News Brief: IMF Completes First Review of The Gambia under PRGF-Supported Program and Approves US$ 4.51 Million Disbursement
July 19, 2000
The Executive Board of the International Monetary Fund (IMF) completed its first review of The Gambia's second annual arrangement under the Poverty Reduction and Growth Facility (PRGF)1 (see Press Release 98/28). The completion of this review enables the release of a further SDR 3.43 million (about US$ 4.51 million), which brings total disbursements under the three year program to SDR 10.3 million (about US$ 13.5 million).
After the Executive Board's discussion, Eduardo Aninat, Deputy Managing Director, made the following statement:
"The Gambian authorities are to be commended for achieving a broadly encouraging economic performance over the past one and a half years of the PRGF arrangement. There has been sustained per capita GDP growth, low inflation, and some reduction in the fiscal deficit. There were also marked structural reforms, including progress in privatization and reform of the financial sector, and a significant reduction and rationalization of the external tariff system was attained.
"However, the midterm review of the second annual arrangement has highlighted the need to strengthen budgetary performance and to enhance transparency and good governance. In the fiscal area, the authorities need to press on with reforms to improve coordination and the efficiency of the tax departments, including through computerization. On the expenditure side, the challenge remains to complete the reforms initiated with Fund technical assistance aimed at improving expenditure reporting and control. Governance issues need to be addressed with an expeditious settlement of the Gambia Groundnut Corporation (GGC) property dispute and timely implementation of the comprehensive program that the government adopted in 1999.
"Other structural reforms, with an emphasis on promoting private sector activities, will also help to reduce poverty. A more direct effort in this regard requires measures that would enhance the participatory process and facilitate the preparation of an interim PRSP before the end of the year, and full-fledged PRSP during 2001. At the same time, implementing the broad range of the program- and PRSP-related measures remains a major test of the authorities' limited economic management capacity, which should be addressed with timely access to technical assistance.
"The preliminary debt sustainability analysis (DSA) indicates that The Gambia may qualify for assistance under the HIPC Initiative. It is expected that a full DSA will be undertaken leading to the preparation of a HIPC document to establish a decision point for The Gambia," Aninat said.
1 On November 22, 1999, the IMF's concessional facility for low-income countries, the Enhanced Structural Adjustment Facility, was renamed the Poverty Reduction and Growth Facility, 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. 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. PRGF loans carry an annual interest rate of 0.5 percent, and are repayable over 10 years with a 5 ½-year grace period for principal payments.