The
minister of Finance and Economic Affairs, Mambury Njie has projected that the
overall impact of covid-19 on the Gambian economy is estimated at 2.5 billion
dalasis. This, he said, coupled with an estimated deterioration in the current
balance, potentially leading to a decline in the international reserve cover,
could result to exchange rate depreciation and build up in inflationary
pressures.
Minister
Njie was speaking during the first Extra Ordinary Session of 2020 Legislative
Year at the National Assembly on Monday.
In
order to mitigate these effects, Minister Njie suggests stricter expenditure
control and planning that would provide a suitable mechanism to lessen the
impact so as to ensure that sound economic gains registered in the past two
years are not lost due to covid-19.
He
disclosed that preliminary assessment of the impact of the COVID-19 indicates
that economic growth in 2020 would be 3% points lower than the initial estimate
of 6.3% at the beginning of the year in terms of revenue performance.
It
is estimated that 1.0 billion will be lost in revenue for the year (equivalent
to one month revenue collection of Gambia Revenue Authority in 2020), if the
virus remains uncertain in the next three months.
Minister
Njie lamented that the decline in economic growth is estimated to emanate from
trade, remittances, construction, hotels and restaurants. In addition, he
observed that mild shocks are anticipated in the manufacturing sector as supply
side constraints through the lower supply of production inputs and other
supplies will run low for most factory floors.
“As
global supply remains constrained due to close down of factories in China,
Europe and Middle East, international trade taxes and domestic supply for basic
commodities would also experience short term adverse shocks thus posing the
risk of price hikes,” he said.
Concerning
the overall fiscal balance, he added that close to a month’s national revenue
collection is projected to be lost, while the budget deficit is expected to
widen from 1.5% of GDP per the approved 2020 budget to 2.1% of GDP with the
impact of covid-19.
“On
net domestic borrowing (NDB), in the absence of stricter expenditure control
and rationalisation, NDB will expand from 1.9% of GDP to 25%. As a result, this
will reduce the gains and the consolidation of efforts in creating the space
needed for private sector borrowing to spur growth”.
