News Brief: IMF Completes The Gambia Review Under PRGF and Approves US$4 Million Disbursement
July 13, 2001
The Executive Board of the International Monetary Fund (IMF) today completed The Gambia's first review of the third annual arrangement under the Poverty Reduction and Growth Facility (PRGF)1. As a result, The Gambia will be able to draw up to SDR 3.4 million (about US$4 million) from the arrangement immediately.
The Gambia's three-year program was originally supported under the Enhanced Structural Adjustment Facility (ESAF) approved on June 29, 1998 (see Press Release 98/28). So far, The Gambia has drawn SDR 13.74 million (about US$17 million) under the arrangement.
After the Executive Board's discussion on The Gambia, Eduardo Aninat, Deputy Managing Director and Acting Chairman, made the following statement:
"The Gambian authorities are to be commended for the encouraging economic performance over the last two and a half years of the PRGF arrangement. There has been sustained per capita GDP growth, low inflation, and a marked reduction in the fiscal deficit. There was also significant structural reform, including progress in privatization, reform of the financial sector, and a reduction and rationalization of the external tariffs.
"The first review of the third annual arrangement has highlighted a need to strengthen budgetary performance and enhance transparency and good governance. To maintain fiscal discipline, the authorities need to press on with reforms to further strengthen the revenue departments and to fully implement the automated system for customs data. On the expenditure side, some progress has been achieved in closing the public accounts and strengthening expenditure control. Further reforms are needed to improve the transparency and tracking of poverty-reducing expenditures. Moreover, fiscal restraint is necessary for prudent monetary policy and will facilitate further financial sector reform.
"Progress toward the settlement of the Alimenta property dispute has considerably improved investor confidence. However, improving governance through timely implementation of the comprehensive governance program incorporated in the PRSP remains crucial.
"Other structural reforms with an emphasis on promoting private sector activities are essential to a sustained reduction in poverty. Moreover, reforms in groundnut marketing are critical to avoid direct government involvement in financing the sector. Significant progress toward the preparation of a full PRSP by end-2001 has been achieved. Collaboration with donors is important to support the PRSP reforms", 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 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. An interim PRSP has been designed and incorporates sector policies that are part of the program pillars to reduce poverty. A full PRSP is expected by end-2001. PRGF loans carry an annual interest rate of 0.5% and are repayable over 10 years with a 5 ½ year grace period on principal payments.