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IMF Executive Board Approves US$47.1 million Extended Credit Facility (ECF) Arrangement for The Gambia

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Via IMF (Den Internationale Valutafond)

IMF Executive Board Approves US$47.1 million Extended Credit Facility (ECF) Arrangement for The Gambia







March 23, 2020











  • The Fund-supported program aims to help The Gambia to be better prepared for external shocks, pursue high and inclusive growth, lessen debt vulnerabilities, strengthen public financial management, and bolster domestic revenue mobilization.
  • The Executive Board decision allows an immediate first disbursement of US$6.7 million to The Gambia and paves the way for additional financial support from a number of donors.
  • The ECF arrangement is essential to help the authorities deal with the challenges posed by the coronavirus disease (COVID-19) pandemic.

Washington, DC
The Executive Board of the International Monetary Fund (IMF) approved a
thirty-nine-month Extended Credit Facility arrangement for The Gambia in
the amount of SDR35 million (about US$47.1 million, or 56.3 percent of The
Gambia’s quota in the Fund) today. The ECF-supported program aims to anchor
macroeconomic stability and progress on structural reforms achieved under
the 2019 Staff Monitored Program (SMP) and would provide a framework to
assist the authorities in developing and implementing effective policy
responses to address the COVID-19 challenges. The program will also help
catalyze much needed donor financing, particularly in the form of grants
for budget support, maintain the momentum in reducing debt vulnerabilities,
and deliver on key commitments in the National Development Plan 2018–2021,
with the focus on inclusive growth and poverty reduction.

The IMF Executive Board decision enables an immediate disbursement of SDR5
million, about US$6.7 million. Disbursements of the remaining amount will
be phased over the duration of the program, subject to six half-yearly
reviews.

Following the Executive Board discussion on The Gambia, Mr Tao Zhang,
Deputy Managing Director and Acting Chair, issued the following statement:

“The Gambian authorities’ commitment to prudent policies and institutional
improvements has supported robust economic growth, while voluntary debt
service deferrals from their main external creditors have helped attain
debt sustainability. However, the ongoing COVID-19 pandemic will challenge
the authorities’ efforts to further strengthen economic performance and
resilience. The 39-month ECF arrangement, focused on advancing reforms in
revenue mobilization, public financial management, and economic governance
to support inclusive growth, will help anchor macroeconomic stability and
meet balance-of-payments needs. Grant financing and technical assistance
from development partners will be needed to support the authorities’ reform
efforts.

“The authorities should remain committed to fiscal consolidation in the
medium-term to ensure debt sustainability. Major projects should be
financed through grants or highly concessional financing and public
procurement and project selection should be strengthened. The governance
and financial management of state-owned enterprises need to be improved to
help reduce fiscal risks and enhance efficiency in public service delivery.
Further strengthening of tax administration and public financial management
is also needed to boost resources for priority investment and social
spending.

“The monetary policy framework needs to be enhanced, including by gradually
adjusting the interest rate corridor, and enabling the SDF rate to
effectively anchor the functioning of the interbank market, and the central
bank’s balance sheet should be strengthened.

“The vulnerabilities identified in the 2019 Financial Sector Stability
Assessment should be addressed to ensure soundness of the financial sector
and improve legal and supervisory framework for banking supervision. The
authorities should leverage the financial inclusion strategy, including
through mobile banking, while strengthening the oversight of non-banking
institutions and monitoring of risks involved in mobile banking.

“The authorities’ support for social programs and commitment to structural
reforms and improvement in governance, as outlined in the authorities’
National Development plan, will be necessary to help address social needs,
combat corruption and promote private-sector-led inclusive growth.”

Annex

Recent Economic Developments

The Gambia’s program of economic policies and reforms implemented under two
consecutive SMPs covering 2017–18 and 2019 helped consolidate macroeconomic
stability, achieve public debt sustainability, improve domestic revenue
mobilization, and strengthen public financial management (PFM). Real GDP
growth is estimated to have reached 6 percent in 2019 despite erratic
rainfall resulting in a 10–percent decline in agricultural production.
Inflation picked up in 2019 and averaged 7.1 percent, mainly due to one-off
hikes in postal charges, while the underlying trend appears benign and core
inflation subdued. Monetary policy has remained appropriately neutral in
the context of moderate core inflation. The renewed confidence in the
Gambian economy helped support robust private sector consumption and
investment on the back of a record tourist season, notwithstanding the
bankruptcy of Thomas Cook (UK), formerly, a major business partner in The
Gambian tourism. Strengthened balance-of-payments helped rebuild The
Gambia’s external buffers and helped replenish bank liquidity, contributing
to credit growth. Meanwhile, The Gambia’s banking system remains well
capitalized, liquid and profitable, with non-performing loans at 4.5
percent of gross loans at end-2019.

Program Summary

The ECF-supported program for The Gambia aims to help the authorities
attain the poverty reduction and growth objectives set in the 2018–21
National Development Plan, including with increased support for social
programs drawing on the fiscal space created in part by debt service
deferrals granted by The Gambia’s external creditors. The program also
emphasizes the need for further PFM reforms to improve governance and
increase the efficiency in the use of public resources, among others by
improving the performance of state-owned enterprises. Disbursements under
the ECF arrangement will help to reinforce balance-of-payments buffers,
including to cope with the impact of the COVID-19 outbreak.

The structural agenda under the ECF-supported program aims to strengthen
The Gambia’s performance in the following areas:

  • Bolstering domestic revenue mobilization
    through a multi-year program of modernizing tax administration based on
    the roadmap drawn with the help of the Tax Administration Diagnostic
    Assessment Tool (TADAT).

  • Consolidating the gains in fiscal policy formulation, public
    financial management,

    and debt sustainability
    by strengthening budget preparation and execution, all stages of cash
    management, debt management, and fiscal reporting.

  • Pursuing a multipronged strategy to improve economic governance

    with emphasis on public investment, drawing on the 2019 Public
    Investment Management Assessment, procurement, and the reform of
    state-owned enterprises including by strengthening their corporate
    governance, financial management, and reporting.

  • Broadening the scope of reforms to sustain growth and poverty
    reduction,

    by fostering financial inclusion, building on the recommendations of
    the 2019 Financial Sector Stability Review, mainstreaming gender
    equality, and counteracting the impact of climate change, which falls
    disproportionately on the poor.


The Gambia: Selected Economic and Financial Indicators,
2018–25

2018

2019

2020

2021

2022

2023

2024

2025

Act.

EBS/19/26

Prel.

Proj.

Projections

National account and prices

GDP at constant prices

6.5

5.8

6.0

6.3

5.8

5.5

5.2

5.2

5.0

GDP deflator

5.2

5.6

6.4

6.3

5.5

4.8

4.5

4.4

4.8

Consumer prices (average)

6.5

6.1

7.1

6.7

6.0

5.5

5.1

5.0

5.0

Consumer prices (end of period)

6.4

5.9

7.7

6.2

5.8

5.2

5.0

5.0

5.0

External sector

Exports, f.o.b (US$ values)

-0.9

6.8

25.2

6.0

7.9

7.3

10.5

10.7

10.1

Imports, f.o.b (US$ values)

11.9

11.0

14.6

13.6

8.3

6.1

7.0

7.5

7.0

Terms of trade (deterioration = -)

-1.7

-2.4

-4.1

-3.3

-2.9

-0.5

-0.2

-0.2

0.7

Real effective exchange rate (depreciation = -)

-1.5

4.6

Money and credit

Broad money

20.0

15.2

27.1

15.5

11.5

Net foreign assets

14.0

8.1

18.9

9.2

9.2

Net domestic assets

6.0

7.1

8.2

6.3

2.3

Of which:

Credit to central government (net)

7.1

4.0

3.9

1.2

0.0

Credit to the private sector (net)

5.0

4.0

6.0

3.4

2.3

Velocity (GDP/broad money)

2.3

2.2

2.1

2.0

2.0

Central government finances

Domestic revenue (taxes and other revenues)

12.1

13.1

14.4

13.7

14.0

14.3

14.6

15.0

15.2

Grants

3.3

7.7

7.8

9.3

8.5

7.7

7.0

6.3

6.1

Total expenditures and net acquisition of financial assets

21.7

23.9

24.4

24.4

24.2

23.4

22.7

22.0

21.7

Of which:
Interest (percent of government revenue)

26.1

24.3

22.3

19.9

18.1

15.3

14.9

13.2

12.6

Net lending (+)/borrowing (–)

-6.2

-3.2

-2.6

-1.7

-1.8

-1.4

-1.1

-0.7

-0.4

Net incurrence of liabilities

5.6

3.2

3.2

2.0

1.8

1.4

1.1

0.7

0.4

Foreign

2.6

1.6

2.7

2.0

1.8

1.4

1.1

0.7

0.4

Domestic

3.0

1.6

0.5

0.0

0.0

0.0

0.0

0.0

0.0

Primary balance

-3.0

0.0

0.6

1.0

0.8

0.8

1.1

1.3

1.5

Public debt

86.6

81.8

83.8

77.9

72.7

68.3

64.3

60.1

55.8

Domestic public debt

39.2

37.2

36.6

32.9

29.5

26.6

24.2

22.1

20.1

External public debt

47.4

44.6

47.2

45.0

43.2

41.7

40.1

38.1

35.8

External public debt (millions of US$)

756.6

774.5

796.3

836.0

876.7

915.6

949.0

967.7

979.0

External current account balance

Excluding budget support

-10.7

-13.8

-8.5

-11.9

-12.4

-11.8

-10.9

-10.7

-10.3

Including budget support

-9.7

-10.3

-5.3

-8.7

-9.9

-9.6

-9.0

-9.1

-8.8

Gross official reserves (millions of US$)

157.0

187.0

225.0

268.0

313.4

349.5

382.4

410.5

450.1

(months of next year’s imports of goods and services)

2.7

3.0

3.4

3.7

4.1

4.3

4.4

4.4

4.6

Savings and investment

Gross investment

17.9

18.3

20.8

20.5

20.0

19.4

18.7

18.4

18.8

Of which
: Central government

7.6

8.9

9.8

10.3

10.2

9.5

8.8

8.1

8.2

Gross savings

8.1

8.0

15.4

11.8

10.1

9.8

9.7

9.2

10.0

Memorandum items:

Nominal GDP (billions of dalasi)

78.6

87.4

88.7

100.2

111.9

123.7

136.0

149.3

164.3

GDP per capita (US$)

712.5

782.4

750.9

795.8

840.0

883.1

923.2

964.5

1008.5

Use of Fund resources (millions of SDRs)

Disbursements

0.0

0.0

0.0

10.0

10.0

10.0

5.0

0.0

0.0

Repayments

-5.5

-4.3

-4.3

-3.6

-4.0

-2.8

-4.1

-3.9

-3.6

Sources: The Gambian authorities; and IMF staff estimates
and projections.

IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Gediminas Vilkas

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson








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