And although the Government, driven by the Central Bank of The Gambia and other state authorities, have been fighting tooth and nail to recover from those exogenous shocks, complete repairing of the damage caused is required to make life more stable and improving for the masses of people in the country.
The International Monetary Fund (IMF) has commended the government authorities for consolidating the country’s democratic transformation. With the aid of the IMF 2020-23 Extended Credit Facility arrangement, the government has been applying positive socio-economic reforms to alleviate the repercussions of the COVID-19 pandemic and the Russia-Ukraine war.
“Nonetheless, inflation persists, foreign exchange pressures are reemerging, and debt vulnerabilities remain high,” the IMF says in its statement published this month(Jan 12, 2024) on the status of The Gambia’s economy.
Although, the IMF Deputy Managing Director and acting Chair Bo Li said the Gambian authorities are committed to maintaining macroeconomic stability, reducing debt vulnerabilities, and pursuing reforms under a new IMF-supported program (which has approved US&100 million for the country to be given over a 3-year period or 36 months), he also emphasises the following:
“Fiscal, monetary, and exchange rate policies under the new program aim to address the near- and medium-term challenges. As such, policy efforts should focus on fiscal consolidation to build fiscal resilience, while safeguarding priority and poverty-reducing spending. Monetary and exchange rate policies will aim to tackle inflationary pressures and address foreign exchange pressures through a market‑determined exchange rate.
“To firmly put public debt on a downward trajectory, it is paramount to implement the planned medium-term fiscal strategy, including further streamlining of tax incentives and fuel subsidies, rationalization of subsidies to state-owned enterprises, and better prioritization of public investment projects. The authorities are committed to overhaul the SOE sector, bolster domestic resource mobilization, and advance governance reforms, in line with the recommendations from an IMF governance diagnostic mission.
“In view of lingering vulnerabilities, including the upcoming expiration of debt service deferrals, it would be important to build fiscal and external buffers. In this regard, maintaining prudent domestic borrowing, strictly adhering to the external borrowing plan, and seeking grants and highly concessional financing would be key.
“The authorities are encouraged to persevere in their ambitious structural reform agenda, including on enhancing governance and improving the business environment to support private sector-led growth and poverty reduction. Adopting strong climate-related policies and tackling gender inequality would also support more resilient and inclusive growth.”
According to the release by the IMF Executive Board, the new ECF-supported program with IMF that the Gambia government has requested “will be articulated around” or focused on four main pillars, which are: addressing inflation and foreign exchange pressures, reducing debt vulnerabilities and overhaul the SOE sector, strengthening governance and unlock growth potential, and addressing long-term challenges related to climate change and gender gaps.
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