Moneys
donated to The Gambia government by multinational organisations and foreign
governments have reduced by more than half within one year, the Finance minister
has said.
“Performance
on grants remains very low during the period [2016], falling by more than 50
per cent,” Minister Abdou Kolley said in the 2017 budget speech that was
delivered to the National Assembly on Thursday, 22 December, and approved by
the deputies on Wednesday following a soft discussion.
For
the first nine months of 2016, grant disbursement to the government stands at
D242 million, much lower than the D565 million it was in the same period of
2015.
However,
Mr Kolley gave no reason for this drastic reduction in grants, but the Central
Intelligence Agency of the United States of America said international donors
continued to be concerned about the quality of Gambia’s fiscal management.
Besides,
The Gambia’s relations with international donors have been tarnished by the
government’s “appalling human rights record”.
Grants
to The Gambia have steadily been decreasing over the years.
In
2013, following President Yahya Jammeh’s abrupt withdrawal of The Gambia from
the Commonwealth, and cutting diplomatic ties with Taiwan, grants to the
country reduced by more than D1 billion, according to the Central Bank of The
Gambia.
In
that year, grants declined to D725.1 million from D1.8 billion in 2012.
The
Commonwealth and Taiwan used to be among the main sources of grants to The
Gambia.
A
former National Assembly Member for Basse, Hon. Sellu Bah, had earlier on
argued that The Gambia should not depend on grants to finance its economy.
“Let
us work as a nation to ensure that we collect our domestic revenue to the
letter to counter any negative response on grants,” Hon. Bah had said.
Meanwhile,
the government has intensified revenue collection during the course of 2016 to
cushion the effects of the poor grants performance.
Minister
Kolley said domestic revenue, which comprises both tax and non-tax revenue, has
increased by 5.1 per cent in the first nine months of 2016, from D5.7 billion
in 2015 to D6.0 billion.
The
enhancement of domestic revenue collection has led to an improvement in the
fiscal position of government, based on the preliminary estimates of the
government’s fiscal position for the first nine months of the year.
However,
as the grants to The Gambia continue to decline, the government resorted to
borrowing money from external and local sources, at costly interest rate, to
finance its operations and development endeavours.
According
to the 2016 budget document, the government’s public debt for 2015 was
estimated at 107.6 per cent of the Gambia’s Gross Domestic Product (GDP), the
total value of all goods and services produced over a specific time
period.
About
48.6 per cent of the total public debt is from domestic sources, and 59 per
cent external debt.
A
high debt-to-GDP ratio makes it more difficult for a country to pay external
debts, and may lead creditors to seek higher interest rates when lending.
The
Gambia is the third most indebted country in sub-Saharan Africa in 2016 after
Eritrea and Cape Verde, according to data from World Bank and IMF. Eritrea’s public debt is estimated at 126 per
cent of its GDP; Cape Verde 122 per cent and The Gambia at 107.6 per cent.
In
2015, Gambia was placed under an IMF Staff-Monitored Programme due to its
alarmingly growing debt level.
The
IMF said a poor country’s debt becomes unsustainable when the government is
devoting more than 20 per cent of its revenue to paying it back.
In
The Gambia, about 50 per cent of the government revenue goes to payment of
interest on loans, according to World Bank.
As a result, the government is left with little resources to embark on
any meaningful development initiative without taking more loans again.
The
Gambia government started to resort to heavy borrowing as grants to the country
have not been forthcoming, leaving it with almost no option but to face the
creditors.
