News Brief: IMF Approves in Principle US$13 Million Loan for The Gambia Program Under the Poverty Reduction and Growth Facility
December 11, 2000
The Executive Board of the International Monetary Fund (IMF) today approved in principle the third annual arrangement of SDR 10.305 million (about US$13 million) for The Gambia under a program supported by a three-year arrangement under the Poverty Reduction and Growth Facility (PRGF)1.
A final decision by the IMF Executive Board is pending discussion of the interim Poverty Reduction Strategy Paper (PRSP) by the World Bank Executive Board, expected to take place on December 14, 2000, and will enable the release of a first loan under the third annual PRGF arrangement in an amount equivalent to SDR 3.44 million (about US$4 million) from the IMF. This brings total disbursements under the PRGF-supported program to an amount equivalent to SDR 13.74 million (about US$18 million).
After the Executive Board's discussion on The Gambia, Horst Köhler, Managing Director and Chairman, made the following statement:
"The authorities are commended for preparing a comprehensive interim PRSP, which provides a sound basis for the development of a full PRSP, for Fund concessional assistance, and for reaching the decision point under the enhanced HIPC Initiative. The interim PRSP incorporates a detailed framework for poverty alleviation on the basis of broad-based public participation. Preparations for a full PRSP are underway and a key challenge is to implement effectively the requisite measures to benefit the poor. Progress was noted in the strengthening of economic and financial data underlying the interim PRSP, and the authorities are urged to continue to improve the quality and timeliness of the data.
"The program for 2000/01 that will be supported by the third annual PRGF arrangement agreed by the Board provides a coherent framework to consolidate macroeconomic stability, deepen structural reforms, and enhance investor confidence. These are all essential for The Gambia to achieve more durable broad-based economic growth and sustained reduction in poverty.
"To attain the program objectives, it will be crucial for the authorities to pursue prudent monetary and fiscal policies, including steps to increase revenue and implement complementary reforms in the budget process and in the financial sector. The consolidation and broadening of structural reforms to cover governance, privatization, and groundnut marketing remain key to improved private sector activity and a speedier reduction in poverty.
"A final decision on The Gambia's debt relief under the enhanced HIPC Initiative is pending action later this week by the World Bank's Executive Board. A press release will be issued jointly with the World Bank following those deliberations. The full participation of all The Gambia's creditors, including non-Paris Club creditors, in debt relief will be important for the success of the Initiative."
1On November 22, 1999, the IMF's concessional facility for low-income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed the Poverty Reduction and Growth Facility (PRGF), and its purposes were redefined. It was intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a poverty reduction strategy paper (PRSP). This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. At this time for The Gambia, pending the completion of a PRSP, a preliminary framework has been set out in an interim PRSP, and a participatory process is underway. It is understood that all policy undertakings in the interim PRSP beyond the first year are subject to reexamination and modification in line with the strategy that is to be elaborated in the PRSP. Once completed and broadly endorsed by the Executive Boards of the IMF and World Bank, the PRSP will provide the policy framework for future reviews under this PRGF arrangement.PRGF loans carry an annual interest rate of 0.5%, and are repayable over 10 years with a 5½ year grace period in principal payments.