Oct 29, 2014, 10:22 AM
is no doubt that the economy of the Gambia is in bad shape.
But there are not many roads to recovery given the known reasons that brought us to where we are today.
One can single out the high domestic debt as the main cause of Gambia’s bad economic situation. The reason why it’s often said that Government’s are hardly bankrupt is that they can always print money or borrow to pay their bills. But of course both actions are inflationary and costly. The Economy of The Gambia has been on this track for sometime.
Without going into the details for some of the reasons why Government could not finance its program without resorting to expensive borrowing.
It’s now time to look forward to solutions.
As the saying goes, “cut your coat according to your cloth” and focus on priorities.
The recent revision of the 2017 budget is welcomed in so far as it is anchored on austerity in which discretionary costs are contained and there are easy targets such as expenditure on vehicles, fuel, travel, Electricity bills for government offices, which now need cashpower and some of the Foreign Missions need to be closed or carry out staff reduction, etc. Government should also minimize travels which take a lot government resources and also consider taking business class tickets.
Resorting to borrowing, especially domestic borrowing with high interest rates will crowd out investment and revenues that would have financed important development programmes would instead go towards interest payments.
It is a vicious circle that can only be solved by painful sacrifice.
The Government must therefore have a target date by which net domestic borrowing is brought to zero. This can only be done by adopting an austerity programme which simply means identifying waste both in revenue generation and expenditure and to eliminate them.
The executive must take the lead in this sacrifice and we don’t need to Invent the wheel but to learn from countries that have been is similar situation and what they did.