## 1gmbea2021002 - 4.7 months of imports at end-2020. Public debt declined. ## Source details **Canonical URL:** [1gmbea2021002 - 4.7 months of imports at end-2020. Public debt declined.](https://www.imf.org/-/media/files/publications/cr/2021/english/1gmbea2021002.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2021/english/1gmbea2021002.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2021/english/1gmbea2021002.pdf.json) --- ### Executive summary and context - Second wave of COVID-19 in early 2021; vaccination campaign started in early March 2021 but pace is slow. - Presidential and parliamentary elections planned for December 2021 and April 2022. - Macroeconomic stability maintained: gross official reserves reached 4.7 months of import coverage at end-2020. - All quantitative performance criteria (PC) at end-December 2020 were met; two structural benchmarks (SBs) for end-March 2021 were met; completion of the end-December 2020 SB was delayed until March 2021. - Staff recommendation: completion of the second ECF review, noting satisfactory implementation and strong policy commitments. ### Macroeconomic developments and outlook - Growth and output (GDP at constant prices): - 6.1 (2019); 0.0 (2020 Prel.); 0.0 (2020 RCF); 6.0 (2021 Proj.); 4.9 (2022); 6.5 (2023); 7.0 (2024); 6.5 (2025); 5.8 (2026); 5.6 (beyond). - Under the impact of the pandemic, growth estimated to have slowed to zero percent in 2020 and expected to rebound to 4.9 percent in 2021. - Prices and inflation: - GDP deflator: 7.1 (2019); 7.2 (2020 Prel.); 7.1 (2020 RCF); 4.3 (2021 Proj.); 4.2 (2022); 4.3 (2023); 4.1 (2024); 4.1 (2025); 5.3 (2026); 4.6 (beyond). - Consumer prices (average): 7.1 (2019); 6.1 (2020 Prel.); 5.9 (2020 RCF); 6.0 (2021 Proj.); 6.0 (2022); 5.5 (2023); 5.1 (2024); 5.0 (2025); 5.0 (2026); 5.0 (beyond). - Consumer prices (end of period): 7.7 (2019); 6.5 (2020 Prel.); 5.7 (2020 RCF); 5.8 (2021 Proj.); 5.8 (2022); 5.2 (2023); 5.0 (2024); 5.0 (2025); 5.0 (2026); 5.0 (beyond). - Inflation subsided from 7.7 percent (y/y) at end-2019 to 5.7 percent at end-2020; inflation edged up to 7.4 percent at end-March 2021. - External sector and reserves: - Gross official reserves (millions of US$): 225.0 (2019); 330. (2020 Prel.); 352.0 (2020 RCF); 389.8 (2021 Proj.); 412.3 (2022); 432.8 (2023); 449.1 (2024); 458.4 (2025); 473.8 (2026); 506.4 (beyond). - Months of next year's imports (reserves coverage): 3.9 (2019); 4.6 (2020 Prel.); 4.7 (2020 RCF); 4.6 (2021 Proj.); 4.6 (2022); 4.5 (2023); 4.5 (2024); 4.5 (2025); 4.5 (2026); 4.6 (beyond). - Exports, f.o.b (US$ values): 23.8 (2019); -10.7 (2020 Prel.); -50.8 (2020 RCF); 23.1 (2021 Proj.); 62.9 (2022); 35.9 (2023); 26. (2024); 8.9 (2025); 5.6 (2026); 7.2 (beyond). - Imports, f.o.b (US$ values): 14.6 (2019); -1.7 (2020 Prel.); -2.4 (2020 RCF); 17.9 (2021 Proj.); 27.7 (2022); 12.2 (2023); 7.1 (2024); 2.0 (2025); 2.8 (2026); 2.4 (beyond). - Current account: - External current account balance excluding official transfers: -9.2 (2019); -10.9 (2020 Prel.); -8.3 (2020 RCF); -14.1 (2021 Proj.); -14.5 (2022); -16.3 (2023); -15.0 (2024); -12.6 (2025); -11.0 (2026); -10.3 (beyond). - Including official transfers: -6.2 (2019); -6.2 (2020 Prel.); -4.0 (2020 RCF); -11.9 (2021 Proj.); -12.4 (2022); -13.9 (2023); -13.0 (2024); -11.0 (2025); -9.4 (2026); -8.8 (beyond). ### Fiscal performance and public debt - Fiscal outturn highlights (selected, percent of GDP): - Domestic revenue (taxes and other revenues): 13.9 (2019); 13.3 (2020 Prel.); 13.8 (2020 RCF); 14.1 (2021 Proj.); 13.8 (2022); 14.0 (2023); 14.4 (2024); 14. (2025); 14.7 (2026); 14.9 (beyond). - Total expenditures and net acquisition of assets: 23.6 (2019); 25.2 (2020 Prel.); 24.0 (2020 RCF); 25.4 (2021 Proj.); 25.5 (2022); 24.0 (2023); 22.9 (2024); 21. (2025); 21.0 (2026); 20.8 (beyond). - Net lending (+)/borrowing (–): -2.5 (2019); -1.7 (2020 Prel.); -2.1 (2020 RCF); -3.9 (2021 Proj.); -4.0 (2022); -2.1 (2023); -1.2 (2024); -0.6 (2025); -0.2 (2026); -0.1 (beyond). - Primary balance: 0.6 (2019); 1.3 (2020 Prel.); 1.0 (2020 RCF); -1.3 (2021 Proj.); -1.4 (2022); 0.5 (2023); 1.1 (2024); 1.6 (2025); 1.8 (2026); 1.7 (beyond). - Public debt and trajectory: - Public debt: 80.2 (2019); 76.4 (2020 Prel.); 77.2 (2020 RCF); 74.4 (2021 Proj.); 76.7 (2022); 72.7 (2023); 66.3 (2024); 61. (2025); 56.3 (2026); 51.0 (beyond). - PV of overall debt-to-GDP ratio: 70.4 (2019); 67.5 (2020 Prel.); 67.4 (2020 RCF); 65.9 (2021 Proj.); 66.7 (2022); 63.0 (2023); 57.1 (2024); 52.9 (2025); 48.6 (2026); 43.8 (beyond). - Fiscal execution in 2020: - Tax revenue outturns supported by strong income and corporate tax collections. - Non-tax revenue boosted by Janneh Commission asset sales and distribution of CBG accumulated profits, raising domestic revenue above program by 0.5 percentage points of GDP. - Grants fell below projections due to delays and postponement of EUR 5.5-million EU budget support. - Spending control: savings on goods and services and compensation offset overspending on subsidies and transfers. - Result: domestic primary deficit and net domestic borrowing below projected ceilings; public debt-to-GDP ratio declined from 80.1 percent at end-2019 to 77.2 percent at end-2020. ### Program performance and 2021 policy objectives - Program performance through December 2020: - All end-December quantitative PCs and indicative targets met, some with large margins. - End-December 2020 SB on MDAs’ compliance with internal audit recommendations completed in March 2021. - Two end-March 2021 SBs met; one CBG SB met in advance. - 2021 program objectives and priorities: - Balance addressing pandemic, supporting recovery, and reducing debt vulnerabilities. - Address weaker-than-expected revenue collection and unforeseen spending pressures (including elections) by: - Streamlining tax expenditures. - Savings from subsidies to SOEs. - Continue revenue administration and PFM reforms, including digitalization, public procurement, and prioritization of public investment. - Maintain appropriately accommodative monetary policy while monitoring liquidity and inflation and tackling financial vulnerabilities. - Finalize and enact SOE bill and Public Finance Bill despite complications from stalled constitutional reform. ### Monetary policy, financial sector, and liquidity - Monetary stance: appropriately accommodative to support recovery; monitor liquidity and inflation. - Money and credit (contributions to broad money growth; percent): - Broad money: 27.1 (2019); 15.5 (2020 Prel.); 22.0 (2020 RCF); 9.5 (2021 Proj.); 12.6 (2022). - Net foreign assets: 18.9 (2019); 9.7 (2020 Prel.); 17.6 (2020 RCF); -1.2 (2021 Proj.); 3.1 (2022). - Credit to central government (net): 4.0 (2019); 4.9 (2020 Prel.); 3.6 (2020 RCF); 7.1 (2021 Proj.); 6.7 (2022). - Credit to the private sector (net): 6.0 (2019); 1.3 (2020 Prel.); 0.1 (2020 RCF); 3.6 (2021 Proj.); 2.9 (2022). - Financial sector resilience and indicators: - COVID-19 impact limited to one large bank, three small banks, and three MFIs. - Affected banks accounted for 27.9 percent and 36.7 percent of banking system assets and loans at end-2020. - By end-February 2021, the affected large bank resolved its NPL problems; three small banks remain (12.2 percent of assets; 22.6 percent of loans). - NPLs increased to 6.8 percent of gross loans at end-2020; provisions at 85 percent. - Banking system remained liquid and well capitalized; mobile banking expanded financial intermediation. - CBG eased liquidity at onset of COVID-19: policy rate reduced from 12.5 percent at end-2019 to 10 percent by end-May; reserve requirement ratio cut from 15 to 13 percent; banks advised to postpone dividend distributions. - By end-2020: broad money expanded by 22.0 percent (y/y); donor support reached US$100 million (including IMF disbursements close to US$28 million); private remittances US$590 million. ### Structural reforms and governance - Key reform actions: - Streamline tax exemptions and achieve savings on SOE subsidies. - Swift implementation of business environment strategy. - Enact Public Procurement Act to improve value-for-money. - Finalize SOE Bill (on hold due to stalled constitutional reform); explore alternative legal approaches. - Continue revenue administration and PFM reforms (digitalization, IFMIS extension, TSA). - PFM and governance milestones: - IFMIS deployed to all local government councils since January 2021; roadmap to extend to all projects and subvented agencies (SB end-June 2021). - Approve and implement new tax expenditure policy (SB end-June 2021). - Submit revised SOE bill and new Public Finance Bill (SBs end-December 2021) — approval contingent on constitutional reform progress. - National Audit Office audit consolidation targeted by end-September 2021. ### Debt sustainability, relief, and contingent liabilities - Assessment: public debt remains sustainable with high risk of debt distress. - Debt stock: PV of debt-to-GDP ratio 77 percent at end-2020; target below 55 percent by 2024; 51 percent by 2026. - Debt relief and arrears: - Requested extension of DSSI through end-June 2021 and intend to request extension to end-December 2021. - Receiving CCRT relief expected to total SDR 7.9 million (SDR 6.1 million approved). - DSSI provided payment suspension of US$4 million in 2020; eligible suspension in 2021 estimated at about US$3 million. - Authorities disputing liabilities to Libya; engaging with Venezuela in good faith but unsuccessful due to international sanctions. - Staff advice on infrastructure financing: - Strengthen appraisal and selection criteria; seek most concessional financing available (preferably grants). - Improve domestic debt management and transparency (SB end-March 2021 and quarterly thereafter). ### Risks, scenarios, and mitigations - Major risks (relative likelihood and impact shown in RAM): - External: Unexpected shift in COVID-19 pandemic — Relative Likelihood: Medium; Impact: High. - Scenarios: asynchronous progress, prolonged pandemic, faster containment; consequences include lower tourism, exports, remittances. - Policy responses: strengthen fiscal, social, and health response; prioritize high fiscal multiplier infrastructure; strengthen regional response; targeted support for tourism, construction, services. - External: Oversupply and volatility in oil market — Relative Likelihood: Medium; Impact: High. - Policy responses: strengthen fiscal oversight of NAWEC; accelerate national energy roadmap. - Financial instability — Relative Likelihood: Medium; Impact: High. - Policy responses: increase provisions and capital; implement FSSR recommendations; risk-based supervision. - Weak fiscal management — Relative Likelihood: Medium/High; Impact: Medium. - Policy responses: implement PFM TA recommendations; identify fiscal measures; SOE and governance reforms. - Social discontent and political instability — Relative Likelihood: Medium; Impact: High. - Policy responses: prioritize socio-economic stability; involve CSOs; implement governance commission findings. - Natural disasters — Relative Likelihood: Medium; Impact: High. - Policy responses: strengthen food security programs; build fiscal and reserve buffers. - Downside macro scenario (tourism subdued until 2021Q4): - Growth would drop to 3.0 percent (about two percentage points below baseline). - Fiscal deficit would widen; additional domestic borrowing assumed. - PV of overall public debt would fall below the 55-percent-of-GDP benchmark in 2025, a year later than baseline. ### Policy recommendations (selected, actionable) - Fiscal policy: - Prioritize pandemic response and recovery while reducing debt vulnerabilities. - Phase out COVID-19-related revenue relaxations; target programs to vulnerable populations. - Streamline tax exemptions and save on SOE subsidies (notably NAWEC and GGC). - Ensure rigorous appraisal and selection for investment projects and use concessional financing. - Meet 2021 program fiscal targets via revenue measures (streamlining tax exemptions; increase voluntary VAT threshold; audit filing requirements for Large Taxpayers; tobacco excise increases) and spending restraint (savings on SOE subsidies; prioritize projects). - Monetary and financial sector: - Maintain accommodative monetary policy while monitoring liquidity and inflation. - Address structural obstacles to credit (strengthen credit information register; enforce collateral laws). - Strengthen CBG balance sheet, safeguards, and autonomy; implement audit arrangements (SB end-March 2021). - Strengthen financial supervision and macroprudential tools; implement FSSR recommendations and stress-testing framework (SB end-June 2021). - Structural reforms and governance: - Approve and implement Tax Expenditure Policy (SB end-June 2021). - Prepare IFMIS roadmap and extend IFMIS to all project and subvented agency accounts (SB end-June 2021). - Revise and submit new Public Finance Bill and SOE Bill (SBs end-December 2021). - Enact Public Procurement Act and continue anticorruption, AML/CFT, and business environment reforms. - Operational and program monitoring: - Adhere to agreed borrowing plan; ensure transparency in debt recording and publish monthly domestic debt issuance calendars. - Maintain quantitative PCs for end-June 2021 and end-December 2021; implement SBs and reporting requirements as specified. ### Selected additional indicators and memoranda (highlights) - Remittances: Estimated at US$590 million in 2020, an 80-percent increase over 2019. - Gross investment: 19.4 (2019); 18.5 (2020 Prel.); 19.4 (2020 RCF); 21.8 (2021 Proj.); 24.2 (2022); 23.9 (2023); 23.7 (2024); 22.9 (2025); 23.1 (2026); 22.7 (beyond). - Gross savings: 13.2 (2019); 12. (2020 Prel.); 15.4 (2020 RCF); 9.9 (2021 Proj.); 11.8 (2022); 10.0 (2023); 10.7 (2024); 12.0 (2025); 13.7 (2026); 13.9 (beyond). - Nominal GDP (billions of dalasi): 91.4 (2019); 98.0 (2020 Prel.); 98.0 (2020 RCF); 108.3 (2021 Proj.); 107.1 (2022); 119.0 (2023); 132.6 (2024); 146.9 (2025); 163.7 (2026); 180.8 (beyond). - GDP per capita (US$): 774.2 (2019); 787.4 (2020 Prel.); 785.3 (2020 RCF); 830.0 (2021 Proj.); 819.4 (2022); 865.8 (2023); 917.6 (2024); 967.9 (2025); 1025.7 (2026); 1075.7 (beyond). ### Data and reporting requirements (selected operational points) - Timely reporting obligations include: - Monthly consolidated Central Government budget report transmitted within four weeks of month-end. - CBG balance sheet and monetary sector data transmitted monthly within four weeks of month-end; detailed reserve statement with end-month data within seven days of month-end. - Daily interbank money market data transmitted weekly within five business days of week-end. - SOE cash flow statements and public enterprise data: monthly, 30 days after month-end or within eight weeks of quarter-end as specified. - Quarterly reports on outstanding short-maturity external public debt and concessional/non-concessional debt contracted or guaranteed transmitted quarterly within four weeks of quarter-end. _Italic: Source: THE GAMBIA: SECOND REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT AND FINANCING ASSURANCES REVIEW; May 12, 2021._ ### 4.7 months of imports at end-2020. Public debt declined. ### 1gmbea2021002 - 4.7 months of imports at end-2020. Public debt declined. ### Executive summary and context - The Gambia experienced a second wave of COVID-19 in early 2021; the vaccination campaign started in early March 2021 but the pace is slow. - Presidential and parliamentary elections are planned for December 2021 and April 2022, respectively. - Macroeconomic stability was maintained, including gross official reserves reaching 4.7 months of import coverage at end-2020. - All quantitative performance criteria (PC) at end-December 2020 were met; two structural benchmarks (SBs) for end-March 2021 were met; completion of the end-December 2020 SB was delayed until March 2021. - Staff recommends completion of the second ECF review, noting satisfactory implementation and strong policy commitments. ### Macroeconomic developments and outlook - Growth and output: - GDP at constant prices: 6.1 (2019); 0.0 (2020 Prel.); 0.0 (2020 RCF); 6.0 (2021 Proj.); 4.9 (2022); 6.5 (2023); 7.0 (2024); 6.5 (2025); 5.8 (2026); 5.6 (beyond). - Under the impact of the pandemic, growth is estimated to have slowed to zero percent in 2020 and expected to rebound to 4.9 percent in 2021. - Prices and inflation: - GDP deflator: 7.1 (2019); 7.2 (2020 Prel.); 7.1 (2020 RCF); 4.3 (2021 Proj.); 4.2 (2022); 4.3 (2023); 4.1 (2024); 4.1 (2025); 5.3 (2026); 4.6 (beyond). - Consumer prices (average): 7.1 (2019); 6.1 (2020 Prel.); 5.9 (2020 RCF); 6.0 (2021 Proj.); 6.0 (2022); 5.5 (2023); 5.1 (2024); 5.0 (2025); 5.0 (2026); 5.0 (beyond). - Consumer prices (end of period): 7.7 (2019); 6.5 (2020 Prel.); 5.7 (2020 RCF); 5.8 (2021 Proj.); 5.8 (2022); 5.2 (2023); 5.0 (2024); 5.0 (2025); 5.0 (2026); 5.0 (beyond). - Inflation subsided from 7.7 percent (y/y) at end-2019 to 5.7 percent at end-2020; inflation edged up to 7.4 percent at end-March 2021. - External sector and reserves: - Exports, f.o.b (US$ values): 23.8 (2019); -10.7 (2020 Prel.); -50.8 (2020 RCF); 23.1 (2021 Proj.); 62.9 (2022); 35.9 (2023); 26. (2024); 8.9 (2025); 5.6 (2026); 7.2 (beyond). - Imports, f.o.b (US$ values): 14.6 (2019); -1.7 (2020 Prel.); -2.4 (2020 RCF); 17.9 (2021 Proj.); 27.7 (2022); 12.2 (2023); 7.1 (2024); 2.0 (2025); 2.8 (2026); 2.4 (beyond). - Gross official reserves (millions of US$): 225.0 (2019); 330. (2020 Prel.); 352.0 (2020 RCF); 389.8 (2021 Proj.); 412.3 (2022); 432.8 (2023); 449.1 (2024); 458.4 (2025); 473.8 (2026); 506.4 (beyond). - Months of next year's imports (reserves coverage): 3.9 (2019); 4.6 (2020 Prel.); 4.7 (2020 RCF); 4.6 (2021 Proj.); 4.6 (2022); 4.5 (2023); 4.5 (2024); 4.5 (2025); 4.5 (2026); 4.6 (beyond). - Current account: - External current account balance excluding official transfers: -9.2 (2019); -10.9 (2020 Prel.); -8.3 (2020 RCF); -14.1 (2021 Proj.); -14.5 (2022); -16.3 (2023); -15.0 (2024); -12.6 (2025); -11.0 (2026); -10.3 (beyond). - Including official transfers: -6.2 (2019); -6.2 (2020 Prel.); -4.0 (2020 RCF); -11.9 (2021 Proj.); -12.4 (2022); -13.9 (2023); -13.0 (2024); -11.0 (2025); -9.4 (2026); -8.8 (beyond). ### Program performance and 2021 policy objectives - Program performance: - The authorities continued good implementation of the program despite the pandemic. - All quantitative PCs at end-December 2020 were met, some with significant margins. - Two SBs for end-March 2021 were met; the end-December 2020 SB was completed in March 2021. - 2021 program objectives and policy priorities: - Ensure an appropriate balance between addressing the pandemic, supporting economic recovery, and reducing debt vulnerabilities. - Address weaker-than-expected revenue collection and unforeseen spending pressures (including elections) through: - Streamlining tax expenditures. - Savings from subsidies to state-owned enterprises (SOEs). - Continue revenue administration and public financial management (PFM) reforms, including digitalization, public procurement, and better prioritization of public investment. - Maintain an appropriately accommodative monetary policy stance while monitoring liquidity and inflation and tackling pockets of financial vulnerabilities. - Seek to finalize and enact the SOE bill and Public Finance Bill despite complications from stalled constitutional reform. ### Fiscal policy and public debt - Central government finances (selected items, percent of GDP): - Domestic revenue (taxes and other revenues): 13.9 (2019); 13.3 (2020 Prel.); 13.8 (2020 RCF); 14.1 (2021 Proj.); 13.8 (2022); 14.0 (2023); 14.4 (2024); 14. (2025); 14.7 (2026); 14.9 (beyond). - Tax Revenue: 10.9 (2019); 10.4 (2020 Prel.); 10.5 (2020 RCF); 11.2 (2021 Proj.); 10.9 (2022); 11.6 (2023); 12.0 (2024); 12. (2025); 12.4 (2026); 12.7 (beyond). - Grants: 7.1 (2019); 10.3 (2020 Prel.); 8.1 (2020 RCF); 7.4 (2021 Proj.); 7.7 (2022); 8.0 (2023); 7.3 (2024); 6.5 (2025); 6.0 (2026); 5.7 (beyond). - Total expenditures and net acquisition of assets: 23.6 (2019); 25.2 (2020 Prel.); 24.0 (2020 RCF); 25.4 (2021 Proj.); 25.5 (2022); 24.0 (2023); 22.9 (2024); 21. (2025); 21.0 (2026); 20.8 (beyond). - Net lending (+)/borrowing (–): -2.5 (2019); -1.7 (2020 Prel.); -2.1 (2020 RCF); -3.9 (2021 Proj.); -4.0 (2022); -2.1 (2023); -1.2 (2024); -0.6 (2025); -0.2 (2026); -0.1 (beyond). - Primary balance: 0.6 (2019); 1.3 (2020 Prel.); 1.0 (2020 RCF); -1.3 (2021 Proj.); -1.4 (2022); 0.5 (2023); 1.1 (2024); 1.6 (2025); 1.8 (2026); 1.7 (beyond). - Public debt and composition: - Public debt: 80.2 (2019); 76.4 (2020 Prel.); 77.2 (2020 RCF); 74.4 (2021 Proj.); 76.7 (2022); 72.7 (2023); 66.3 (2024); 61. (2025); 56.3 (2026); 51.0 (beyond). - Domestic public debt: 35.6 (2019); 33.6 (2020 Prel.); 34.0 (2020 RCF); 31.1 (2021 Proj.); 31.9 (2022); 29.4 (2023); 25.0 (2024); 22. (2025); 20.3 (2026); 17.2 (beyond). - External public debt: 44.6 (2019); 42.8 (2020 Prel.); 43.2 (2020 RCF); 43.3 (2021 Proj.); 44.8 (2022); 43.3 (2023); 41.3 (2024); 38.9 (2025); 36.0 (2026); 33.8 (beyond). - External public debt (millions of US$): 798.1 (2019); 813.8 (2020 Prel.); 820.4 (2020 RCF); 888.0 (2021 Proj.); 905.6 (2022); 953.1 (2023); 993.0 (2024); 1015. (2025); 1023.6 (2026); 1040.6 (beyond). - PV of overall debt-to-GDP ratio: 70.4 (2019); 67.5 (2020 Prel.); 67.4 (2020 RCF); 65.9 (2021 Proj.); 66.7 (2022); 63.0 (2023); 57.1 (2024); 52.9 (2025); 48.6 (2026); 43.8 (beyond). ### Monetary policy, financial sector, and liquidity - Monetary policy stance: Remains appropriately accommodative to support recovery, while liquidity and inflation developments need to be monitored. - Money and credit (contributions to broad money growth; percent): - Broad money: 27.1 (2019); 15.5 (2020 Prel.); 22.0 (2020 RCF); 9.5 (2021 Proj.); 12.6 (2022). - Net foreign assets: 18.9 (2019); 9.7 (2020 Prel.); 17.6 (2020 RCF); -1.2 (2021 Proj.); 3.1 (2022). - Net domestic assets: 8.2 (2019); 5.9 (2020 Prel.); 4.4 (2020 RCF); 10.7 (2021 Proj.); 9.6 (2022). - Credit to central government (net): 4.0 (2019); 4.9 (2020 Prel.); 3.6 (2020 RCF); 7.1 (2021 Proj.); 6.7 (2022). - Credit to the private sector (net): 6.0 (2019); 1.3 (2020 Prel.); 0.1 (2020 RCF); 3.6 (2021 Proj.); 2.9 (2022). - Velocity (GDP/broad money): 2.1 (2019); 2.0 (2020 Prel.); 1.9 (2020 RCF); 2.0 (2021 Proj.); 1.8 (2022). - Financial sector vulnerabilities: - Emerging pockets of vulnerabilities in select financial institutions are being tackled. - Given slow credit growth in a context of ample liquidity, structural obstacles to credit should be addressed. ### Structural reforms and governance - Key reforms and legislation: - Streamline tax exemptions and make savings on subsidies to SOEs to address fiscal pressures. - Swift implementation of the business environment strategy to support strong and inclusive growth. - Enact the Public Procurement Act to improve value-for-money of spending. - Finalize the SOE Bill (currently on hold because of stalled constitutional reform) to improve SOEs’ performance and reduce their reliance on the state budget. - Continue revenue administration and PFM reforms, including digitalization and public procurement improvements. - Political and institutional context: - Constitutional reform has stalled at the National Assembly, affecting enactment of the SOE bill and revisions to the Public Finance Bill. - Authorities are committed to transparency of COVID-19-related spending; GPPA published COVID-19-related procurement contracts for 2020 and Q1 2021; National Audit Office audit consolidation targeted by end-September 2021. ### Selected additional indicators and memoranda - Remittances: Estimated at US$590 million in 2020, an 80-percent increase over 2019. - Gross investment: 19.4 (2019); 18.5 (2020 Prel.); 19.4 (2020 RCF); 21.8 (2021 Proj.); 24.2 (2022); 23.9 (2023); 23.7 (2024); 22.9 (2025); 23.1 (2026); 22.7 (beyond). - Gross savings: 13.2 (2019); 12. (2020 Prel.); 15.4 (2020 RCF); 9.9 (2021 Proj.); 11.8 (2022); 10.0 (2023); 10.7 (2024); 12.0 (2025); 13.7 (2026); 13.9 (beyond). - Nominal GDP (billions of dalasi): 91.4 (2019); 98.0 (2020 Prel.); 98.0 (2020 RCF); 108.3 (2021 Proj.); 107.1 (2022); 119.0 (2023); 132.6 (2024); 146.9 (2025); 163.7 (2026); 180.8 (beyond). - GDP per capita (US$): 774.2 (2019); 787.4 (2020 Prel.); 785.3 (2020 RCF); 830.0 (2021 Proj.); 819.4 (2022); 865.8 (2023); 917.6 (2024); 967.9 (2025); 1025.7 (2026); 1075.7 (beyond). *Source: THE GAMBIA: SECOND REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT AND FINANCING ASSURANCES REVIEW; May 12, 2021.* ### 5. Despite budgetary pressures from the pandemic, budget execution in 2020 was in line ### 1gmbea2021002 - 5. Despite budgetary pressures from the pandemic, budget execution in 2020 was in line ### Fiscal performance in 2020 - Tax revenue outturns were as expected, supported by strong income and corporate tax collections. - Non-tax revenue was supported by sales of assets under the Janneh Commission and distribution of accumulated profits from the CBG, boosting domestic revenue above the program by 0.5 percentage points of GDP. - Grants fell below projections due to delays in project implementation and postponement of a EUR 5.5-million budget support grant from the EU. - Spending was kept under control: savings on goods and services and on compensation to employees more than offset overspending on subsidies and transfers (support to SOEs, tourism and related sectors, and households via cash transfers and food distribution). - Acceleration of domestically financed infrastructure projects starting in September 2020 increased domestically financed capital spending; pandemic slowed execution of foreign-financed projects, moderating capital spending relative to projections. - As a result: - Domestic primary deficit and net domestic borrowing fell below projected ceilings. - Public debt-to-GDP ratio declined from 80.1 percent at end-2019 to 77.2 percent at end-2020—despite economic stagnation. ### Fiscal outturns (Text Table 1 — selected figures, percent of GDP) - Revenue: 21.0 (2019 Act.) | 23.6 (EBS/20/197 Est.) | 21.9 (2020 Diff. -1.7) - Domestic revenue: 13.9 | 13.3 | 13.8 (Diff. 0.5) - Taxes: 10.9 | 10.4 | 10.5 (Diff. 0.1) - Non-tax: 3.0 | 2.9 | 3.3 (Diff. 0.4) - Grants: 7.1 | 10.3 | 8.1 (Diff. -2.2) - Budget support: 3.1 | 4.9 | 4.7 (Diff. -0.2) - Project grants: 4.0 | 5.4 | 3.4 (Diff. -2.0) - Expenditures: 23.6 | 25.3 | 24.0 (Diff. -1.3) - Expenses: 14.5 | 17.4 | 17.2 (Diff. -0.2) - Compensation of employees: 4.3 | 4.3 | 4.1 (Diff. -0.2) - Use of goods and services: 3.5 | 4.3 | 3.9 (Diff. -0.4) - Interest: 3.1 | 3.0 | 3.0 (Diff. 0.0) - Subsidies and transfers: 3.6 | 5.9 | 6.1 (Diff. 0.3) - Net acquisition of nonfinancial assets: 9.0 | 7.8 | 6.7 (Diff. -1.1) - Foreign financed: 8.3 | 6.1 | 4.9 (Diff. -1.1) - Gambia local fund: 0.7 | 1.7 | 1.8 (Diff. 0.1) - Net lending (+)/borrowing (–): -2.5 | -1.7 | -2.1 (Diff. -0.4) - Financing: 2.8 | 1.0 | 1.7 (Diff. 0.6) - Net incurrence of liabilities: 3.1 | 1.2 | 1.8 (Diff. 0.6) - Domestic: 0.5 | 0.8 | 0.8 (Diff. -0.1) - Net borrowing: 1.2 | 0.5 | 0.1 (Diff. -0.4) - Foreign: 2.6 | 0.2 | 0.9 (Diff. 0.7) - Memorandum items: - Primary balance: 0.6 | 1.3 | 1.0 (Diff. -0.4) - Domestic primary balance: 1.8 | -1.7 | -1.0 (Diff. 0.6) ### Early 2021 fiscal execution challenges (preliminary) - Tax revenue Jan–Mar 2021 was 6 percent below program target due to: - Lower VAT, CIT and PIT collections as tourism in 2020Q4 declined by 85 percent compared to 2019Q4. - Higher freight costs and unresolved transit issues with neighboring countries reducing trade volumes, customs duties, and processing fees. - Non-tax revenue declined due to reduced traffic on the Senegambia bridge and threatened by court suspension of Janneh Commission asset sales. - Expenditure pressures: - Independent Electoral Commission (IEC) needs for presidential and legislative elections in December 2021 and April 2022. - Acceleration of infrastructure projects, notably for the Organization of Islamic Cooperation (OIC) conference. - Pace of execution of current spending in Jan–Feb 2021 was significantly slower than projected, providing some assurance toward meeting end-June program targets. - Budget appropriations and proposals for elections: - 2021 budget appropriated GMD 0.3 billion (0.3 percent of GDP) for elections. - IEC proposed a budget of GMD 0.5 million (0.5 percent of GDP). ### Balance of payments and reserves - Current account deficit retracted from 6.2 percent of GDP in 2019 to an estimated 2.6 percent of GDP in 2020, driven by historically high net current transfers that more than offset a decline in the goods and services balance. - Official transfers increased by about 50 percent relative to 2019. - Private remittances doubled. - Balance of payments showed a surplus; gross reserves reached US$352 million at end-2020 (4.7 months of prospective imports). ### Monetary policy, liquidity, and external inflows - CBG eased liquidity via policy measures at onset of COVID-19 (policy rate reduced from 12.5 percent at end-2019 to 10 percent by end-May; reserve requirement ratio cut from 15 to 13 percent; banks advised to postpone dividend distributions). - By end-2020: - Broad money expanded by 22.0 percent (y/y). - Donor support reached US$100 million (including IMF disbursements of close to US$28 million). - Private remittances reached US$590 million and helped expand banks’ net foreign assets by US$43.8 million (about 25 percent relative to end-2019). - Banks’ excess reserves over prudential requirement reached 16 percent of reserve money. - Private credit growth was about zero percent. - CBG made no further policy changes at March 2021 meeting, noting stable exchange rates and increasing local food production as factors likely to mitigate inflation pressure. ### Financial sector resilience - COVID-19 impact limited to one large bank, three small banks, and three microfinance institutions (MFIs). - Affected banks accounted for 27.9 percent and 36.7 percent of banking system assets and loans at end-2020. - By end-February 2021, the affected large bank had resolved its NPL problems, leaving three small banks that account for 12.2 percent of banking system assets and 22.6 percent of loans. - NPLs increased to 6.8 percent of gross loans at end-2020; provisions remained at 85 percent. - MFI problems affected three out of fifteen institutions; affected MFIs accounted for 46 percent and 22 percent of sector-wide assets and loans, respectively. - Overall, banking system remained liquid and well capitalized; subsector maintained capitalization and liquidity and expanded financial intermediation via significant growth in mobile banking. ### Program performance through December 2020 - All end-December quantitative performance criteria (PCs) and indicative targets were met, some with large margins. - Preliminary end-March 2021 data suggest ceiling on net domestic borrowing, floor on net useable international reserves, and debt-related indicators were met; tax revenue collection fell below the indicative floor due to the pandemic. - End-December 2020 structural benchmark on publication of MDAs’ compliance with internal audit recommendations was completed in March 2021 (delay due to waiting for end-December information). - Two end-March 2021 SBs were met; one in purview of CBG was met far in advance of target date. ### Economic outlook and risks - Baseline growth projection: rebound in 2021 to 4.9 percent (revised down from previous projection of 6 percent). - Medium term: protracted pandemic impact on tourism expected to be offset by strong growth in construction and retail trade services, maintaining medium-term growth path as earlier projected. - Downside scenario: - If tourism remains subdued until 2021Q4, overall growth would drop to 3.0 percent (about two percentage points below baseline). - Fiscal deficit would widen due to higher health spending and lower revenue, spurring additional fiscal financing needs assumed to be met through additional domestic borrowing. - PV of overall public debt would fall below the 55-percent-of-GDP benchmark in 2025, a year later than under the baseline. - Other risks: potential political instability from upcoming presidential and parliamentary elections, oil price volatility, and natural disasters. ### Policy discussions and recommendations - Key focus areas: (i) addressing emerging challenges in execution of the 2021 budget (weak revenue collection and unforeseen spending pressures); (ii) public debt sustainability via project prioritization and prudent borrowing; (iii) stance of monetary policy and financial supervision; (iv) progress on structural reform agenda. A. Fiscal policy: 2021 budget stance and measures - 2021 budget remains appropriate to address pandemic effects and support recovery. - Most 2020 COVID-19 tax relief measures phased out (including tax payment deferrals, penalty waivers for late filings, suspension of enforcement and auditing). - Authorities prefer securing revenue to finance targeted programs rather than foregoing revenue. - Measures to support vulnerable populations: - Continue 20-percent reduction in the C.I.F. value of some commodities. - Implement second phase of food distribution program. - Vaccinations started with no expected budget cost; grant financing from COVAX and the World Bank will cover costs of vaccinating around 60 percent of the population. - Measures to support private businesses and eliminate distortions: - Reduction in incorporation fees from GMD 10,000 to GMD 4,000. - Reduction in business registration certificate from GMD 1,000 to GMD 500. - Payroll tax exemptions for informal sector investors and sole proprietors. - Realignment of fringe benefit tax rate (previously 35 percent) with corporate income tax rate (27 percent). B. Measures to meet 2021 program fiscal targets - Revenue-side: - Streamlining of tax exemptions and duty waivers expected to deliver 0.5 percent of GDP in 2021. - Voluntary VAT threshold increased to tackle VAT leakages. - All Large Taxpayers required to file audited financial statements with annual tax returns. - Increases in various taxes and excises on tobacco. - Improved customs valuation accuracy and strict adherence to policy and operational protocols. - EUR 5.5 million EU budget support (disbursal delayed to 2021Q2) expected to help shortfall in domestic revenue. - Prioritize reforms associated with World Bank DPO disbursement in 2021Q2 and EU budget support in 2021Q4 to avoid loss of critical resources. - Spending-side: - Savings expected on subsidies to SOEs and on contingent spending items. - Changes at NAWEC and The Gambia Groundnut Corporation (GGC) and gradual business model changes are improving financial sustainability and reducing fiscal risks. - GMD 800 million (about 0.8 percent of GDP) budgeted for NAWEC and GGC will not be fully spent in 2021. - Budget contingencies of GMD 500 million (about ½ percent of GDP) for personnel emoluments and other current spending may not be fully used. - Slower-than-expected execution pace of current spending in January–February provides assurance toward meeting end-June program targets. - Continued prioritization of spending and infrastructure projects recommended to alleviate pressures. C. Strengthening revenue administration and public financial management (PFM) - Key actions and structural benchmarks (SBs) for remainder of 2021: - Approve and implement a new tax expenditure policy (SB for end-June 2021), including review of investment tax incentives, development of new act governing GIEPA, and streamlining of all tax incentives. - Tax unit set up at MoFEA and inter-ministerial committee established to enforce tax exemption policy. - World Bank expert recruited to complement 2020 IMF TA support on tax expenditure. - GRA plans to extend tax register cleansing to all tax offices by end-2021 and modernize IT infrastructure. - Prepare roadmap for extending IFMIS to all flows to projects and subvented agency accounts (SB for end-June 2021). - IFMIS deployed to all local government councils since January 2021; deployment to be expanded. - Continue operations of Cash management committee to strengthen spending control and make progress on the TSA. - Submit revised SOE bill in line with IMF recommendations (SB for end-December 2021) to limit executive interference and strengthen SOE governance. - Approval on hold due to stalled constitutional reform; authorities exploring alternative legal approaches. - Revise and submit new Public Finance Bill in line with transparency and accountability clauses in new Constitution (SB for end-December 2021). - Consultant being recruited with UNDP support to draft new Public Finance Bill aiming to submit draft to National Assembly by year end. *Source: The Gambian authorities; and IMF staff estimates.* ### 16. The Gambia’s public debt remains sustainable with high risk of debt distress, as ### The Gambia’s public debt remains sustainable with high risk of debt distress, as ### Debt sustainability and vulnerabilities - Assessment: public debt remains sustainable with high risk of debt distress (as assessed at the time of the first ECF review (MEFP ¶20)). - Debt stock targets: - PV of debt-to-GDP ratio: 77 percent at end-2020. - Target: below the benchmark of 55 percent by 2024. - Target: 51 percent by 2026. - Main vulnerabilities: - Uncertain pace of global economic recovery. - Authorities’ aspirations to address the infrastructure gap, including preparations for the conference of the Organization of Islamic Cooperation and Banjul port expansion. - Staff advice to manage ambitious infrastructure projects: - Strengthen appraisal of public investment projects. - Adopt selection criteria outlined by recent TA missions. - Seek the most concessional financing available (preferably grants). - Continued needs: improve domestic debt management and transparency (SB for end-March 2021 and quarterly thereafter). ### Fiscal outlook and medium-term debt trajectory - Fiscal framework: calibrated to reduce debt vulnerabilities (MEFP ¶20 and Tables 2–3). - Fiscal balance path: - Switch from primary deficit to surpluses starting in 2022. - Consolidation supports: - Projected gradual increase in domestic revenue via broadening the tax base, rationalization of tax expenditures and exemptions, and strengthening revenue administration. - Phasing-out of one-off spending in 2021 and rationalization of subsidies to SOEs and transfers to subvented agencies. - Thorough enforcement of infrastructure project selection criteria. - Policy imperative: strictly adhere to the agreed borrowing plan and use available space judiciously for highest priority projects to ensure value-for-money and contain debt vulnerabilities. ### Debt relief and arrears - DSSI and related relief: - Authorities requested an extension of the DSSI through end-June 2021 and intend to request a further extension to end-December 2021. - The Gambia is receiving debt service relief under the CCRT expected to total SDR 7.9 million (SDR 6.1 million of which has already been approved). - The DSSI provided a payment suspension of US$4 million in 2020; the debt service that is eligible for suspension in 2021 is estimated at about US$3 million. - Arrears and disputes: - Authorities are disputing debt service liabilities to Libya due to a disagreement over the amount owed. - Authorities are engaging in good faith with Venezuela to try to resolve outstanding arrears but have not been successful, due to international sanctions (Annex III). ### Monetary policy, reserves, and financial sector - Monetary stance: - Monetary policy remains appropriately supportive in addressing pandemic-related pressures (Annex I, MEFP ¶¶8 and 22, and Tables 5–7). - Accommodative stance adopted by CBG at the onset of the pandemic helped ensure adequate liquidity. - Inflation and credit: - Despite liquidity expansion, inflation remained subdued in 2020 and private credit was sluggish. - Staff advises CBG to monitor liquidity and inflation and tackle structural obstacles hindering credit extension (including strengthening the credit information register, encouraging bank use of the register, and enforcing collateral laws). - CBG balance sheet and safeguards: - CBG is strengthening oversight through appointment of qualified Audit Committee members and external audit mechanism. - FY2020 audit is nearing completion; FY2021 audit arrangement formalized with Auditor General (SB for end-March 2021). - Several recommendations remain outstanding, including internal audit and financial reporting. - Exchange rate and reserves: - CBG committed to a flexible exchange rate regime; forex purchases in the interbank market follow a transparent auction process. - Projection: gross reserves projected to amount to US$412 million (or 4.6 months of prospective imports) by end-2021. - CBG concurs with Fund’s suggested reclassification of the de facto exchange rate arrangement as “stabilized.” - Financial sector supervision: - CBG assesses pandemic-driven weakening as transitory and limited to a few banks and NBFIs; one large affected bank resolved its NPL problems. - Staff advises continuous review of select banks and MFIs under risk-based supervision with AFRITAC West2 assistance. - CBG implementing 2019 Financial Sector Stability Review recommendations, including preparations to stress test banks’ balance sheets (SB for end-June 2021). ### Governance and structural reforms - Public procurement: - Sole sourcing has been reduced significantly. - The GPPA act has been approved at the committee level; authorities are fast-tracking approval at the plenary, preparing regulations, and drafting related manuals. - Anti-corruption: - An anti-corruption bill is in parliament proposing an Anti-Corruption Commission and measures to eradicate, suppress and prevent corruption in private and public life. - Authorities expressed interest in a governance diagnostic with the IMF. - AML/CFT: - Framework reflecting GIABA recommendations awaiting cabinet consideration. - Pre-assessment workshop for the second Mutual Evaluation exercise held in February 2021. - Banks have seen softening of Correspondent Banking Relationship difficulties, including solutions from the African Export-Import Bank and arrangements with some African and European banks. - TRRC and TIPs: - Truth, Reconciliation and Reparations Commission expected to submit a final report by end-July. - The Gambia updated to Tier 2 Watch List in the US State Department’s TIPs report of June 2020, with noted achievements in investigations, victim identification, witness protection, awareness, and budget increases to the agency. - Business environment reforms: - Strategy includes simplification of business regulations, improvements in tax and customs administration, land administration reform, and enhanced access to markets and finance. - Social and climate priorities: - Fast-tracking a Health Insurance bill, continuing social safety nets and Program for Accelerated Community Development. - Integrating gender considerations into budgeting with IMF support. - Assessing climate change impact and cost estimates for interventions. ### Program modalities, financing, and risks - Program reviews and targets: - Program performance assessed through semi-annual reviews (Table 14 and MEFP Tables 2 and 4). - Maintain quantitative PCs for end-June 2021 and end-December 2021; intermediate quarterly ITs maintained. - SBs from the first review remain targeted; implementation capacity affected by the pandemic and upcoming elections. - Fund obligations and financing assurances: - Total obligations to the Fund projected to peak at about 3 percent of exports of goods and services. - Program is fully financed with firm financing assurances in place for the next twelve months (in 2021 and the first half of 2022) and good prospects for the remainder of the arrangement. - Some donor disbursements will substitute each other in 2021 and broadly keep expected overall financing unchanged. - IMF’s share in the 2021 total financing gap is 47 percent following the augmentation; IMF’s share expected to decline to 27 percent over the course of the program. - Sources of financing needs: - Persistent health and economic implications of COVID-19, delayed tourism resumption, support to economic recovery, and large infrastructure projects for the OIC conference. - Private remittances may not be sustained at the exceptionally high 2020 level. - Risks and mitigations: - Risks: protracted COVID-19 pandemic, delayed tourism recovery, wider fiscal and financing gaps, strain on financial sector, election-related fiscal pressures and reform disruptions, fast-tracked infrastructure projects posing fiscal and debt risks. - Mitigations: staff advises appropriate financial buffers and close coordination with development partners; The Gambia’s recent social, political, and economic improvements could help mitigate risks. ### Staff appraisal, outlook, and policy recommendations - Growth and outlook: - 2020 economic growth is estimated at zero percent. - Projected growth for 2021: 4.9 percent. - Drivers for 2021: construction sector, agricultural production, and large investment projects. - Recent performance and indicators: - All quantitative program targets were met. - Domestic revenue exceeded projections and spending was controlled. - Public debt declined from 80.1 percent of GDP at end-2019 to 77.2 percent of GDP at end-2020. - Reserves rose to 4.7 months of imports at end-2020. - Liquidity expansion did not accelerate inflation; private credit was flat; Dalasi remained broadly stable. - Key reforms completed on compliance with audit recommendations, public debt management, and central bank governance. - Fiscal policy recommendations: - Prioritize fiscal policy to address the pandemic and support recovery while reducing debt vulnerabilities. - Phase out COVID-19-related revenue relaxations and target programs to vulnerable populations. - Finance mass vaccination via COVAX and World Bank support. - Tackle emerging 2021 budget implementation challenges: weaker-than-anticipated revenue and unforeseen spending pressures (including elections). - Streamline tax exemptions and make savings on subsidies to SOEs (particularly the utility company and groundnut corporation). - Ensure investment projects follow rigorous appraisal and selection criteria and use concessional financing. - Monetary and financial sector recommendations: - Continue accommodative monetary policy while monitoring liquidity and inflation. - Analyze structural obstacles to credit despite ample liquidity. - Strengthen CBG balance sheet, safeguards, and autonomy per 2020 safeguards assessment. - Strengthen financial supervision, sharpen macroprudential tools, and step up crisis preparedness and management per 2019 FSSR recommendations. - Structural reform priorities: - Implement business environment strategy swiftly. - Enact the public procurement act to improve value-for-money. - Finalize SOE bill and Public Finance Bill to improve SOE performance and public financial management (both on hold due to stalled constitutional reform). - On AML/CFT: adopt and publish a national risk assessment, continue strengthening risk-based bank supervision, bolster capacity of the financial intelligence unit and consider joining the Egmont Group. - Advance legislative reforms on anti-corruption, TRRC, Trafficking in Persons, health insurance, and gender equality to build socio-economic foundations. *1gmbea2021002 - 16. The Gambia’s public debt remains sustainable with high risk of debt distress, as* ### 36. In view of The Gambian authorities’ strong performance under the ECF-supported ### 1gmbea2021002 - 36. In view of The Gambian authorities’ strong performance under the ECF-supported ### Executive recommendation - In view of The Gambian authorities’ strong performance under the ECF-supported program in a challenging environment, and on the basis of the authorities’ policy commitments for the remainder of the arrangement, staff recommends the Executive Board’s completion of the second review under the ECF arrangement and the financing assurances review. ### Recent economic developments (high-level findings) - The COVID-19 pandemic has severely affected growth as tourist arrivals halted and private credit slowed. - Tourist arrivals and private credit: charted sharp declines in 2020 (12_month average Percent change; series shown graphically in source). - T-Bill rates declined in the second half of the year, as liquidity conditions eased. - The primary fiscal balance strengthened, thanks to significant inflow of budget support. - Large FX inflows improved reserve coverage of imports, and confidence in the dalasi strengthened. - Inflation remained subdued, reaching 5.7 percent (y/y) at end-2020, driven by weak domestic demand and a stable dalasi. ### Fiscal sector developments (key points) - Large inflow of grants more than compensated for lower domestic revenue collection in 2020 due to low economic activity. - Spending on subsidies and goods and services increased in response to COVID-19 crisis, but total spending remained flat. - Overall fiscal deficit narrowed in 2020. - The primary surplus increased, but the domestic primary balance deteriorated in 2020. - Total public debt-to-GDP ratio is estimated to have dropped further in 2020. - Domestic borrowing was contained in 2020, thanks to on-lending of the IMF's RCF disbursement. ### Medium-term economic outlook (summary) - Economic growth is expected to rebound in 2021, as tourism resumes. - Average inflation is projected to drop toward the CBG's medium-term target of 5 percent. - Expenditure restraint and improved tax effort offsetting the decline in donor support will drive projected fiscal consolidation in the medium term. - Public borrowing requirements are expected to lower and the public debt-to-GDP ratio is projected to decline steadily. - The external current account deficit is expected to narrow from 2023, once tourism recovers fully. ### Selected quantitative indicators (as presented) - "GDP at constant prices" series (raw from table): 6.10.00.06.04.96.57.06.55.85.6 - "GDP deflator" series (raw): 7.17.27.14.34.24.34.14.15.34.6 - "Consumer prices (average)" series (raw): 7.16.15.96.06.05.55.15.05.05.0 - "Consumer prices (end of period)" series (raw): 7.76.55.75.85.85.25.05.05.05.0 - Exports, f.o.b (US$ values) (raw): 23.8-10.7-50.823.162.935.926.98.95.67.2 - Imports, f.o.b (US$ values) (raw): 14.6-1.7-2.417.927.712.27.12.02.82.4 - Terms of trade (deterioration = -) (raw): -4.81.41.4-1.7-1.7-1.4-1.0-0.51.92.8 - Broad money (percent change series, raw): 27.115.522.09.512.6 - Net foreign assets (percent change series, raw): 18.99.717.6-1.23.1 - Net domestic assets (percent change series, raw): 8.25.94.410.79.6 - Domestic revenue (taxes and other revenues) series (percent of GDP, raw): 13.913.313.814.113.814.014.414.514.714.9 - Grants (percent of GDP series, raw): 7.110.38.17.47.78.07.36.56.05.7 - Total expenditures (percent of GDP series, raw): 23.625.224.025.425.524.022.921.621.020.8 - Primary balance (percent of GDP series, raw): 0.61.31.0-1.3-1.40.51.11.61.81.7 - Public debt (percent of GDP series, raw): 80.276.477.274.476.772.766.361.456.351.0 - Gross official reserves (millions of US$ series, raw): 225.0330.0352.0389.8412.3432.8449.1458.4473.8506.2 - Reserves (months of next year's imports) (series, raw): 3.94.64.74.64.64.54.54.54.54.6 - External current account balance excluding official transfers (percent of GDP series, raw): -9.2-10.9-8.3-14.1-14.5-16.3-15.0-12.6-11.0-10.3 - External current account balance including official transfers (percent of GDP series, raw): -6.2-6.2-4.0-11.9-12.4-13.9-13.0-11.0-9.4-8.8 - Gross investment (percent of GDP series, raw): 19.418.525.721.824.223.923.722.923.122.7 - Gross savings (percent of GDP series, raw): 13.212.321.89.911.810.010.712.013.713.9 - Nominal GDP (billions of dalasi) series (raw): 91.4 98.0 98.0108.3107.1119.0132.6146.9163.7180.8 - GDP per capita (US$) series (raw): 774.2 787.4 785.3830.0819.4865.8917.6967.91025.71075.7 ### Central government operations — headline figures (selected, raw from tables) - Revenue (millions of local currency full series as presented): 19,23823,11421,44623,32323,04125,86226,07628,76430,83133,94137,337 - Domestic revenue (millions): 12,75313,02813,53915,25414,74614,55116,60819,04821,28824,04326,992 - Grants (millions): 6,48510,0877,9078,0698,29511,0159,4699,7169,5439,89810,344 - Expenditures (millions): 21,55224,74523,47727,51827,28932,00628,56030,38031,71634,30337,521 - Net lending (+)/borrowing (–) (millions): -2,314-1,631-2,031-4,196-4,248-6,144-2,484-1,616-885-361-185 - Net incurrence of liabilities (millions): 2,8669701,5954,2864,3265,3682,6641,796885361185 - Primary balance (millions): 5291,306936-1,391-1,473-3,0576531,4962,3162,8833,109 - Total debt (millions): 73,29774,90076,36580,63280,128...84,41288,66992,35194,12595,624 - Interest payments as a percent of government revenue (series): 22.322.5`18.418.818.916.315.013.512.2 ### Monetary accounts — highlights - Broad money levels (millions of local currency): 42,87549,53352,28854,23958,895 - Net foreign assets (millions of local currency / US$): 16,78420,86424,33020,27025,930 (in millions of U.S. dollars)328408476391500 - Net domestic assets (millions): 26,09128,66927,95833,96932,966 - Reserve money (millions): 13,88818,17818,59520,58321,441 - Credit to private sector (levels, millions): 7,7298,3057,79210,1099,303 - Money velocity (levels): 2.12.01.92.01.8 - Broad money (percent of GDP): 46.950.553.450.155.0 - Credit to the private sector (percent of GDP): 8.58.58.09.38.7 ### Balance of payments / external sector (selected) - External public debt (millions of US$ series): 798.1813.8820.4888.0905.6953.1993.01015.91023.61040.6 - PV of overall debt-to-GDP ratio (series): 70.467.567.465.966.763.057.152.948.643.8 ### Policy implications and staff assessment - Staff view The Gambian authorities' performance under the ECF-supported program as strong in a challenging environment. - Continued policy commitments for the remainder of the arrangement form the basis for recommending completion of the second review and the financing assurances review. - Fiscal consolidation in the medium term is expected to be driven by expenditure restraint and improved tax effort, despite projected declines in donor support. - On-lending of IMF resources (RCF/ECF) has played a material role in domestic financing dynamics and reserve outcomes. *Sources: The Gambian authorities; and IMF staff estimates and projections.* ### 1. Current account ### 1. Current account ### A. Goods and services (Levels, US$ millions) - Goods and services (net): -337.4, -464.1, -539.6, -532.5, -659.1, -723.2, -731.7, -698.8, -683.4, -688.5 - Goods (net): -453.6, -458.5, -511.9, -533.8, -629.2, -679.0, -696.4, -696.9, -710.5, -716.3 - Exports, f.o.b.: 142.4, 127.4, 70.0, 156.8, 114.0, 155.0, 196.7, 214.2, 226.2, 242.3 - Imports, f.o.b.: -596.0, -585.8, -581.9, -690.6, -743.3, -833.9, -893.0, -911.2, -936.6, -958.7 - Services (net): 116.2, -5.6, -27.6, 1.3, -29.8, -44.2, -35.4, -1.8, 27.1, 27.9 - Services exports: 226.3, 102.7, 82.5, 166.8, 121.0, 197.2, 233.9, 283.1, 313.3, 329.4 - Of which: Travel income: 181.3, 69.2, 46.6, 113.6, 63.7, 135.8, 164.9, 206.3, 232.2, 242.7 - Services imports: -110.2, -108.3, -110.1, -165.6, -150.9, -241.5, -269.3, -284.9, -286.1, -301.5 ### B. Income (net) (Levels, US$ millions) - Income (net): -30.1, -30.5, -31.0, -31.4, -32.1, -32.4, -31.2, -32.4, -33.5, -34.8 - Income credits: 2.3, 2.4, 2.4, 2.4, 2.5, 2.5, 2.4, 2.5, 2.6, 2.7 - Income debits: -32.4, -32.9, -33.5, -33.8, -34.6, -34.9, -33.7, -34.9, -36.2, -37.5 ### C. Current transfers (Levels, US$ millions) - Current transfers: 255.5, 375.5, 495.1, 316.8, 437.4, 445.6, 446.9, 442.1, 445.1, 449.7 - Official transfers: 55.8, 89.1, 82.7, 43.7, 43.3, 52.0, 47.5, 42.5, 45.1, 47.8 - Of which: COVID-19 assistance: ...26.4, 26.4, ..................... - Remittances: 187.4, 274.2, 400.1, 260.5, 381.6, 380.8, 385.2, 385.0, 385.1, 386.6 - Other transfers: 12.3, 12.3, 12.3, 12.6, 12.6, 12.9, 14.2, 14.6, 14.9, 15.3 ### D. Current account balances (Levels, US$ millions) - Current account (excl. official transfers): -167.8, -208.1, -158.3, -290.8, -296.9, -361.9, -363.5, -331.5, -316.9, -321.4 - Current account (incl. official transfers): -111.9, -119.1, -75.5, -247.1, -253.7, -310.0, -316.0, -289.0, -271.8, -273.6 ### A. Goods and services (Percent of GDP) - Goods and services (net): -18.6, -24.4, -28.4, -25.7, -32.3, -32.5, -30.2, -26.5, -23.7, -22.1 - Goods (net): -24.9, -24.1, -26.9, -25.8, -30.8, -30.5, -28.7, -26.4, -24.7, -23.0 - Exports, f.o.b.: 7.8, 6.7, 3.7, 5.6, 5.6, 7.0, 8.1, 8.1, 7.9, 7.8 - Imports, f.o.b.: -32.8, -30.8, -30.6, -33.4, -36.4, -37.5, -36.8, -34.6, -32.5, -30.8 - Services (net): 6.4, -0.3, -1.5, 0.1, -1.5, -2.0, -1.5, -0.1, 0.9, 0.9 - Services exports: 12.4, 5.4, 4.3, 8.1, 5.9, 8.9, 9.6, 10.7, 10.9, 10.6 - Of which: Travel income: 10.0, 3.6, 2.5, 5.5, 3.1, 6.1, 6.8, 7.8, 8.1, 7.8 - Services imports: -6.1, -5.7, -5.8, -8.0, -7.4, -10.9, -11.1, -10.8, -9.9, -9.7 ### B. Income (net) (Percent of GDP) - Income (net): -1.7, -1.6, -1.6, -1.5, -1.6, -1.5, -1.3, -1.2, -1.2, -1.1 - Income credits: 0.1, 0.1, 0.1, 0.1, 0.1, 0.1, 0.1, 0.1, 0.1, 0.1 - Income debits: -1.8, -1.7, -1.8, -1.6, -1.7, -1.6, -1.4, -1.3, -1.3, -1.2 - Of which: Interest on government debt: 0.6, 0.6, 0.5, 0.6, 0.6, 0.6, 0.5, 0.5, 0.5, 0.5 ### C. Current transfers (Percent of GDP) - Current transfers: 14.1, 19.7, 26.1, 15.3, 21.4, 20.1, 18.4, 16.8, 15.5, 14.5 - Official transfers: 3.1, 4.7, 4.4, 2.1, 2.1, 2.3, 2.0, 1.6, 1.6, 1.5 - Of which: COVID-19 assistance: ...1.4, 1.4, .................. - Remittances: 10.3, 14.4, 21.1, 12.6, 18.7, 17.1, 15.9, 14.6, 13.4, 12.4 - Other transfers: 0.7, 0.6, 0.6, 0.6, 0.6, 0.6, 0.6, 0.6, 0.5, 0.5 ### D. Current account balances (Percent of GDP) - Current account (excl. official transfers): -9.2, -10.9, -8.3, -14.1, -14.5, -16.3, -15.0, -12.6, -11.0, -10.3 - Current account (incl. official transfers): -6.2, -6.2, -4.0, -11.9, -12.4, -13.9, -13.0, -11.0, -9.4, -8.8 *Sources: The Gambian authorities; and IMF staff estimates and projections.* ### Annex II. Risk Assessment Matrix ### Annex II. Risk Assessment Matrix ### Risk overview, relative likelihood, and impact - The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path (the scenario most likely to materialize in the view of IMF staff). - The relative likelihood is staff’s subjective assessment of the risks surrounding the baseline scenario within the next three years. Definitions: - “Low” is meant to indicate a probability below 10 percent. - “Medium” a probability between 10 percent and 30 percent. - “High” a probability of 30 percent or more. - The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Non-mutually exclusive risks may interact and materialize jointly. ### External: Unexpected Shift in COVID-19 Pandemic - Relative Likelihood: Medium - Impact if Realized: High - Policy Response: - Strengthen fiscal, social, and health response to pandemic. Prioritize infrastructure projects with high fiscal multipliers and value-for-money. - Strengthen regional cross-border pandemic response. - Rollout targeted support for tourism, construction and services sectors for previously well-run and profitable corporates. - Risk scenarios and consequences: - Asynchronous progress. Limited access to, and longer-than-expected deployment of vaccines—combined with dwindling policy space—prompt a reassessment of growth prospects. - Prolonged pandemic. The disease proves harder to eradicate), requiring costly containment efforts and prompting persistent behavioral changes rendering many activities unviable. - Faster containment. Pandemic is contained faster than expected due to the rapid production and distribution of vaccines, boosting confidence and economic activity. - Further collapse in Gambia’s exports and tourism receipts. Failure of key domestic corporates in tourism, construction and services. Negative impact on growth, fiscal and external accounts. - Disruptions to economic activity. Employment pressures abroad reduce the inflow of remittances. Tourism is halted and exports are depressed. Negative impact on growth and the external position. - Exports recover and tourism rebounds. Construction, services and other (tourism-related) activities pick up. The fiscal and external positions are strengthened. ### External: Oversupply and volatility in the oil market - Relative Likelihood: Medium - Impact if Realized: High - Policy Response: - Strengthen the fiscal oversight of NAWEC. - Accelerate implementation of national energy roadmap with World Bank support, including use of alternative energy production methods. - Risk scenarios and consequences: - Higher supply and lower demand lead to renewed weakness in energy prices. Uncertainty about production cuts and the pace of demand recovery lead to bouts of volatility. - Dependence on HFO and sovereign guarantees pose a significant contingent liability risk. Increased use of ITFC facility could delay projects. - High production costs hurt growth. ### Financial Instability - Relative Likelihood: Medium - Impact if Realized: High - Policy Response: - Increase provisions and bolster capital to absorb losses and resist temptation to weaken prudential standards. - Discuss loan reprofiling for clients with strong business models. - Implement FSSR recommendations. - Ensure Banks retain retail banking units to better meet private sector recovery needs. - Risk scenarios and consequences: - Rising NPLs due to COVID-19 raise concerns in some banks, even with ample domestic liquidity. Collapse of Travelex increase fears about FX cash obligations internationally. Lack of alternatives to sovereign debt reignites concerns around sovereign-bank nexus. - Reduced profitability and capital adequacy, negatively affecting financial intermediation. ### Weak Fiscal Management - Relative Likelihood: Medium/High - Impact if Realized: Medium - Policy Response: - Implement TA recommendations on PFM, cash management and budget execution. - Identify additional fiscal measures to create fiscal space for crisis support. - Implement SOE and governance reforms. - Risk scenarios and consequences: - An expansive COVID-19 fiscal policy without effective control of non-priority spending and lack of fiscal reforms. - Fiscal shocks from SOEs. - Increased domestic borrowing and pressure on public debt sustainability. - Pressure on foreign reserves. - Crowding out of private credit. ### Social discontent and Political Instability - Relative Likelihood: Medium - Impact if Realized: High - Policy Response: - Give priority to socio-economic stability and strengthen COVID-19 response. - Involve CSOs in policy decisions. - Implement findings from governance commissions. - Risk scenarios and consequences: - Tribal politics and tensions among the coalition parties and government increase due to the upcoming elections (end 2021 and early 2022) and ineffectiveness of COVID-19 response. - Political uncertainty hurts market confidence and private investment, delays economic and policy reforms, and weakens institutions. ### Natural disasters - Relative Likelihood: Medium - Impact if Realized: High - Policy Response: - Strengthen food security and rural feeding programs. - Build up fiscal and reserve buffers. - Build resilience to natural disasters. - Risk scenarios and consequences: - Recurring cycles of erratic rainfall and droughts. - Negative impact on domestic production, especially rain-fed agriculture. --- ### Annex III. Lending into Arrears to Official Bilateral Creditors — Key staff assessment points - Staff assesses that the conditions are met for the Fund to provide financing to The Gambia in line with the policy on arrears to official bilateral creditors, notwithstanding its outstanding arrears to Venezuela. In particular: 1. Prompt financial support from the Fund is considered essential and the member is pursuing appropriate policies. The Gambia is a long-standing fragile state, currently at high risk of debt distress caused by the heavy debt service payments on its external debt. The ECF arrangement will support the authorities’ efforts to achieve debt sustainability, while catalyzing much needed international financial support. The Fund-supported program is expected to anchor macroeconomic stability and play a pivotal role in addressing this long-standing issue, building on the improvements in the medium-term debt profile as a result of debt service deferrals. The Gambia’s policies in the context of the ECF-supported program covering 2020–23 will contribute markedly to growth and poverty reduction, notably by facilitating the creation of the much-needed fiscal space. 2. The authorities have been making good faith efforts to reach agreement with the creditor on a contribution consistent with the parameters of the Fund-supported program. - In terms of process, the Gambian authorities have relayed to staff that they had contacted the Venezuelan authorities bilaterally through letters and technical meetings (most recently in October 2019 in Banjul and some exchanges of correspondence around December 2020), offering to engage in substantive dialogue and start a collaborative process on resolving the outstanding arrears (which arose due to international sanctions). Relevant information has been shared with them on a timely basis. The Gambian authorities are committed to their continued good faith efforts until all the remaining arrears are resolved. - The terms offered by the Gambian authorities to Venezuela are in line with the financing and debt objectives of the Fund-supported program and imply a contribution that is not disproportionate relative to those sought from other creditors under the official sector involvement. 3. The decision to provide financing despite the arrears is not expected to have an undue negative effect on the Fund's ability to mobilize official financing packages in future cases. In staff’s view, providing financing to The Gambia despite the arrears is not expected to have an undue negative effect on the Fund's ability to mobilize future financing packages, given strong support from the international community in the context of the Fund-supported program for The Gambia and The Gambian authorities’ efforts to resolve this in a timely manner. --- ### Annex IV. Technical Assistance Priorities, 2020–21 — Objectives and priorities - Revenue Administration - Implementation of new tax exemption policy and GIEPA Act. - Strengthen the integrity of the taxpayer register; improve filing and payment compliance and reduce tax arrears; improve accuracy of reporting in the key economic sectors and taxpayer compliance. - Improve customs procedures, compliance risk management capacity to undertake post-clearance audits, and take steps to implement ECOWAS customs integrity framework. - Implementation of plans for embedding stable and effective tax administration information management systems that support revenue administration functions including: completing implementation of the GAMTAXNET remediation plan; development and implementation of an action plan for installing a new ITAS system. - Public Financial Management - Extend IFMIS on project and subvented agency accounts. Implement TSA roadmap and improve cash forecasting and debt data reconciliation. - Prepare a 2022 gender sensitive budget by moving towards a gender responsive budget through means of sound PFM practices; create the conditions for moving to climate responsive budgeting by 2023. - Support fiscal risk assessment of SOEs and PPPs, to improve risk monitoring and analysis—with the ultimate objective of limiting contingent support. - Governance - Identify future reforms under the ECF program to tackle weak governance and vulnerability to corruption. - Bank Supervision and Stress Testing - Continue to strengthen bank supervision and develop and implement stress testing procedures. - Macroprudential Policy - Strengthen the macroprudential awareness of the CBG and clarify the responsibilities and the mode of operations of the financial stability function and the monetary policy function. - Bank Safety Nets, Resolution and Crisis Management - Develop a safety net (notably, deposit insurance) and to strengthen the CBG’s resolution and crisis preparedness, particularly in the context of heighten risks to banks’ portfolios in the context of the COVID-19 pandemic. - Debt Management - Lengthen maturity of domestic debt and reduce rollover risk. - Government Finance Statistics - Continue efforts to collect the source data comprehensively and compile GFS for budgetary central government (monthly). - Real Sector Statistics - Further improve the quality and timeliness of national accounts, including developing quarterly GDP series and new GDP rebasing. Improve price statistics. Strengthen the statistical capacity in national accounts and compilation of price statistics. - External Sector Statistics - Enhance the quality and coverage of source data used for compiling The Gambia’s balance of payments and international investment position statistics. - Strengthening AML/CFT Framework - Build capacity to strengthen regulatory and supervisory frameworks to mitigate risk of loss or reduction of correspondent banking relationships and the impediments to remittance services. --- ### Annex V. Key Recommendations of the 2019 FSSR — Summary of recommendations and status highlights - I. Banking supervision - Review and amend the Banking Act 2009. Taskforce setup to work with the CBG legal unit. Taskforce functional. - Review of the manual of guidelines and instructions. A team designated to review the guidelines. Team functional. - Define team in-charge of data quality functions. A team to do quality control. Team functional. - Revisit offsite and onsite supervision functions. RBS ongoing; RBS ongoing for onsite follow-up. - II. Stress testing - Develop high quality stress testing governance framework. Leverage TA to develop framework. On track. - Put in place processes for stress testing. On track. - Building capacity in stress testing. TA required. Awaits resident advisor. - III. Macroprudential policy - Produce Financial Stability report adopting forward looking approach. On track. - Develop detailed macroprudential toolkit. Working with partners. On track. - Assign macroprudential authority to the CBG. Would seek to consult with MOFEA on this strategy. On track. - IV. Bank safety net, resolution, and crisis management - Strengthen capacity for stress detection and introduce recovery plans for banks. Team set up to advise CBG Mgt. Ontrack. Awaits resident advisor. - Prepare deposit insurance legislation and strengthen resolution powers. Negotiate with Government. On track. - Develop Emergency Liquidity Assistance (ELA) policy and processes. Develop ELA framework. On track. - Strengthen Prompt Corrective Action (PCA) framework. Team to advise on PCA framework for timely bank intervention. On track. - Develop bank resolution framework with adequate legal provisions. Working group functional. - Strengthen domestic and cross-border cooperation and co-ordination. Work with MoFEA and regional authorities. On track. - V. Regulation and supervision of non-bank financial institutions - Revisit approach to supervising deposit taking Finance Companies (FCs): develop a tiered-capital framework for FCs; develop RBS framework for large FCs; augment regulatory capital for Reliance Financial Services. Done / TA required / Done. - Review NBFI Act 2016 and guidelines for adequacy of licensing provisions; draft guidelines. Guidelines drafted. - Include non-bank lenders in the Credit Reference Bureau (CRB); develop framework for inclusion and reduce costs for NBFIs participation in the CRB. - Upgrade oversight of mobile money operators (MMOs); review and upgrade guidelines; develop onsite/off-site manuals and reporting templates. (Status: to be done/ensure enforcement.) - Strengthen supervision of Credit Unions (CUs); assume direct oversight of 11 largest CUs; develop reporting templates and examination frameworks. On track. 12 largest CUs are incorporated and being regulated under the guidelines. - Develop a proportionate supervision framework for Village Savings and Credit Associations (VISACAs). Done. Piloting to revamp the concept of VISACAs. - VI. Financial Inclusion - Improve data quality for financial inclusion and information sharing. Automate and expand CBG data system; interface with regulated service providers; develop supervisory software for data collection and supervision of NBFIs; develop nanotech to capture forex operations. On track / Done. - Incorporate consumer protection into financial inclusion efforts. Collaborate with the Competition and Consumer Protection Commission. On track. - Develop a financial inclusion ecosystem for digital financial services. Strengthen the electronic payment system and guidelines for MMOs; build staff capacity to regulate and supervise digital finance. On track. --- ### Appendix I. Letter of Intent — Opening statements and recent program context (select excerpts) - Date and addressee: Banjul, The Gambia; May 12, 2021; Ms. Kristalina Georgieva, Managing Director, International Monetary Fund. - Key points: - The Government expresses gratitude to the IMF for continued strong support in addressing health and socio-economic impacts of the COVID-19 pandemic. - Completion by the IMF Executive Board in January 2021 of the first review under the ECF arrangement and the augmentation of access were timely. It helped the government in addressing the second wave of the COVID-19 pandemic and provided resources for implementing the 2021 budget. In addition, it helped prevent an increase in borrowing costs as observed in early 2020. The government is also grateful for the IMF’s support for the G20 Debt Service Suspension Initiative (DSSI) and the third extension of the debt service relief under the Catastrophe Containment and Relief Trust (CCRT). - The attached Memorandum of Economic and Financial Policies (MEFP) (i) outlines the progress made under the program since completion of the first review in January 2021 and (ii) updates policies for the remainder of 2021 and beyond. Despite the pandemic, the Government’s commitment to the program remains unwavering. - The authorities observed all quantitative performance criteria (QPCs) and all indicative targets (ITs) at end-December 2020. The end-December 2020 structural benchmark (SB) was implemented in the first quarter of 2021, to allow incorporation of end-December 2020 information in the publication. All SBs at end-March 2021 were implemented timely. Authorities will ensure that budget execution in 2021 is consistent with the fiscal path and debt sustainability under the ECF program. - Progress on central bank governance and safeguards: continued efforts to strengthen the governance and autonomy of the central bank and advance the implementation of outstanding recommendations of the 2020 safeguards assessment. The FY2020 audit of the CBG’s financial statements is near completion; steps are being taken to strengthen internal audit and financial reporting functions. A joint audit arrangement with the Auditor General, to be carried out by a local and an international firm, of the central bank’s FY2021 financial statements has been agreed. - Transparency in COVID-19 spending: all COVID-19 spending items were included in the 2021 budget. A list of all COVID-19-related procurement contracts and their beneficiary owners was published on the website of the Gambia Public Procurement Agency (GPPA) covering the full year of 2020 and the first quarter of 2021. The National Audit Office (NAO) completed the first phase of an ex-post audit of all COVID-19-related spending during March-October 2020 and launched an audit of all such spending executed in November and December 2020. The results will be consolidated with the audit of the 2020 fiscal accounts and submitted to the National Assembly for deliberations and publication by end-September 2021. *Source: Annex II–V, Appendix I from the IMF staff report content provided.* ### 5. In light of the resolve and commitment we have shown in implementing the agreed ### 1gmbea2021002 - 5. In light of the resolve and commitment we have shown in implementing the agreed ### Request to the IMF and operational conditions - The Government of The Gambia requests completion by the IMF Executive Board of the second review of the ECF-supported program and the disbursement of the third ECF tranche of SDR 10 million. - The Government requests that this disbursement be on-lent to the Government and made available to the Treasury to provide budget support upon the signature of an MoU between the Ministry of Finance and Economic Affairs and the Central Bank of The Gambia defining their respective roles and responsibilities for servicing the related financial obligations to the IMF. - The Government will consult with the IMF prior to adopting additional measures or revising policies in the MEFP, and will continue to provide IMF staff with all information needed to monitor implementation. - The Government consents to make public the IMF staff report, this letter, the attached supplemental MEFP and Technical Memorandum of Understanding (TMU) once the IMF Executive Board approves completion of the second review under the ECF arrangement. ### COVID-19 response, vaccination and transparency measures - Vaccination campaign started in early March with COVAX support and World Bank financing. - Expected coverage: 20 percent of the population under COVAX; an additional 40 percent with a grant financing of US$8 million from the World Bank. - By late April, about 20,000 people vaccinated, or about 1percent of the population. - Intention to complete vaccination campaign of a total of 60 percent of the population by [end-2022], corresponding to all adult population. - All COVID-19 spending items included in the 2021 budget and published: GPPA list of COVID-19-related procurement contracts updated for 2020 and 2021Q1; monthly budget execution reports for 2020 published on the finance ministry’s website. - National Audit Office completed first phase ex-post audit covering March–October 2020; audit of November–December 2020 launched; results to be consolidated with the 2020 fiscal accounts audit and submitted to the National Assembly by end-September 2021. ### Political transition and transitional justice updates - Transitional justice reforms pursued, including efforts to resume constitutional reform ahead of presidential election in December 2021. - Multi-pronged approach mediated by former President Goodluck Jonathan; civil society and religious leaders invited to build consensus. - Inter-Party Committee (IPC) established; Truth, Reconciliation and Reparation Commission public hearings expected to conclude and submit final report in early July. - Agreed transformation of ECOMIG mandate into a police force; Gambia Armed Forces restored full military defense duties at end-2020. ### Recent economic developments and 2020 outturns - Economic growth estimated at around 0 percent in 2020. - Tourism severely impacted: 62-percent decline in airport arrivals. - Inflation (year-on-year) declined from 7.7 percent at end-2019 to 5.7 percent at end-2020; inflation spiked in January 2021 and decelerated in February. - Exchange rate broadly stable. - Balance of payments: current account deficit narrowed from 6.2 percent of GDP in 2019 to an estimated 2.6 percent of GDP in 2020. - Remittances rose by 78-percent (y/y) in 2020 (about 20 percent attributed to shift from informal to formal transfers). - Gross official reserves boosted to US$352.0 million (about 4.7 months of prospective imports) at end-December 2020. ### Fiscal outcomes and public debt dynamics - Overall deficit at 2.1 percent of GDP in 2020, slightly higher than projected due to delayed EU budget support (EUR 5.5 million). - Domestic primary balance stronger than projected by 0.6 percent of GDP, driven by better GRA performance, sale of assets authorized by the Janneh Commission, and distribution of accumulated profits by the CBG. - Total expenditure lower than projected by 1.3 percent of GDP due to lower execution of foreign-financed capital expenditure. - Lower domestic borrowing of 0.1 percent of GDP vs program ceiling of 0.5 percent of GDP. - Public debt-to-GDP ratio declined from 80.1 percent at end-2019 to 77.2 percent at end-2020. - SAP executed at 95 percent; some SAP spending (road construction, WFP food distribution phase 2, some health spending) to continue in early 2021. ### Monetary, liquidity and financial sector developments - Broad money expanded by 22.0 percent (y/y) at end-2020, driven by accumulation of net foreign assets: commercial banks NFA up 63 percent; Central Bank NFA up 27 percent. - Central Bank purchased foreign currency to strengthen reserves in anticipation of external payments. - Credit to private sector grew 0.8 percent (y/y) at end-2020 compared to 35.8 percent in 2019; banks remained prudent and excess reserves stayed high. - Banking sector soundness at end-2020: - System-wide capital adequacy ratio 32.6 percent (statutory requirement 10 percent). - Liquidity ratio 93.5 percent. - NPL ratio rose from 4.5 percent at end-2019 to 6.8 percent at end-2020, driven by one large and three small banks exposed to tourism; these banks accounted for 27.9 percent of total assets and 36.7 of gross loans. - By end-February, one large bank (accounting for 16 percent and 21 percent of total banking system assets and NPLs, respectively, as at end-2020) had resolved its NPL problems. - Aggregate provisioning increased from 73.4 percent in 2019 to 80.1 percent in 2020. - Central Bank avoided blanket weakening of regulatory requirements, except temporary suspension until end-2020 of provisioning rules on a case-by-case basis for banks exposed to pandemic-affected clients. ### Non-bank financial sector and financial inclusion - Two Finance Companies granted licenses to operate as microfinance institutions, bringing total FCs to six (6). - FCs total assets grew by 33.6 percent to GMD 2,006 million; deposits grew by 31 percent. - Capital adequacy around 32 percent (benchmark 20 percent); profitable. - Loans portfolio contracted by 20 percent by Q3 before recovering in Q4, ending in annual growth of 2.3 percent. - Liquidity ratio deteriorated from 75 percent to 58 percent in 2020. - NPLs more than doubled from 5 percent to 11 percent. - Mobile money transactions more than doubled between June and December 2020; cash transactions increased by 53 percent in the same period. ### Performance under the ECF program (targets and structural benchmarks) - All quantitative performance criteria and indicative targets at end-December 2020 met with large margins: - Ceiling on central government net domestic borrowing observed with margin of about GMD 400 million or 0.4 percent of GDP. - Floor on net usable international reserves exceeded by US$99 million or about 50 percent above the target. - Other QPCs met: ceiling on net domestic assets of the Central Bank; zero-ceiling on non-concessional external debt contracted and guaranteed; zero-ceiling on outstanding stock of external public debt with original maturity less than one year; non-accumulation of external payment arrears; ceiling on new concessional external debt contracted or guaranteed by government. - End-December 2020 indicative targets met, including floor on domestic revenue and floor on poverty-reducing spending. - Preliminary end-March 2021 data suggest the ceiling on net domestic borrowing, the floor on net usable international reserves, and all debt-related indicators were met; tax revenue collection fell below the indicative floor due to the pandemic. - All structural benchmarks through end-March 2021 met except one implemented with delay: - Annual statement on MDAs’ compliance with internal audit recommendations published in March 2021 (delay to reflect full-year information). - CBG agreed that 2021 financial statements will be audited jointly by a local and international firm; recruitment of auditors initiated. - Ministry of Finance published 2020Q4 quarterly debt bulletin on March 26, 2021, including a monthly domestic debt issuance calendar for 2021Q2; with IMF and WB support, MoFEA (DLDM) and CBG published an annual borrowing plan for 2021 and a monthly domestic debt issuance plan ahead of each month. ### Macroeconomic outlook and risks - Recovery expected from 2021 onwards, with: - Agricultural sector continuing satisfactory performance. - Private forex and remittance inflows sustaining construction sector. - Acceleration of public investment related to the 2022 OIC conference; large projects include Port of Banjul extension and airport modernization. - Roll-out of COVID-19 vaccines invites optimism for tourism recovery from second semester of 2021. - Economic growth projected at 4.9 percent in 2021. - Projection subject to significant downside risks, notably delays in controlling the COVID-19 pandemic domestically and globally. ### Policy priorities and structural reform agenda - ECF program anchored on the National Development Plan (NDP); coverage extended to 2022 due to COVID-19. - Mid-Term-Evaluation (MTE) of NDP validated in February 2021; initial findings: after three years, 60 percent of outcomes achieved or on track by end-December 2021. - Formulation of a new long-term development vision to be finalized around end of second quarter of 2021; new medium-term development plan to start in Q3 and scheduled to be finalized in 2022 for 2023 budget process. - Turn Around Allocation (TAA) strategy drafted with World Bank to address fragility and build resilience, featuring five strategic goals: (i) security and political stability; (ii) governance and transitional justice; (iii) land management; (iv) environment and climate change; (v) human capital development and inclusive growth and economic stability. - TAA could top up IDA allocation by 125 percent, up to national top-up cap of US$1.25 billion per country per replenishment. - Fiscal pressures in 2021: - January–February 2021 revenue collection below projections by 6 percent. - Contributing factors: weak tourism-related corporate and personal income taxes, large increase in freight costs lowering import volumes and customs revenue, transit trade bottlenecks with Senegal, closure of Guinean borders, lower traffic on Senegambia-bridge affecting non-tax revenue, delays in lifting suspension on sale of stolen assets under Janneh Commission. - Expenditure pressures: additional financing likely needed for presidential and parliamentary elections in end-2021 and early-2022; accelerated payments on infrastructure projects (Banjul Rehabilitation and Hakkalan road); possible prefinancing for Banjul port rehabilitation. *Source: 1gmbea2021002 — Excerpts from the Government of The Gambia Memorandum of Economic and Financial Policies and IMF staff report* ### 18. The 2021 fiscal framework will help tackle the impacts of the pandemic and support ### 18. The 2021 fiscal framework will help tackle the impacts of the pandemic and support ### Fiscal measures implemented and maintained (paragraph 18) - Phased out measures deemed no longer warranted: payment deferrals of tax obligations; suspension of penalty and interest charges for late filing and payments; suspension of enforcement and tax field audit activities; granting of duty payment deferrals on fuel sales to oil marketing companies that invest in jet fuel supply and were affected by the abrupt closure of the airspace. - Continued or pursued measures: - 20-percent reduction on the customs valuation of some basic food and hygiene items to alleviate the impact of the pandemic. - Continuation of the food distribution program, supported by the WFP. - Contingency of GMD 300 million (0.3 percent of GDP) factored for emergency spending pertaining to the Health sector. - Measures to support recovery of economic activity: - Reduced incorporation fees from GMD 10,000 to GMD 4,000. - Reduced business registration certificate fee from GMD 1,000 to GMD 500. - Exemption of investors and sole proprietors in the informal sector from paying payroll tax. - Reduced fringe benefit tax rate from 35 percent to 27 percent. - Expected effects: incentivize economic activity, encourage expansion and formalization of micro, small and medium-sized enterprises, address administrative distortions, and avoid creating large revenue loss. ### 2021 budget execution priorities and measures (paragraph 19) - Revenue-side actions and expectations: - Implementation of fiscal measures in the 2021 budget to mitigate revenue shortfall. - Rationalizing tax exemptions and duty waivers; a new tax expenditure policy to be approved and implemented, including a review of investment tax incentives, a new GIEPA Act, and streamlining of all tax incentives (structural benchmark end-June 2021). - Voluntary VAT threshold increased from GMD 500,000 to GMD 1 million to minimize administrative burden and align with the mandatory VAT threshold. - Requirement: All taxpayers categorized as Large Taxpayers must file audited financial statements with annual tax returns. - Increased taxes and excises on tobacco products to comply with commitments to increase excise share to at least 70 percent of the retail price. - Annual threshold of capital gains tax increased from GMD 18,000 to GMD 24,000. - Expected revenue source: privatization of MegaBank and sale of assets from the Janneh commission. - Efforts to complete reforms in financing programs from partners (budget support and project grants). - Spending-side measures and SOE-related developments: - Operational, organizational, and financial reforms in two key SOEs expected to reduce reliance on government subsidies in 2021. - NAWEC: budget originally envisaged subsidies of about 0.3 percent of GDP, potential reduction as financial situation improved; new management team; World Bank support to fill top-management posts competitively; revised performance contract being finalized; overdue maintenance completed improving generation capacity; revenue collection improved following use of prepaid meters; procuring an APC contract for construction of 30 MW capacity to replace Karpower arrangement. - GGC: 2020-21 groundnut yield significantly below target, requiring significantly lower subsidies; plans to improve future campaigns (direct purchase from farmers, payment on the spot, collaboration with a local bank to finance the campaign); modernized payroll systems and digitalized inventory management; internal audit department established yielding GMD 1.2 billion saving on overpricing and unnecessary procurements. - Contingency spending envelope for education likely not fully utilized based on current pace of execution. ### Debt sustainability (Section C, paragraphs 20–21) - Current debt status and objective: - Total public debt declined from 80.1 percent of GDP at end-2019 to 77.2 percent of GDP at end-2020. - Aim: reduce present value of total public debt below the benchmark of 55 percent of GDP around 2024. - Policies to achieve objective: - Medium-term fiscal framework: - Some 2021 measures to be rolled back from 2022, improving primary balance from a deficit of 1.4 percent of GDP in 2021 to a surplus of 0.5 percent of GDP in 2022 and an average surplus of 1.5 percent of GDP during 2023-26. - Consolidation drivers: - Revenue side: improvement in tax administration through modernization of revenue collection systems and rationalization of tax expenditure. - Expenditure side: civil service reforms (including elimination of ghost workers and improved efficiency), rationalization of subvented agencies, improvement of financial conditions of SOEs to contain subsidies. - Borrowing policy: - Continue to adhere to the borrowing plan and rely primarily on grants and highly concessional borrowing. - Advanced stage discussions with the EIB and AfDB for concessional financing of the Banjul port extension. - For the Bertil-Harden highway, three out of four financiers have agreed to provide concessional financing: BADEA, the Kuwaiti fund, and the Abu-Dhabi fund; discussions underway with OFID to improve terms. - Debt management and transparency: - Recording of domestic debt in the Meridian system has begun; first cycle expected to be completed in December 2021, followed by reconciliation with the CBG debt recording system. - Update of debt strategy and systematic revision and publication of annual borrowing plans and monthly bond issuance plans. - Publication of quarterly debt bulletins and a monthly domestic debt issuance calendar for the next three months, reviewed monthly. - Requested extension of the DSSI through end-June 2021 and planning to request extension through end-December 2021. - Extension of the CCRT relief through October 2021 reduces debt service owed to the IMF by SDR1.9 million. - Contingent liabilities and SOEs (paragraph 21): - Fiscal risks from ITFC trade credit facility have significantly declined; GGC will exit the facility after paying its last obligation due in 2021Q2. - NAWEC renewed the facility in late 2020 for two years but is honoring obligations up to six months ahead of schedule. - Adoption of the SOEs bill expected to durably reduce contingent liabilities. ### Monetary policy and financial sector (Section D, paragraphs 22–24) - Monetary policy stance and actions: - Policy rate reduced from 12.5 percent to 10 percent (in two steps). - Reserve requirements ratio reduced from 15 percent to 13 percent. - Interest rate on the special deposit facility increased by 50 basis points to 3 percent. - Accommodative policy stance maintained at March 2021 monetary policy committee meeting. - Foreign exchange and reserves: - Monthly average private remittances: US$50.9 million in January-February 2021, compared to US$49.2 million monthly average in 2020 and US$27.5 million in 2019. - Central bank foreign currency purchases from commercial banks via bidding process to strengthen international reserves. - Central bank international reserves: US$383 million at end-February 2021. - Government deposits at the CBG increased by about 1 percent of GDP, sterilizing some FX inflows and providing a buffer for fiscal uncertainties. - Inflation and liquidity: - Inflation eased in 2020 but spiked in January and March 2021 due to increases in some food prices caused by bordure closures in neighboring countries. - Reserve money and liquidity expanded; expansion has not translated into private credit growth, which broadly stagnated in 2020. - Weak private credit growth attributed to banks’ prudence; structural obstacles to credit extension include access constraints, collateral recovery problems, and default risks. - Financial sector monitoring and resilience: - Overall financial sector broadly resilient except in a few banks and non-banks exposed to affected sectors. - No blanket weakening of prudential requirements; situation not widespread nor systemic. - Implementation of recommendations from the Fund’s 2019 Financial Sector Stability Review via a strategic plan. - Introduced Regulatory, Compliance and Supervision System (vRegCoSS) software in April 2020 for real-time supervision data; organogram of Financial Services Department reviewed; strengthening of risk-based supervision of banks. - Taskforce set up to review Business Continuity Plan and a crisis management and resolution team created. - Preparing a framework for stress testing banks’ balance sheets (SB for end-June 2021) with IMF technical assistance; parallel approach for NBFIs supervision, with technical assistance to be required. - Financial safeguards (paragraph 24): - Internal Audit Department to prepare quarterly reports covering program monitoring data submitted to the Fund (report for end-2020 to be completed once audit of 2020 financial statements is finalized). - Additional members appointed to the audit committee; audit committee charter to be updated by end-May 2021. - Board approved transfer of all foreign exchange cash handlings to the Currency Unit at the Banking Department; update of foreign exchange management guidelines to be completed in line with IMF technical assistance. - For audit of the central bank’s 2021 financial statements, arrangement agreed with the Auditor General for a joint audit by a local firm and an international firm with central bank auditing experience (SB for end-March 2021). ### Structural reforms — Domestic Revenue Mobilization (Section E, paragraph 25) - Post-TADAT reforms anchored in the 2020-2024 Corporate Strategic Plan (CSP) guiding Gambia Revenue Authority (GRA) reforms. - Tax registry cleaning: - Exercise completed for the Large Taxpayer Unit (LTU) and seven tax Offices in greater Banjul (Banjul, Kanifing, Serrekunda, Tallinding, Brusubi, Brikama and Wellingara). - Ongoing campaign for remaining tax offices in Barra, Farafenni, Soma, Brikama-ba and Basse; expected finalization by end-December 2021. - After cleaning, migration of cleaned registry data from excel files to GAMTAXNET platform to reconstruct taxpayer ledgers and monitor tax obligations including tax arrears. - GAMTAXNET enhancement: - Three modules (Registration, Returns fillings and Payments) of the remediation plan rolled out to four pilot offices (Banjul, Kanifing, Serrekunda and Tallinding); these four offices now using the enhanced system. - Enforcement module deployed to pilots including Brikama, Wellingara and Brusubi. - Remaining modules to complete: Audit, Refunds, MIS Report and Administration. - Interim manual block management method: enforcement officers assigned blocks, provide quarterly compliance reports. - Digital transformation and IT systems: - Migration from ASYCUDA++ to ASYCUDA World with AfDB support. - Acquisition of a new Integrated Tax Administration System (ITAS) with World Bank support under the Fiscal Management Development (FMD) project to replace GAMTAXNET; FMD project has commenced; contract negotiations underway with selected service provider. - ITAS implementation to include e-registration, e-filing, and mobile payment solutions interfaces. - MoFEA approved funding for GRA to connect systems to GAMTEL broadband fiber network to improve network capabilities and digital footprint. - Tax expenditure policy (TEP) and institutional arrangements: - Efforts to implement TEP recommendations as outlined in the 2021 budget speech; a consultant recruited with World Bank support to assist MoFEA. - Tax unit created at MoFEA and a committee established comprising MoFEA, Ministry of Trade (MoT) and GRA to strengthen controls on enforcement and eligibility for tax exemptions. - Consultant work on revision of the GIEPA Act progressing with a view to request Cabinet approval by end-June 2021. - Other measures and capacity building: - GRA enhancing capacity to audit finance and telecommunications sectors. - Customs committed to improving adherence to policy measures and operational protocols, especially regarding exemptions, accuracy in valuations and charges. - Customs to focus on facilitating exports and ensuring bilateral trade agreements (in particular with Senegal) are strictly adhered to. - GRA started engagements with Guinea Bissau Customs Administration in December 2020 and has just started with the Malian authorities to foster trade in the context of the African Free Trade Agreement. *Source: 1gmbea2021002 - 18. The 2021 fiscal framework will help tackle the impacts of the pandemic and support* ### 26. Our reforms in public financial management (PFM) will be guided by the newly ### 26. Our reforms in public financial management (PFM) will be guided by the newly ### Public financial management (PFM) reform strategy and key measures - PFM reform guided by the adopted 2021–25 PFM reform strategy; finalized and published with development partners’ support. - Public procurement: - Single sourcing has been reduced markedly; bulk of public contracts now awarded based on “requests for proposal”. - Continued efforts to enhance the share of “open bidding” contracts through training and better planning by ministries, departments, and agencies. - Procurement act (GPPA act) has undergone two readings at the National Assembly and approved at Committee level; plenary approval delayed by heavy legislative agenda. Actions to accelerate approval: request fast-tracking at the National Assembly, prepare regulations, draft manuals. - State-Owned Enterprises (SOEs) bill: - Approval process on hold because of stalled constitutional reform. - Exploring alternative legal approaches to finalize and submit it to the National Assembly by end-2021 (SB for end-December 2021). - Civil service reforms: - Performance Management System policy validated in January 2021; implementation expected in 2022. - Since February 2021, all salaries paid electronically through commercial banks, microfinance institutions, mobile money service providers, and credit unions. - Cabinet authorized permanent secretaries to purchase Biometric Time and Attendance Register System to better control payroll. - IFMIS (Integrated Financial Management Information System): - Extension recorded significant progress despite COVID-19 constraints; roadmap prepared and implemented to extend IFMIS to all projects and subvented agencies (SB for end-June 2021). - Since January 2021, IFMIS deployed to all local government councils. - By end-June 2021, IFMIS to be deployed to all self-accounting projects and embassies. - Embassies of Guinea Bissau, Saudi Arabia, Senegal, and those in Europe already connected. - Two subvented agencies connected: Office of the Ombudsman and the Human Rights Commission. - Need assessments conducted for remaining subvented agencies; AGD seeking deployment arrangements. - Cash management: - Cash Management Committee established annual cash plan for 2021; meets monthly to update and define monthly borrowing plan, aligning spending to available resources and preventing fiscal slippages. - Operationalization of TSA by end-2021 to be supported by full deployment of recently procured payment gateway; gateway will centralize and instantaneously record all government revenues not collected by the GRA and integrate them to IFMIS. - Consolidation of accounts at commercial banks and at the Central Bank continued; Senegambia bridge toll revenue moved from commercial banks to the Treasury. - Public Finance Act: - Revision subject to pending approval of new constitution. - Consultant being recruited with UNDP support to draft new Public Finance Act with aim of submitting draft to National Assembly at the end of the year (SB for end-December 2021). ### Oversight, audits, investment selection, and asset policies - COVID-19 spending audits: - Field work for first phase of audit (purchase and distribution of medical items/equipment and food items from March through October 2020 for greater Banjul area) completed by National Audit Office; findings shared for comments. - MoFEA’s Directorate of Internal Audit finalizing its report on purchase and distribution of COVID-19 emergency food relief. - Second part of the audit to be submitted to the National Assembly and published by end-September 2021. - Investment selection and project appraisal: - The Gambia Strategic Review Board (GSRB) and Directorate of Aid Coordination developed project appraisal guidelines (IMF-FAD and World Bank support) to standardize economic, financial, and technical analysis. - GSRB enforcing guidelines for appraisal and selection of foreign-financed public investment projects; some projects approved and some rejected. - Selection process yet to be expanded to domestically financed projects; next step is implementation of self-selection of infrastructure investment projects from MDAs before submission to GSRB. - Vehicle policy: - Draft policy by Ministry in charge of transportation to improve efficiency in government vehicle handling; includes: - Identification of individuals entitled to a government vehicle. - Option for directors to choose between a car loan and a government vehicle. - Centralization of procurement, management and maintenance of government vehicles. - Stringent requirements for government vehicle drivers. ### Governance, AML/CFT, and trafficking in persons - Governance and anticorruption: - Continued efforts to strengthen governance and AML/CFT framework; interest in working with IMF on a governance diagnostic. - Expected approval by National Assembly of the anticorruption Bill will strengthen governance framework. - Human trafficking: - Significant strides led to upgrade to Tier 2 Watchlist in 2020Q2 by the US Department of State. - NAATIP implementing US 2020 TIP Report recommendations: awareness-raising training, victim protection, advancing cases in court; reinforced cooperation with US State Department. - AML/CFT: - First national AML/CTF Risk Assessment completed in 2019 and submitted to Cabinet for approval in January 2021. - GoAML application provided to Gambia FIU by UNODC to enhance and digitize AML/CFT reporting; FIU staff trained; domestication process started. - Working with GIABA on steps for second round of Mutual Evaluation Exercise scheduled in 2021; pre-assessment workshop held in February 2021; Mutual Evaluation report expected to be discussed at GIABA Plenary and Technical Committee meeting in May 2022. ### Business environment reforms - Business Environment reforms plan: - MoFEA and Ministry of Trade and Regional Integration finalized a US$ 22.7 million Business Environment reforms plan. - Six strategic objectives: (i) simplified business regulation, (ii) improved reliability and affordability of electricity, (iii) increased access to finance, (iv) improved tax administration, (v) improved access to markets through trade and custom reforms, (vi) improved land titles, registration and administration. - Milestones include: functional electronic business registration system; upgraded single window registry; re-establishment of commercial courts; licensing of credit reference bureau; enactment of credit reporting bill; development of centralized food testing laboratory; digital cadastral mapping; enactment of national land policy. - MoFEA seeking development partner support including World Bank review of funding request. ### Poverty reduction, gender, climate, and capacity development - Poverty reduction: - Government commitment under social safety programs, including annual contribution of GMD 10 million as counterpart fund to World Bank-supported social safety net program. - Continued implementation of Program for Accelerated Community Development. - Intention to fast-track approval by National Assembly of National Health Insurance bill. - Gender and climate-sensitive budgeting: - MOFEA, with IMF support, to commence gradual implementation of gender responsive budgeting in 2021 to integrate gender policies into the overall budget process. - Ministry of Gender disbursed funds to 46 women groups in 2020 and an additional 51 groups in 2021 through Women Enterprise Development Fund. - Joint review with Ministry of Justice of discriminatory laws: Marriage Act, Women Act, Sexual Offence Act, Labor Act. - Medium-term strategy formulated to address gender issues; existing gender policy under review. - Budget Directorate to explore implementation of Climate Change budget coding with IMF resident expert to quantify and assess climate-change interventions. - Capacity development priorities: - Continue technical assistance to strengthen project appraisal and selection, macroeconomic statistics production, debt management, monetary policy design, and banking supervision capacity. ### Program monitoring and key quantitative targets (selected figures) - Program monitoring: - Government to meet quantitative targets and observe structural benchmarks; program subject to semiannual reviews; third and fourth program reviews based on targets through end-June 2021 and end-December 2021, respectively. - Selected quantitative performance criteria and indicative targets for 2021 (Table 2): - Net domestic borrowing of the central government (ceiling): 112 (Prel.), 1,000 (Dec. 2021 Program), 500 (Mar. 2021), 1,100 (Jun. 2021), 1,250 (Sep. 2021). - Stock of net usable international reserves of the central bank (floor, US$ million): 292 (Prel.), 250 (Dec. 2021 Program), 260 (Mar. 2021), 270 (Jun. 2021), 280 (Sep. 2021). - New concessional external debt contracted or guaranteed by central government (annual ceiling, US$ million): 12 (Prel.), 115 (Dec. 2021 Program), 115 (Mar. 2021), 115 (Jun. 2021), 115 (Sep. 2021). - Total domestic tax revenue (floor): 10,326 (Prel.), 3,000 (Mar. 2021), 6,000 (Jun. 2021), 8,700 (Sep. 2021), 11,400 (Dec. 2021). - Poverty-reducing expenditure (floor): 6,975 (Prel.), 1,300 (Mar. 2021), 2,800 (Jun. 2021), 4,400 (Sep. 2021), 6,000 (Dec. 2021). - Base Money (stock, GMD millions): 18,595 (Prel.), 19,628 (Mar. 2021), 21,079 (Jun. 2021), 20,918 (Sep. 2021), 20,590 (Dec. 2021). - IMF disbursements (SDR millions): 20.6 (Prel.), 20.0 (Mar. 2021), 30.0 (Jun. 2021), 30.0 (Sep. 2021), 35.0 (Dec. 2021). - ECF disbursements (SDR millions): 5.0 (Prel.), 20.0 (Mar. 2021), 30.0 (Jun. 2021), 30.0 (Sep. 2021), 35.0 (Dec. 2021). - Proposed structural benchmarks for 2021 (selected, Table 4): - Approve and implement a new Tax Expenditure Policy (end-June 2021). - Prepare a roadmap for extending IFMIS to all flows to project and subvented agency accounts (end-June 2021). - Revise, in consultation with fund staff, a new Public Finance Bill and submit to the National Assembly (end-December 2021). - Publish a rolling monthly domestic debt issuance calendar for the ensuing three months (end-March 2021 and quarterly thereafter) — Status: Met. - CBG to sign MoU with Auditor General for joint audit of FY2021 financial statements (end-March 2021) — Status: Met. - Prepare a framework for banking sector stress testing (end-June 2021). - Submit to the National Assembly a revised SOE bill in line with IMF staff recommendations (end-December 2021). *Source: Chapter excerpt from 1gmbea2021002 — The Gambia (IMF PDF content provided).* ### Introduction ### Introduction ### Overview - Memorandum sets out understandings between The Gambian authorities and IMF staff regarding: definitions of quantitative targets and structural benchmarks; related reporting requirements; adjustors applied to certain quantitative targets under the ECF-supported program through end-2021. ### A. Net Domestic Borrowing of the Central Government - Definition: - Change in net claims on Central Government by the domestic monetary sector (monetary authorities and deposit money banks) plus change in discounted value of domestic government securities held by the non-monetary sector. - Also covers change in any other net claims on Central Government by domestic non-monetary sector and change in government arrears on domestic debt service obligations. - Central Government excludes local and regional governments and public enterprises. - Exclusions in computing NDB: (i) on-lending of the IMF credit (under RCF or ECF) to the budget; (ii) changes in balances of project accounts listed in Table 1; (iii) face value of government securities issued to increase the CBG’s capital to the value mandated in the CBG Act; (iv) face value of government securities issued for purpose of transferring the CBG stake in MEGA-Bank to the treasury. - Adjuster: - NDB targets (ceilings) adjusted downward/upward by excess/shortfall of the dalasi equivalent of total budget support grants and loans received relative to program forecasts specified in Text Table 1. - Upward adjustment for shortfall in budget support disbursements (including ECF tranches expected to be onlent) may not exceed GMD 1.0 billion at each quarter’s end. - NDB targets adjusted downward by deviation of privatization proceeds from zero. - Downward adjustment will not apply to budget support grants and loans provided to The Gambia for spending needs arising from the COVID-19 emergency, to the extent these raise total budget support and loans above program forecasts. - Supporting material: - Reporting on net domestic borrowing will form part of the consolidated budget report described in ¶32. ### B. Net Domestic Assets of the Central Bank (CBG) - Definition: - NDA = reserve money − net foreign assets of the CBG. - Reserve money = currency issued by the CBG (currency in circulation) + deposits of commercial banks at the CBG. - Net foreign assets = foreign assets − foreign liabilities (claims on nonresidents and liabilities to nonresidents, respectively). - Exchange rate conversion for program monitoring: - End-of-period market exchange rates prevailing at end-October 2020: 51.84 GMD/USD, 1.17 USD/EUR, 1.30 USD/GBP, 0.92 CHF/USD, 1.41 USD/SDR, 104.58 JPY/USD. - Foreign assets/liabilities in other currencies converted into U.S. dollars at prevailing end-of-period market exchange rates for end-October 2020, then into dalasi at rate listed above. - These are accounting exchange rates only and not projections. - Supporting material: - CBG balance sheet (compiled based on the TMU rates) transmitted monthly within four weeks of the end of each month. - For analytical purposes, balance sheet compiled on a current-rate basis also to be submitted. ### C. Net Usable International Reserves (NIR) of the CBG - Definition: - NIR = usable reserve assets − reserve liabilities. - Usable reserve assets: readily available claims on nonresidents in convertible currencies; include CBG holdings of SDRs, foreign currency cash, foreign currency securities, deposits abroad, and country’s reserve position at the IMF. - Exclusions: assets pledged/collateralized/encumbered; claims on residents; claims from derivatives vis-à-vis domestic currency; precious metals; assets in nonconvertible currencies; illiquid assets (including capital shares in international organizations). - Reserve liabilities: all foreign exchange liabilities to residents and nonresidents (including commitments from derivatives), and all credit outstanding from the IMF, excluding liabilities to the IMF’s SDR Department. - Exchange rate conversion: - Foreign assets and liabilities converted at exchange rates listed in ¶5 above. - Adjusters: - Quarterly NIR targets (floors) adjusted downward/upward by US dollar equivalent of shortfall/excess of total budget support grants and loans (excluding IMF resources expected to be onlent) received in the period preceding quarter’s end relative to program forecasts in Text Table 1. - Downward adjustment to quarterly NIR floors on account of shortfall in budget support capped at US$20 million. - In case of an allocation of SDRs by the IMF, NIR adjusted upward by amount of the SDR allocation. - Supporting material: - Detailed reserve statement with end-month data on NIR transmitted within seven days of the end of each month. ### D. New External Debt Payment Arrears of the Central Government - Definition: - External debt payment arrears = external debt obligations of the central government not paid when due in accordance with contractual terms (accounting for contractual grace periods). - Exclusions for program purposes: - (i) financial obligations for which creditor has accepted in writing to negotiate alternative payment schedules before relevant payment; (ii) arrears on claims government has represented as disputed; (iii) arrears that cannot be settled due to international sanctions; (iv) arrears on trade credits, except arrears on payments due to the International Islamic Trade Finance Corporation (ITFC). - Performance criterion: - Non-accumulation of new external debt payment arrears by the central government is a target to be observed continuously. - Supporting material: - Accounting of non-reschedulable external arrears (if any) by creditor countries, with detailed explanations, transmitted monthly within four weeks of end of each month; includes separate reporting for Central Government and other public sector entities to Paris Club, non-Paris-Club, private, pluri-lateral and multilateral creditors. ### E. New Non-Concessional External Debt Contracted or Guaranteed by the Central Government - Definition: - Targets new non-concessional external debt contracted or guaranteed by the Central Government denominated in any currency other than Gambian dalasi. - Applies to debt as defined in ¶8(a) of Guidelines on Public Debt Conditionality and to commitments contracted or guaranteed for which value not received. - Guarantee arises from explicit legal/contractual obligation of central government to service debt owed by third party. - Debt considered contracted when conditions for entrance into effect met, including approval by the National Assembly. - Exclusions: loans/purchases from the IMF; concessional debts as defined; any debt with maturity of one year or less. - Performance criterion assessed continuously. - Concessionality definition (¶16): - Debt concessional if grant element ≥ 35 percent, calculated as (PV of debt − nominal value) / nominal value. - PV calculated by discounting future payments; for variable-rate debts (benchmark + fixed spread), PV calculated using program reference rate plus fixed spread (in basis points) specified in the contract. - Program reference rate for the six-month USD LIBOR is 2.42 percent and will remain fixed for duration of the program. - Spread of six-month EURIBOR over six-month USD LIBOR is -250 basis points. - Spread of six-month JPY LIBOR over six-month USD LIBOR is -250 basis points. - Spread of six-month GBP LIBOR over six-month USD LIBOR is -150 basis points. - For debts with grant element equal or below zero, PV set equal to nominal value of the debt. - Discount rate used: unified discount rate of 5 percent set forth in Executive Board Decision No. 15248-(13/97). - Supporting material: - Comprehensive record, including loan-by-loan accounting of all new concessional and non-concessional debt contracted or guaranteed by Central Government, transmitted quarterly within four weeks of end of each quarter. - MoFEA to forward within four weeks of contracting/guaranteeing any new external loan: loan’s terms and conditions including interest rate, grace period, maturity, interest, fees, principal payment schedule with all annexes. ### F. New Concessional External Debt Contracted or Guaranteed by the Central Government - Definition: - Targets new concessional external debt contracted or guaranteed by the Central Government denominated in any currency other than Gambian dalasi; concessionality as defined in ¶16. - Borrowing packages: - For packages comprising both loan and grant components to meet concessionality requirement (grant element of 35 percent), only the loan components count toward the borrowing limit. - Supporting material and data provision: - Refer to ¶17 and ¶18. ### G. Outstanding Stock of External Public Debt with Original Maturity of One Year or Less - Definition: - Stock of outstanding external public debt with original maturity of one year or less, owed or guaranteed by the public sector. - Public sector consists of Central Government, regional governments and other public agencies, including central bank. - Trade credits excluded, including ITFC credits. - Supporting material: - Comprehensive record of all external debt with original maturity < one year owed or contracted by public sector, transmitted quarterly within four weeks of end of each quarter. ### H. Tax Revenue (indicative target) - Definition: - Taxes and duties collected by Domestic Taxes Department and Customs and Excises Department of the Gambia Revenue Authority (GRA). - Tax revenue = sum of revenues collected against all tax codes outlined in Text Table 2. - Nontax revenue (licensing fees, fines, levies) excluded. - Levies collected by GRA on behalf of other organizations excluded: National Education & Technology Training Levy, AU Levy, ECOWAS Levy. - Supporting material: - Monthly report on revenue collected by GRA transmitted within four weeks of end of each month. ### I. Central Bank Credit to the Central Government at Non-Market Terms - Definition: - Consolidated balance on the Treasury Main Account, Consolidated Revenue Fund, and other revenue accounts. - Covers all gross claims on Central Government on central bank balance sheet with terms materially different from market terms for Treasury bills and bonds around time of acquisition. - Also covers overdue payments of principal and interest on Central Government securities held by central bank. - Performance criterion assessed at end of each month. - Supporting material: - Reporting will form part of the monetary sector data described in ¶34 and ¶35. ### J. Poverty-Reducing Expenditures - Definition: - Expenditures financed out of The Gambia Local Fund (GLF) on: Agriculture and Natural Resources; Education; Health; Nutrition, Population and HIV-AIDS; Infrastructure Programme; Social Fund for Poverty Reduction; Implementation and Monitoring of Poverty Reduction Programs; Support to Cross-Cutting Programs; ICT Research and Development; Decentralization and Local Government Capacity Building; Governance and Civil Service Reform Program. - Starting Q1 2021, includes COVID-19 spending implemented through the COVID-19 project accounts. - Supporting material: - Monthly report on poverty-reducing expenditures transmitted within four weeks of end of each month. ### Other Data Requirements and Reporting Standards - Prices (K): - Monthly disaggregated consumer price index, including weights for each major category, with January 2020 = 100, transmitted within four weeks of end of each month. - Government Accounts Data (L): - Monthly consolidated Central Government budget report (analytical table) on budget execution for month and cumulatively from beginning of year transmitted within four weeks of end of each month. - Report covers: (i) revenue by major items; (ii) external grants by type; (iii) details of recurrent expenditure; (iv) details of capital expenditure and net lending (including externally financed capital expenditure, expenditure from GLF, and net lending); (v) overall balance, primary and basic balance; (vi) details of budget financing (including net domestic and net external borrowing and components). - End-week data on net domestic borrowing (including project accounts listed in Table 1) transmitted weekly within five business days of end of each week. - Monetary Sector Data (M): - Balance sheet of CBG, prepared on basis of current and program exchange rates, transmitted monthly within four weeks of end of each month; must explicitly identify all claims on and liabilities to the government and include individual balances on government accounts listed in Table 1. - Consolidated balance sheet of commercial banks and a monetary survey (consolidation of CBG and commercial banks), including foreign currency deposits held by residents with commercial banks, transmitted within four weeks of end of each month. - Daily data on reserve money transmitted weekly within five business days of end of each week. - Treasury Bill Market and Interbank Money Market (N): - Weekly data on amounts offered and issued, net issuance, over/under subscription, and yields transmitted weekly within five business days of end of each week. - Data on treasury bills and CBG bills outstanding (face value and discounted value, including distribution by bank and non-bank holders) transmitted monthly within six weeks of end of each month. *Source: IMF staff memorandum — Introduction (1gmbea2021002).* ### 38. Daily data on the interbank money market (interest rates, maturities, and volumes of ### 1gmbea2021002 - 38. Daily data on the interbank money market (interest rates, maturities, and volumes of transactions) ### Interbank money market reporting - Daily data on the interbank money market (interest rates, maturities, and volumes of transactions) will be transmitted weekly within five business days of the end of each week. - Daily interbank market exchange rates, defined as the simple average of the daily weighted average buying and selling rates, will be transmitted on a weekly basis within five business days of the end of the week. - Weekly interbank market exchange rates, defined as the simple average of the weekly weighted average buying and selling rates, will be transmitted on a monthly basis within seven days of the end of the month. - The CBG’s monthly average and end-month exchange rates, including those for all currencies in which foreign assets and liabilities are denominated, will be transmitted within seven days after the end of each month. - Daily data on foreign exchange intervention by the central bank will be transmitted weekly within five business days of the end of each week. - A detailed reserve statement with end-week data on net usable international reserves of the CBG will be transmitted weekly within five business days of the end of each week. - The CBG will forward monthly data on the volume of transactions (purchases, sales, and total) in the foreign exchange market by each major group of participants (CBG, commercial banks, and foreign exchange bureaus) in dalasi within seven days of the end of each month. ### External sector and reserves reporting - The CBG will forward within four weeks of the end of each month, data on transactions in official reserves. - Statement/report of transactions in official reserves: Monthly, 30 days after month-end (as listed in reporting requirements). - CBG reserves statement/report: Monthly, 30 days after month-end. - International reserves and Foreign & Domestic Assets data (NIR, NFA & NDA): Weekly, 7 days after week-end. - Foreign exchange liquidity forecasts statement/report: Weekly, 7 days after week-end. ### Public enterprises and government-related reporting - MoFEA will forward within eight weeks of the end of each quarter, data on monthly cash flow of NAWEC, GNPC, GAMTEL, GAMCEL, GCAA, SSHFC, and NFSPMC. - MoFEA will forward within eight weeks of the end of each quarter, data on the stock of consolidated Central Government’s stock of payment arrears to NAWEC at the end of each month. ### Data reporting requirements (selected items and deadlines) - T-bills auction data, Inter-banks rates & other accompanying data & tables: Weekly, 7 days after week-end. - Project accounts data: Weekly, 7 days after week-end. - Commercial banks' balance sheets: Monthly, 30 days after month-end. - Commercial banks' Forex net open position statement/report: Monthly, 30 days after month-end. - CBG balance sheet (including NDA): Monthly, 30 days after month-end. - Statement/report on CBG credit to Gov. at non-market interest rates; and Gov.'s overdue payments to CBG: Monthly, 30 days after month-end. - Financial Soundness Indicators: Monthly, 30 days after month-end. - Commercial banks' income statements: Quarterly, 30 days after quarter-end. - Balance of payments (BOP): Quarterly, 30 days after quarter-end. - Stock of outstanding public debt of maturity not exceeding 1 year: Quarterly, 30 days after quarter-end. - Statement/report on concessional & non-concessional debts contracted or guaranteed by government: Quarterly, 30 days after quarter-end. - Statement of Government Operations (SGO): Monthly, 30 days after month-end. - Poverty-reducing expenditure data: Monthly, 30 days after month-end. - Consolidated Central Gov. budget execution: Monthly, 30 days after month-end. - SOE cash flow statements (i.e. 13 SOEs): Monthly, 30 days after month-end. - External debt reports: Monthly, 30 days after month-end. - Statement of external payment arrears by Central Government & SOEs: Monthly, 30 days after month-end. - Staff Monitored Program (SMP) implementation matrix: Monthly, 30 days after month-end. - Monthly Revenue Report: Monthly, 30 days after month-end. - Oil volumes and tax collected on oil imports: Monthly, 30 days after month-end. - Revenue collection by tax type: Monthly, 30 days after month-end. - Tax exceptions\duty waivers: Monthly, 30 days after month-end. - Consumer price index (CPI): Monthly, 30 days after month-end. - Producer price index (PPI): Monthly, 30 days after month-end. - Data on exports (by product type, quantity, country, etc.): Monthly, 30 days after month-end. - Data on imports (by product type, quantity, country, etc.): Monthly, 30 days after month-end. - Gross domestic product (GDP): Annually, 90 days after year-end. - Crop field cultivation per hectare: Quarterly, 90 days after year-end. - Crop yield: Quarterly, 90 days after year-end. - Livestock population by region: Quarterly, 90 days after year-end. - Tourists arrivals by nationality: Monthly, 30 days after month-end. - Out-of-pocket tourists expenditures: Monthly, 30 days after month-end. ### Responsible institutions (as listed) - Central Bank of The Gambia (CBG) - Ministry of Finance & Economic Affairs (MoFEA) - Gambia Revenue Authority (GRA) - Gambia Bureau of Statistics (GBoS) - Ministry of Agriculture (MoA) - Gambia Tourism Board (GTB) *Source: 1gmbea2021002 - 38. Daily data on the interbank money market (interest rates, maturities, and volumes of transactions).* --- _Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1gmbea2021002.pdf_