News Brief: IMF Completes Review Under The Gambia's PRGF Arrangement and Approves US$4 million Disbursement
December 6, 2001
The Executive Board of the International Monetary Fund (IMF) completed the second review of The Gambia's performance under the third annual Poverty Reduction and Growth Facility (PRGF) 1 arrangement. As a result, The Gambia will be able to draw up to SDR 3.4 million (about US$4 million).
The Gambia's three-year program was originally supported by a three- year arrangement under the Enhanced Structural Adjustment Facility (ESAF) approved on June 29, 1998 (see Press Release 98/28) for SDR 20.61 million (about US$26 million). So far, The Gambia has drawn SDR 17.18 million (about US$22 million) under the arrangement.
After the Executive Board Meeting on The Gambia, Eduardo Aninat, Deputy Managing Director and Acting Chairman, stated:
"The Gambian authorities are to be commended for The Gambia's generally encouraging economic performance since 1998 under the PRGF arrangement. During this period, The Gambia experienced sustained per capita GDP growth and low inflation and an improvement in the fiscal balance. The authorities took corrective measures, including the adoption of an appropriate macroeconomic framework and supporting policies for 2002-2004 in response to pressures on the budget that emerged earlier this year. On the basis of the corrective measures, the Board granted a waiver for the nonobservance of the quantitative performance criterion with respect to net bank credit to the central government, and the second review was completed.
"The budget for 2002 provides for a strengthening of fiscal performance in line with the goal of maintaining a sustainable level of government domestic debt. The planned revenue and expenditure reforms will free up resources for spending on the social sector and poverty reduction. Especially important will be efforts to enhance revenue collection, in particular improvements in customs administration. The measures envisaged to maintain fiscal discipline will need to be supported by actions to enhance the transparency and accountability of the public finances.
"The authorities should continue to implement a prudent monetary policy. The measures to promote closer interaction of banks and foreign exchange bureaus and the introduction of foreign currency deposits will help deepen the interbank foreign exchange market. The authorities are taking steps to enhance the supervision and monitoring of financial institutions.
"With a settlement with Alimenta, a Swiss company, on a major property dispute having been reached, there is a need to continue to consolidate and broaden structural reforms, which remain key to stimulating private sector activity and accelerating a reduction in poverty. The Gambia's open and liberal trade regime has made it a key regional trading center.
"Full implementation of the measures articulated in the macroeconomic framework for 2002-04, including the budget for 2002 that draws on the building blocks for the full PRSP under preparation, will be challenging as well as necessary to consolidate macroeconomic stability and further build on the track record leading to debt relief under the enhanced HIPC Initiative.
"Considerable progress has been made with respect to the preparation of the full PRSP, including recent measures to help ensure completion by the recently revised date of early 2002. Executive Directors considered that work toward the development of a full PRSP, as reflected in the PRSP Preparation Status report, is satisfactory and provides a sound basis for continued access to Fund concessional lending," Mr. Aninat said.
1 On November 22, 1999, the IMF's facility for low income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed Poverty Reduction and Growth Facility (PRGF), and its purposes were redefined. It is intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies 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. An interim PRSP has been designed by The Gambian authorities and incorporates sector policies that are part of the program pillars to reduce poverty. A full PRSP is expected to be completed in January 2002. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 1/2 -year grace period on principal payments.