan; monitorthe implementation of the debt strategy and annual borrowing plan, discuss progress on the development of domestic debt market risks arising from contingent liabilities and guarantee as well as any new instruments of debt, and advise on the adequateness of the institutional processes, procedures and system that are necessary for effective debt management .
In his statement on behalf of the minister of Finance and Economic Affairs, the Director of Loans and Public Debt Management, Ebrima Darboe, said: “The aim of managing collective public sector indebtedness [is to] enable us to structure a more ambitious and dynamic investment programme such as the like of Programme for Accelerated Growth and Employment (PAGE), and its successor programmes.
“Furthermore, the committee’s output will also enhance improvements in Cash Management and Investment functions, and ensures that highest quality of service is delivered to the Gambians at competitive costs.”
Careful management of all public debt is required both for the sake of effective stewardship of fiscal resources, and also for the sake of external stability, since external crises can have their roots in fiscal sustainability problems, said Lamin Camara, DPS for Finance, in charge of International Cooperation.
The committee, which comprises strategic officials and departments of MoFEA and CBG, has terms of reference which ranges from reviewing the consistency of fiscal policy objectives and debt management, taking into consideration debt sustainability analysis and debt strategy, to periodically reviewing the debt portfolio’s cost and risk exposure.