## 1gmbea2021003 ## Source details **Canonical URL:** [1gmbea2021003](https://www.imf.org/-/media/files/publications/cr/2021/english/1gmbea2021003.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2021/english/1gmbea2021003.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2021/english/1gmbea2021003.pdf.json) --- ### EXECUTIVE SUMMARY — context and headline outcomes - Pre-pandemic progress: growth acceleration, reduced debt vulnerabilities, strengthened external stability, structural and legislative reforms, improved social indicators following 2016–17 transition. - COVID-19 impact: - Pandemic halted progress, stagnated activity, re-ignited extreme poverty. - Additional 25,000 people (about 1 percent of the population) pushed into extreme poverty. - Tourist arrivals: from 235,788 in 2019 to 89,232 in 2020 (a 62 percent decline). - Budgetary pandemic spending: about 3.6 percent of GDP in 2020 (total additional spending 2020 = 3.6; 2021 = 1.0; 2022 = 1.0, in percent of GDP per Text Table 5). - COVID-19 vaccination rate: about 12 percent of the adult population (as of end-September 2021). - Elections: Presidential planned for December 2021; parliamentary planned for April 2022. - Staff recommendation: conclude 2021 Article IV consultation and complete third ECF review given broadly satisfactory program performance. ### RECENT MACROECONOMIC DEVELOPMENTS AND OUTLOOK - Growth: - Real GDP growth: -0.2 percent in 2020; projected 4.9 percent in 2021; medium-term average 6 percent per year. - Text Table 2 series (selected): 2020 Prel. -0.2; 2021 Baseline 4.9; 2022 6.0; 2023 6.5; 2024 6.5; 2025 5.8; 2026 5.6. - Inflation and monetary indicators: - Inflation: 8.1 percent (y-o-y) at end-June 2021; 6.9 percent (y-o-y) at end-August 2021. - CBG policy rate: 10 percent (September MPC); statutory reserve requirements: 13 percent. - Reserve money: expanded by 31 percent (y-o-y) at end-June 2021 in earlier summary; other tables: base money stock figures reported (e.g., 19,845; 19,204; 20,139; 20,886). - Private credit: rebounded by 5.8 percent (y-o-y) at end-August 2021; other reporting: private credit expanded 5.7 percent y/y at end-June 2021. - External sector and remittances: - Remittance inflows: about US$300 million in H1 2021 versus about US$400 million in full-year 2020 in one summary; elsewhere remittances reported as US$ 535 million at end-August 2021 (compared to US$ 590 million for full year 2020). - Gross official reserves: strengthened by US$173 million to US$526 million (equivalent to 5.7 months of prospective imports) at end-September 2021 (helped by donor support and US$85 million SDR allocation at end-August 2021). - Dalasi exchange: slight appreciation of 0.9 percent y-o-y to the U.S. dollar at end-August 2021; average 6.9 percent y-o-y depreciation against other major currencies over same period. - Key projection indicators (selected from Text Table 2, preserve exact figures): - Tourist arrivals (percent change): 2020 -62.2; 2021 0.9; 2022 6.7; 2023 7.8; 2024 7.8; 2025 6.4; 2026 5.9. - Tax revenue (percent of GDP): 2020 11.0; 2021 10.9; 2022 11.0; 2023 11.5; 2024 11.9; 2025 12.0; 2026 12.5. - Primary balance (percent of GDP): 2020 1.0; 2021 -1.2; 2022 -0.1; 2023 1.2; 2024 1.8; 2025 2.8; 2026 1.8. - Current account balance (percent of GDP): 2020 -3.2; 2021 -12.5; 2022 -16.0; 2023 -12.3; 2024 -10.7; 2025 -8.9; 2026 -9.3. - PV of public debt (percent of GDP): 2020 73.5; 2021 71.5; 2022 66.6; 2023 62.2; 2024 55.8; 2025 50.8; 2026 46.7. - Gross official reserves (months of prospective imports): 2020 4.7; 2021 5.4; 2022 4.9; 2023 4.7; 2024 4.6; 2025 4.3; 2026 4.0. ### FISCAL DEVELOPMENTS, 2021 PERFORMANCE, AND 2022 BUDGET FRAMEWORK - H1 2021 execution: - Budget execution challenged by weaker tax collections and delayed World Bank budget support grant; strict cash management aligned spending to resources. - Overall fiscal deficit at end-June 2021: 2.7 percent of GDP (against target 2.6 percent of GDP). - Net domestic borrowing at end-June 2021: GMD 1.1 billion (within program ceiling after adjustment). - Supplementary appropriation (SAP) in July 2021 accounted for a revenue windfall of about GMD1.5 billion (1.4 percent of GDP) from British Petroleum settlement. - 2022 budget projections and composition (Text Table 4 highlights, all figures percent of GDP preserved): - Revenue: 2021 Prog. 22.2; 2021 Proj. 20.8; 2022 Budget 25.8. - Domestic Revenue: 14.2; 14.8; 15.2. - o/w Taxes: 11.2; 10.9; 11.0. - Grants: 8.0; 5.9; 10.6. - Expenditures: 26.3; 24.8; 28.8. - Capital investment: 10.5; 9.6; 13.8. - Net lending (+)/borrowing (–): -4.1; -4.0; -3.0. - Financing: 4.1; 4.0; 3.0. - Memorandum: Domestic primary balance: -1.1; 0.5; 0.5; Primary balance: -1.4; -1.2; -0.1. - Revenue composition and one-offs for 2022: - Tax revenue projected at 11.0 percent of GDP (2022) supported by revenue administration measures. - Nontax revenues projected at 4.2 percent of GDP, boosted by a one-off US$30 million (1.4 percent of GDP) petroleum receipt and further sale of stolen assets. - Use of SDRs in budget: US$20 million from the US$85 million SDR allocation on-lent to Treasury for one-time COVID-related financing needs in 2022. - Financing and domestic market implications: - Net domestic borrowing planned: GMD 659 million (0.6 percent of GDP) to leave space for private sector credit. - Project grants projected to reach 8.4 percent of GDP. - Anticipated proceeds from privatization and SDR use support financing plan. ### PROGRAM PERFORMANCE, MONITORING, AND SAFEGUARDS - Program implementation: broadly satisfactory despite pandemic. - End-June 2021 program targets: - All quantitative performance criteria (QPCs) met. - Three out of four indicative targets (ITs) met; floor on domestic tax revenue missed by 0.3 percent of GDP (Text earlier notes 0.4 percentage points in one table). - Structural benchmarks (SBs): one of three met (IFMIS extension roadmap); two SBs not observed but with good progress (draft bank stress testing framework; approved tax expenditure policy memorandum and draft GIEPA act). - Proposed rescheduling of two unobserved SBs to end-December 2021 (and other SB resets noted across chapters). - Safeguards and CBG: - Safeguards assessment completed July 2020; CBG implemented most recommendations (audit committee, IAD director, currency department handling FX cash). - IAD reviews program monetary data at test dates; revised audit arrangements for FY2021. ### EXTERNAL POSITION, RESERVES, AND BALANCE OF PAYMENTS - Reserves and SDR allocation: - SDR allocation: US$85 million (about 4.5 percent of GDP) at end-August 2021; authorities to on-lend US$20 million to Treasury and save remainder to bolster reserves. - Gross official reserves: rose by about US$173 million to US$526 million (5.7 months of prospective imports) at end-September 2021. - Balance of payments and financing gaps: - Annual debt servicing needs projected to double from about US$55 million during 2022–25 to about US$105 million (3-4 percent of GDP) in 2026–30. - Baseline financing gap: approximately US$151 million in 2021 and average around $62 million in the remaining two years of the program. - Donor financing projected to cover 10, 80 and 85 percent of the total financing gap in 2021, 2022 and 2023 respectively; IMF share declines over time (nearly 30 percent of 2021 gap covered by Fund financing). - External vulnerabilities and recommendations: - Current account expected to deteriorate sharply in 2021–22 due to subdued tourism recovery and imports for infrastructure; rebuild external buffers and maintain flexible exchange rate. - Staff advises saving part of the SDR allocation to strengthen reserves in anticipation of expiry of debt deferral period. ### FINANCIAL SECTOR CONDITIONS AND POLICY - Banking and nonbank indicators: - Banking system NPLs: narrowed to 5.6 percent of gross loans in June 2021 (after deterioration in Dec 2020 and Mar 2021), with some small banks still having high NPL ratios. - MFCs NPLs: increased from 4.4 percent at end-2019 to 9.5 percent at end-2020 and averaged 10.4 percent in H1 2021 amid asset expansion. - Banking system capital adequacy ratio: 28 percent at end-June 2021 (statutory requirement: 12 percent). MFCs capital adequacy: 34 percent at end-June 2021 (statutory requirement: 20 percent). - Broad money expansion: reported variously as 27.5 percent (y/y) at end-June 2021 and series in tables showing 27.1 etc. - Monetary stance and macroprudential readiness: - Near-term: accommodative monetary policy to support fragile recovery; consider tightening if inflation pressures resume. - CBG to maintain flexible exchange rate; limited FX market intervention (primarily purchases to anticipate government FX needs). - Action items: complete bank stress-testing framework (reset SB to end-December 2021), conduct balance sheet stress tests of two banks (proposed SB end-September 2022), withdraw case-by-case supervisory forbearance progressively, strengthen AML/CFT supervision and FIU capacity. ### STRUCTURAL REFORMS, CAPACITY DEVELOPMENT, AND PFM - Revenue administration reforms: - GRA 2020-24 Corporate Strategic Plan; implement tax exemption policy, clean taxpayer register, GAMTAXNET remediation and migration to new ITAS; proposed SBs include taxpayer charter (end-June 2022) and accurate tax ledger for large taxpayers (end-September 2022). - Year-to-date disallowance of exemption applications: GMD 1.3 billion; duty remissions declined to 0.9 percent of GDP during January-August 2021 (from 2.5 percent in 2020 and 2.8 percent in 2019). - PFM and IFMIS/TSA: - IFMIS interfaced with MERIDIAN and CBG’s T24 and under user acceptance test by end-June 2021; five pilot sites identified (Independent Electoral Commission, National Nutrition Agency, Edward Francis Small Teaching Hospital, Gambia Bureau of Statistics, Social Development Fund). - TSA operationalization expected by end-December 2021; rollout targets for IFMIS to additional agencies into 2022. - Cash Management Committee meets monthly; sweeping of accounts and consolidation progressing. - SOE governance and fiscal risks: - SOE reforms: align SOE bill with constitution and submit to National Assembly by end-2021; publish audited SOE financial statements (end-December 2021 SB); extend performance contracts and operational oversight improvements (end-September 2022 SB). - Capacity development priorities (Annex V): - Revenue mobilization, PFM, bank supervision and stress testing, macroprudential framework, debt management, statistics, AML/CFT strengthening. ### DEBT SUSTAINABILITY, DSA FINDINGS, AND FINANCING NEEDS - DSA key findings: - Risk ratings: overall and external debt distress risk remain "High"; public debt judged sustainable under baseline. - Revisions and impacts: data reconciliation raised external debt stock by 6.1 percentage points of GDP in 2020 and increased debt service payments (cumulative increase about 4 percent of GDP in 2021–30). - External indicators: PV of external debt-to-exports breaches threshold in 2021–22; external debt service-to-exports breaches threshold in 2021 and 2025–29. - Public debt trajectory: PV of overall debt-to-GDP falls below indicative threshold of 55 percent in 2025 under baseline. - Infrastructure gap and financing needs: - Infrastructure gap relative to SDG-level needs in electricity, roads, water and sanitation: about 15 percent of GDP, translating to average additional annual investment need of about 5.3 percent of GDP in 2021–30. - Policy options to meet gap: domestic revenue mobilization (could cover 1-1.5 percent of GDP), improve spending efficiency (similar magnitude), increased private financing, concessional financing, prioritization. - Borrowing plan: - Agreed to seek concessional financing (preferably grants) for projects; adhere to agreed borrowing plan and increase frequency of creditor data reconciliation (from annual to bi-annual). ### RISKS, MITIGATION, AND POLICY RECOMMENDATIONS - Main downside risks: - Global resurgence of pandemic dampening tourism and growth (example scenario: 9-percent decline in tourism for 2021 relative to baseline; growth reduced by two percentage points per year in 2022 and one percentage point per year for 2023–24 under downside scenario). - Fiscal risks from lower tax intake and increased pandemic spending; global oil price increases, supply chain disruptions, high shipping costs; political risk around elections. - Recommended mitigation and policy priorities: - Near term: expand vaccine coverage; improve targeting of social programs; maintain accommodative monetary policy while ready to tighten if inflation resumes; strict cash management to align spending with resources. - Medium term: unlock digitalization potential; implement financial inclusion strategy; improve business environment; develop climate-related policies; pursue legislative reforms (Anti-Corruption bill, Public Finance bill, procurement act, SOE bill); close revenue collection gap; accelerate SOE reforms. - External buffers: save part of SDR allocation to bolster reserves; maintain flexible exchange rate regime. - Program monitoring: semi-annual reviews; proposed modification of end-December PC on NIR due to SDR allocation; staff recommends Executive Board completion of third ECF review and financing assurances review. *Source: EXECUTIVE SUMMARY and selected chapters (1gmbea2021003).* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Context: pre-pandemic progress and COVID-19 shock - Prior to the pandemic, The Gambia showed strong macroeconomic performance following the 2016–17 political transition: economic growth accelerated, debt vulnerabilities decreased, external stability strengthened, structural and legislative reforms advanced, and key social indicators improved. - COVID-19 halted some progress, stagnating economic activity and re-igniting extreme poverty. - The Gambia experienced a third wave of the pandemic in mid-2021, which has receded recently. - The COVID-19 vaccination rate currently stands at about 12 percent of the adult population. - Presidential and parliamentary elections are planned for December 2021 and April 2022, respectively. - The pandemic caused budgetary spending of about 3.6 percent of GDP to address its socio-economic impact. - The pandemic pushed an additional 25,000 people (about 1 percent of the population) into extreme poverty. - Tourist arrivals plummeted by 62 percent (from 235,788 in 2019 to 89,232 in 2020). ### Recent macroeconomic developments and outlook - Economic growth and activity: - Growth of 4.9 percent in 2021, compared with -0.2 percent in 2020. - Early signs of recovery are fragile and subject to significant downside risks from the pandemic, global recovery, tourism resumption, and upcoming elections. - External sector and remittances: - Remittance inflows reached about US$300 million in H1 2021, compared to about US$400 million during the full-year 2020. - Foreign exchange reserves strengthened further, exceeding five months of prospective imports at end-September 2021. - Inflation and monetary indicators: - Inflation accelerated to 8.1 percent (y-o-y) at end-June 2021, then abated to 6.9 percent (y-o-y) at end-August 2021. - Core inflation followed a broadly similar pattern. - The CBG policy rate was left at 10 percent and statutory reserve requirements at 13 percent (September MPC). - Reserve money expanded by 31 percent (y-o-y) at end-June 2021. - Banks’ excess reserves over the statutory requirement reached 15.7 percent of reserve money. - Private credit rebounded by 5.8 percent (y-o-y) at end-August 2021. - Fiscal developments: - Budget execution in H1 2021 faced challenges (weaker tax collections, delayed World Bank budget support grant), but spending was aligned to resources through strict cash management. - Overall fiscal balance was broadly on target and net domestic borrowing remained below the program ceiling (after adjusting for the shortfall in budget support). - Parliament approved in July 2021 a supplementary appropriation (SAP) to account for a revenue windfall of about GMD1.5 billion (1.4 percent of GDP) from British Petroleum’s settlement payments; allocations include election preparation, ambulances, road construction, and anti-drug enforcement. ### Program performance - Program implementation is broadly satisfactory despite the pandemic environment. - All quantitative performance criteria (QPCs) and three out of four indicative targets (ITs) at end-June 2021 were met. - One out of the three structural benchmarks (SBs) at end-June 2021 was completed. - Authorities are delivering on transparency commitments related to COVID-19 spending. - Staff recommends conclusion of the 2021 Article IV consultation and completion of the third ECF review, considering satisfactory implementation and strong forward policy commitments. ### Policy discussions and recommendations - Support the post-pandemic recovery and lay foundations for inclusive growth: - Near term: expand COVID-19 vaccine coverage and improve targeting of social programs. - Medium term: unlock digitalization potential, implement the financial inclusion strategy, improve the business environment, develop climate-related policies, and pursue ambitious legislative reforms (including on human rights and gender equality). - Address COVID-19-related spending and development needs while reducing debt vulnerabilities: - For 2021: pursue strict cash management to align spending with available resources. - For 2022: fiscal framework accommodates pandemic and development spending while continuing debt reduction. - Medium term: close the revenue collection gap, expand investment project prioritization, accelerate SOE reforms, adhere to the agreed borrowing plan, and pursue governance measures including on procurement and anti-corruption. - Sustain external and financial stability: - Near term: maintain an accommodative monetary policy stance to support the fragile recovery; consider tightening if inflation pressures resume. - Medium term: the CBG will maintain a flexible exchange rate regime; authorities will save part of the new SDR allocation to bolster external reserves in anticipation of the expiration of the debt service deferral period and to build buffers for unanticipated shocks. ### Social and institutional implications - The pandemic heightened socio-economic fragility: 48 percent of businesses reported partial loss of income, 43 percent scaled down operations, and 19 percent shut down (survey by GCCI and 3A’s Solutions). - At least 9 out of 10 people reported a decrease in income during the peak of the first wave (March–August 2020) (Gambia Bureau of Statistics and World Bank High Frequency Survey). - School closures disrupted education notably for poorer children unable to participate in distance learning; maternal mortality worsened. - Voter registration for the upcoming electoral cycle exceeded 2016 registered voters by about 10 percent; 18 political parties are registered for the elections. Political party representatives in the Inter-Party Committee expressed support for continuation of reforms under the ECF-supported program after the elections. *Source: EXECUTIVE SUMMARY (1gmbea2021003)* ### 0.8 percent at end-2020. ### 1gmbea2021003 - 0.8 percent at end-2020. ### Foreign exchange reserves and exchange rate - Foreign exchange reserves strengthened by US$173 million to US$526 million (equivalent to 5.7 months of prospective imports) at end-September 2021, helped by donor support and the IMF’s US$85 million SDR allocation to the CBG at end-August 2021. - Banking system net foreign assets and excess reserves were boosted by strong remittance inflows. - Preliminary data point to a rebound in exports of goods in H1 2021 compared to H1 2020, particularly for re-exports of oil; tourism continued to be subdued. - Apart from health-related imports, all other import categories dropped in H1 2021. - The CBG’s presence in the FX market was limited and solely on the purchasing side to mobilize funds in anticipation of government FX needs. - Exchange rate movements: - The dalasi appreciated slightly by 0.9 percent y-o-y relative to the U.S. dollar at end-August 2021. - The dalasi weakened against other major currencies: an average 6.9 percent y-o-y depreciation over the same period. ### Financial sector performance - Non-performing loans (NPLs) narrowed to 5.6 percent of gross loans in June 2021 after deterioration in December 2020 and March 2021; some small banks still exhibited high NPL ratios. - Microfinance companies (MFCs): - NPLs increased from 4.4 percent of gross loans at end-2019 to 9.5 percent at end-2020 and averaged 10.4 percent in H1 2021 amid asset expansion. - Liquidity, profitability, and capitalization: - Banking system capital adequacy ratio: 28 percent at end-June 2021 (statutory requirement: 12 percent). - MFCs capital adequacy ratio: 34 percent at end-June 2021 (statutory requirement: 20 percent). ### Program performance (end-June 2021) - Overall assessment: satisfactory (MEFP¶¶11–12 and MEFP Tables 1 and 3). - Quantitative performance criteria: - All quantitative performance criteria were met; the adjusted ceiling on net domestic borrowing and floor on net international reserves were observed with margins. - Other four QPCs were also observed. - Indicative targets: - Three out of four indicative targets were met. - Observed: ceiling on the CBG’s credit to the central government on non-market terms; ceiling on the CBG’s net domestic assets. - Floor on poverty-reducing expenditure: just on target. - Floor on domestic tax revenue: missed by 0.3 percent of GDP due to sluggish economic activity, including imports. - Structural benchmarks (end-June 2021): - One out of three SBs was met: roadmap for extending IFMIS coverage to project and subvented agency accounts. - Two SBs not observed but with good progress: draft bank stress testing framework (requires technical refinement); approved tax expenditure policy memorandum and draft GIEPA act (draft GIEPA act needs agreement with key stakeholders). - Proposed rescheduling of the two non-observed SBs to end-December 2021. ### Macroeconomic outlook and risks - Baseline projections (Table 1 and Text Table 2): - Real GDP growth: projected to expand by 4.9 percent in 2021 and strengthen to an average of 6 percent per year in the medium term. - Inflation: projected at 6.5 percent for 2021; to converge to the CBG’s medium-term objective (5 percent) by 2024. - External current account: expected to deteriorate in near term due to a sharp rise in imports linked to major infrastructure projects; expected to improve in the medium term with rebound in tourism and sustained remittances. - Downside risks (Annex III and Text Table 2): - Global resurgence of the pandemic could dampen tourism further (for 2021, a 9-percent decline relative to baseline) and reduce growth by two percentage points per year in 2022 and one percentage point per year for 2023–24. - Reduced services export and income receipts would widen the current account deficit and reduce gross official reserves. - Fiscal risks: lower tax intake and increased Covid-19-related spending under downside scenario would weaken the primary balance and increase public debt. - Other risks: continuation of global oil price increases, global supply chain disruptions, high shipping costs, and potential socio-political tensions around upcoming presidential and parliamentary elections. - Recommended readiness: authorities should stand ready to re-prioritize expenditures to reduce resort to debt financing, recalibrate monetary policy, and bolster forex reserves should downside risks materialize. ### Key macroeconomic projections and indicators (selected figures from Text Table 2) - Real GDP growth (percent): 2020 Prel. -0.2; 2021 Baseline 4.9; 2022 6.0; 2023 6.5; 2024 6.5; 2025 5.8; 2026 5.6. - Tourist arrivals (percent change): 2020 -62.2; 2021 0.9; 2022 6.7; 2023 7.8; 2024 7.8; 2025 6.4; 2026 5.9. - Tax revenue (percent of GDP): 2020 11.0; 2021 10.9; 2022 11.0; 2023 11.5; 2024 11.9; 2025 12.0; 2026 12.5. - Primary balance (percent of GDP): 2020 1.0; 2021 -1.2; 2022 -0.1; 2023 1.2; 2024 1.8; 2025 2.8; 2026 1.8. - Domestic primary balance (percent of GDP): 2020 -1.1; 2021 0.5; 2022 1.2; 2023 0.5; 2024 0.0; 2025 1.3; 2026 1.6. - Current account balance (percent of GDP): 2020 -3.2; 2021 -12.5; 2022 -16.0; 2023 -12.3; 2024 -10.7; 2025 -8.9; 2026 -9.3. - PV of public debt (percent of GDP): 2020 73.5; 2021 71.5; 2022 66.6; 2023 62.2; 2024 55.8; 2025 50.8; 2026 46.7. - Gross official reserves (months of prospective imports): 2020 4.7; 2021 5.4; 2022 4.9; 2023 4.7; 2024 4.6; 2025 4.3; 2026 4.0. ### Policy discussions — Post-Pandemic Recovery and Inclusive Growth - Near-term priorities: - Contain domestic spread of COVID-19; accelerate vaccine roll-out and targeted relief to allow full return of economic activity (MEFP¶1, Annex II, Tables 2–3). - Around 12 percent of the population above 18 years of age have received Covid-19 vaccines as of end-September 2021. - Continue tax rebate on essential goods and food distribution program to support the population. - Business environment and social safety nets: - Adopted a business reform program and improving targeting of social safety nets (MEFP¶¶30-31). - Measures underway or envisaged: facilitate setting-up of new businesses; prepare service-level agreement with NAWEC to reduce waiting times for electricity connection; implement single window web-based platform to accelerate customs clearance (supported by the European Commission); reduce business registration fee. - Expand social registry to additional six districts (proposed SB for end-June 2022). - Medium-term policy priorities (MEFP¶¶28, and 32–33): - Expand access to finance: formal financial services estimated at 30 percent access; only 5 percent use bank service and 14 percent use non-bank financial services. Prompt finalization and implementation of the financial inclusion strategy recommended. - Digitalization: about 90 percent of Gambians live within 10 km of the fiber optic node and 98 percent are covered by mobile cellular network; remove regulatory barriers to foster competition and improve access, affordability, and reliability. - Strengthen governance: progress since 2016-17; Anti-Corruption bill expected to be adopted by the National Assembly by end-2021. - Empower women and youth: continue legislative agenda on human rights, access to information, women enterprise, and gender discrimination; prepare gender-budgeting roadmap. - Climate-related policies: The Gambia highly vulnerable to climate change; Climate Action Tracker finds The Gambia the only country globally with plans deemed compatible with Paris Agreement goals; mitigation and adaptation actions underway including Renewable Energy Act, 2013 and restoration of forests and mangroves. ### Authorities’ views - Authorities agree with staff recommendations to support inclusive post-pandemic recovery and cited measures already undertaken: containment actions, support to livelihoods, progress on financial inclusion and digitalization (including digital money transfer and public sector salary payments), and measures to alleviate pandemic impact on women. - Authorities emphasized targeted government support and avoiding across-the-board allowances. ### Policy discussions — Immediate spending needs and debt sustainability - Near-term fiscal stance and challenges (MEFP¶17): - Authorities committed to remain within 2021 program fiscal parameters; end-December 2021 fiscal targets are within reach. - Revenue collection in H1 2021 underperformed. - Disbursements delayed: US$20 million World Bank budget support grant postponed to 2022; two out of five tranches of the European Union’s EUR13.5 million budget support grant likely postponed to 2022. - Vaccine coverage expansion costs and continuation of pandemic-related measures (tax rebate on essential goods and social safety nets) weigh on budget execution. - Mitigating measures: - Revenue collection improved in early H2 2021. - Vaccine support from COVAX, World Bank COVID-19 grant, and bilateral partners (Senegal, France, and the USA). - Accelerate sale of public assets recovered from previous regime following favorable court ruling. - Fast-track reforms to unlock donor disbursements, including public procurement act. - Strengthen tax exemptions governance: - Cabinet approved memorandum on Tax Expenditure Policy (TEP). - Consultant hired with World Bank support to implement IMF TEP mission recommendations. - Reinforced collaboration between GRA, GIEPA, Ministry of Trade, and MoFEA to control tax exemptions. - Duty remissions and exemptions declined to 0.9 percent of GDP during January-August 2021, compared with 2.5 percent of GDP and 2.8 percent of GDP during the same period in 2020 and 2019, respectively. - Spending execution stood at about 41 percent of the full-year budgeted envelope at end-June 2021, compared to an average of about 47 percent in previous years. - 2022 budget (approved by the National Assembly; MEFP¶19 and Text Table 4): - Features some consolidation while providing adequate space to support post-pandemic recovery. - Projections show an overall fiscal balance of about 3 percent of GDP, with an improvement of about 1 percentage point of GDP on both the overall and the primary fiscal balances relative to 2021. - Projections include a relaxation of 1 percentage point of GDP relative to projections at the time of the second ECF review to address COVID-19-related spending. - Under current projections, public debt would decline by about 4 percentage points of GDP in 2022; PV of public debt would fall below the 55-percent of GDP indicative threshold in 2025, a year later than projected at the time of the second review. - The draft budget includes some one-off revenue and financing sources allocated for one-off spending items and projects. - The draft 2022 budget was submitted to the National Assembly (prior action) and approved by the latter. *Source: 1gmbea2021003 - 0.8 percent at end-2020.* ### 2022. Tax revenue is projected ### 2022. Tax revenue is projected ### Revenue projections and composition - Tax revenue is projected at 11.0 percent of GDP, supported by strong revenue administration measures, including use of the electronic payment platform and an upgraded tax registry, more frequent tax audits and data matching to ensure compliance (particularly in the commercial real estate sector where a Rental Property Survey has been conducted) and the continued rationalization of tax exemptions initiated in 2021. - Nontax revenues are projected at 4.2 percent of GDP, boosted by a one-off US$30 million (1.4 percent of GDP) receipt from the petroleum sector and further sale of stolen assets. - Text Table 4 (Key Fiscal Indicators, 2021–22, in percent of GDP) — selected figures: - Revenue: 2021 Prog. 22.2; 2021 Proj. 20.8; 2022 Budget 25.8 - Domestic Revenue: 14.2; 14.8; 15.2 - o/w Taxes: 11.2; 10.9; 11.0 - Grants: 8.0; 5.9; 10.6 - o/w Budget support: 2.4; 1.0; 2.3 - Expenditures: 26.3; 24.8; 28.8 - Expenses: 15.9; 15.2; 15.0 - Compensation of employees: 4.8; 4.5; 4.4 - Use of goods and services: 3.9; 3.6; 3.4 - Interest: 2.7; 2.8; 3.0 - Subsidies: 4.5; 4.3; 4.2 - Capital investment: 10.5; 9.6; 13.8 - Net lending (+)/borrowing (–): -4.1; -4.0; -3.0 - Financing: 4.1; 4.0; 3.0 - Net acquisition of financial assets: -0.2; -0.2; 0.8 - Net incurrence of liabilities: 4.3; 4.2; 2.3 - Domestic: 2.5; 2.8; 1.1 - Net borrowing: 1.2; 1.2; 0.6 - RCF/ECF/SDR (Onlent): 2.2; 2.1; 0.9 - Change in arrears: -0.9; -0.5; -0.4 - Foreign: 1.7; 1.4; 1.2 - Exceptional Financing (DSSI): 0.1; 0.0; 0.0 - Statistical discrepancy: 0.0; 0.0; 0.0 - Memorandum items: - Domestic primary balance: -1.1; 0.5; 0.5 - Primary balance: -1.4; -1.2; -0.1 ### Grants, donor support, and one-offs - The World Bank’s US$20 million and the European Union’s EUR5.4 million budget supports have been shifted from 2021 to 2022. - The World Bank indicated they are no longer planning an additional budget support of US$15 million originally envisaged for 2022. - The budget includes anticipated proceeds from a one-off privatization (preparations advanced) and uses US$20 million from the US$85 million SDR general allocation to The Gambia to create space for pandemic-related spending. ### Spending priorities and COVID-19 measures - The budget comprises a provision of one billion dalasi for pandemic-related spending (vaccination logistics, running COVID-19 hospitalization centers, medical supplies, other pandemic-driven needs). - Domestically financed investment at 2.6 percent of GDP, marginally below its 2021 level; over half reserved for completion of the Banjul Rehabilitation Project and the Bertil-Harding Highway (one-off infrastructure projects for OIC conference). - Text Table 5 (COVID-19 Spending, 2020–22, in percent of GDP) — selected figures: - Prevention, containment, and management: 2020 1.5; 2021 1.0; 2022 1.0 - Support to households: 2020 1.2; 2021 0.0; 2022 0.0 - Support to businesses, SOEs, government entities: 2020 0.9; 2021 0.0; 2022 0.0 - Total additional spending: 2020 3.6; 2021 1.0; 2022 1.0 ### Financing and domestic market implications - Net domestic borrowing of GMD 659 million (0.6 percent of GDP) intended to leave sufficient space on the domestic financial market for private sector credit. - Anticipated proceeds from one-off privatization and SDR use noted above support the financing plan. ### Structural and revenue administration reforms - Revenue administration reforms anchored on GRA’s 2020-24 Corporate Strategic Plan, building on IMF’s 2018 TADAT recommendations. - Planned measures and targets (proposed SB dates as noted): - Revise legal framework governing business incentives under the GIEPA act in line with tax expenditure policy (unobserved end-June 2021 SB, proposed reset to end-December 2021). - Adopt a taxpayer charter to improve GRA relationship with taxpayers (proposed SB for end-June 2022). - Approve an accurate tax ledger for large taxpayers (proposed SB for end-September 2022). - Audit at least five companies holding special investment certificates (SIC) to verify tax exemptions (proposed SB for end-December 2022). - PFM reforms based on 2019 PIMA; measures include aligning draft SOE bill to existing constitution for Parliament submission (SB end-December 2021), publishing audited SOE financial statements (proposed SB end-December 2021), identifying key financial indicators for SOEs, extending performance contracts with MoFEA to three additional key SOEs (proposed SB for end-September 2022), operationalizing new Directorate of SOE oversight within the Ministry of Finance, clarifying cross debts among key SOEs, and progressing on Public Finance bill (SB proposed reset from end-December 2021 to end-June 2022). - Transparency measures: publication of all COVID-19-related procurement contracts and beneficial owners up to end-June 2021; NAO completing ex-post audits (reports expected proposed SB for end-March 2022); publication of COVID-19-related spending in monthly budget execution reports to resume from October 2021. ### Debt sustainability, external position, and medium-term needs - Debt Sustainability Analysis (DSA) results: - Overall and external debt distress risk ratings remain high; public debt continues to be deemed sustainable. - Temporary breaches of indicative thresholds for external debt service indicators persist due to weak early export projections and expiration of debt deferrals. - Data reconciliation with bilateral creditors resulted in upward revision to debt service payments (a cumulative increase of about 4 percent of GDP in 2021-30) and the stock of external debt (by 6.1 percentage points of GDP in 2020). - Authorities will increase frequency of data reconciliation exercises with creditors from annual to bi-annual and improve coordination between the debt directorate and managers of foreign-financed projects. - Staff estimates on infrastructure gap and financing needs: - Infrastructure gap relative to SDG-level needs in electricity, roads, and water and sanitation would amount to about 15 percent of GDP. - This translates into an average additional annual investment need of about 5.3 percent of GDP in 2021–30. - Policy options to address trade-off between spending needs and debt vulnerabilities include domestic revenue mobilization, higher public spending efficiency, collaboration with development partners, enhancement of private sector financing, and prudent borrowing. - Staff estimates tax collection efforts are about 6-16 percent below best performing peer countries; improving domestic revenue mobilization could cover 1-1.5 percent of GDP out of the additional annual financing need of 5.3 percent of GDP. - Strengthening spending efficiency could cover a similar magnitude. - Benchmarking suggests educational outcomes could be improved by about 10 percent and public investment outcomes by 10-13 percent with unchanged spending. - Agreed borrowing plan: seek concessional financing (preferably grants) for projects to narrow the infrastructure gap; follow the agreed borrowing plan. ### Authorities’ views - Authorities concur with staff recommendations on fiscal policy and acknowledge the need to balance financing needs and debt vulnerabilities. - They highlight strong fiscal discipline measures (strict cash management, aligning spending with available resources) and commit to enhance domestic revenue mobilization and spending efficiency. - Authorities plan to involve the private sector in infrastructure projects, minimize fiscal risks from OIC-related projects drawing on experience from African Union summit in 2006, and rely primarily on grants and highly concessional borrowing to finance the infrastructure gap. ### Financial sector and external stability - Near-term monetary policy: accommodative stance to remain unchanged given slight easing of inflation pressures in August and fragile recovery; if inflation re-emerges, liquidity is ample, and private credit grows robustly, tighten by tempering central bank forex purchases and increasing the deposit facility rate. - Central Bank of The Gambia (CBG) actions: - Continue strengthening oversight and capacity per IMF 2020 safeguards assessment. - Review financial situation of banks and NBFIs, withdraw remaining case-by-case supervisory forbearance progressively, strengthen crisis preparedness. - Complete development of internal framework to guide banking sector stress testing by end-December 2021 (unobserved end-June SB, proposed reset to end-December 2021). - Continue risk-based supervision with AFRITAC West2 assistance and conduct balance sheet stress tests of two banks (proposed SB for end-September 2022). - Shore up macroprudential policy preparedness. - AML/CFT efforts: - Strengthen AML/CFT risk-based prudential supervision of banks and enhance/digitize suspicious transaction reporting. - Set up specialized unit at financial services department for AML/CFT and strengthen capacity of financial intelligence unit (including for potential Egmont Group membership). - External position: - External position broadly in line with fundamentals; staff analysis points to an insignificant undervaluation of the Dalasi. - Current account balance expected to deteriorate sharply in 2021 and 2022 due to subdued tourism recovery and increased imports for large infrastructure projects. - Continued record-high remittance inflows and evolution of FDI are uncertain. - Authorities should maintain a flexible exchange rate regime and maintain or strengthen external buffers; saving part of the SDR allocation of US$85 million can help. - The Gambia has not placed restrictions on payments or transfers for current international transactions nor multiple currency practices. *Source: 1gmbea2021003 - 2022. Tax revenue is projected* ### 29. The authorities broadly agreed with staff’s assessment of the external position and ### 29. The authorities broadly agreed with staff’s assessment of the external position and ### External position, exchange rate, and reserves - Authorities reaffirmed commitment to a flexible exchange rate regime and maintenance of adequate foreign exchange reserves (MEFP ¶25). - The CBG will save a large portion of the SDR allocation after on-lending US$20 million to the Treasury for one-time COVID-related financing needs, allowing gross official reserves to reach about 5 months of prospective imports in 2021-22. - CBG intervention in the forex market will be minimal and limited to preventing disorderly volatility and, if warranted, to anticipate government prospective forex transactions. - Authorities underscored the absence of exchange restrictions and multiple currency practice. - The Gambia received an SDR allocation equivalent to US$85 million (or about 4.5 percent of GDP) at end-August 2021; the authorities will use US$20 million (or about 1 percent of GDP) to address financing needs in the 2022 budget in the context of the COVID-19 pandemic. - The remainder of the general SDR allocation will be saved to strengthen external reserves. ### Balance of payments and financing needs - Annual debt servicing needs projected to double from about US$55 million during 2022–25 to about US$105 million (3-4 percent of GDP) in 2026–30. - Under the baseline scenario, the financing gap is estimated to be approximately US$151 million in 2021 and average around $62 million in the remaining two years of the program. - Nearly 30 percent of the 2021 gap is estimated to be covered by Fund financing in 2021; IMF’s share declines to 17 percent in 2022 and to 2 percent in 2023. - Donor financing is projected to amount to 10, 80 and 85 percent of the total financing gap in years 2021, 2022 and 2023 respectively. - The Fund disbursement related to the conclusion of the 3rd ECF review will help fill the balance of payments financing gap and will not be used for budget support. - Authorities reaffirmed commitment to re-engage with Venezuelan authorities to resolve outstanding arrears (contingent on international sanctions status) and are disputing arrears to Libya while engaged in ongoing discussions; a reasonable projection of amortization payments to Libya has been factored into the Fund-supported program baseline. ### Data issues and capacity building - Data provision is broadly adequate for surveillance and program review (TMU Table 2); authorities provide weekly data on some key indicators under the ECF-supported program. - Further efforts needed to bolster data collection and reconciliation for debt and external sector statistics. - With IMF support, compilation of national accounts and price statistics and provision of monetary and interest rate data have improved. - Lingering problems: data quality issues, submission delays, and economic survey financing shortfalls. - Capacity development will continue with support from STA and AFRITAC West2; EU-funded resident advisors at MoFEA and the GRA are aiding institutional capacity and program reporting. - Upcoming resident advisor for the CBG will support banking supervision and crisis preparedness. - Authorities plan to allocate adequate funds to macroeconomic statistics production and finance economic surveys; commit to bi-annual data reconciliation with creditors and improved reporting of processed disbursements to the debt management office. - CBG appreciates technical assistance on monetary forecasting and the hiring of a resident advisor on banking supervision. ### Program modalities, monitoring, and safeguards - Program reviews: performance assessed through semi-annual reviews (Table 14 and MEFP Tables 2 and 4). Except for an increase in the floor on Net International Reserves due to the general SDR allocation, the program maintains other QPCs and ITs for end-December 2021 as set in the second ECF review; staff proposes new QPCs and ITs for 2022. - Assessments at end-December 2021 and end-June 2022 will form the basis for the fourth and fifth ECF reviews. - Staff proposes postponing or setting new SBs for end-December 2021 and for 2022. - Program is fully financed with firm commitment of financing for the next twelve months and with good prospects for the remainder of the arrangement, based on information from development partners. - Safeguards assessment of the CBG completed in July 2020 (MEFP ¶24); CBG has implemented most key recommendations, including appointment of additional audit committee members and a director for IAD. - IAD reviews program monetary data at test dates; audit committee charter updated; Currency Department now handles foreign exchange cash handlings. - CBG committed to complete outstanding recommendations, including re-aligning investment policy and guidelines. ### Program risks and mitigation - Key risks: - Protracted COVID-19 pandemic delaying tourism recovery, weakening activity, increasing fiscal and BOP financing gaps, and straining the financial sector. - Government ambitious infrastructure plans posing risks to fiscal strategy and debt sustainability. - Political risk from presidential and parliamentary elections in December 2021 and April 2022 possibly disrupting reform momentum. - Mitigation measures: - Save bulk of SDR allocation to build external buffers. - Strengthen fiscal prudence and better prioritize investment projects. - Engagement with the Inter-Party Committee of all 18 political parties and National Assembly committees resulted in expressions of support for continuation of reforms under the ECF-supported program after the elections. ### Capacity to repay and debt service - The Gambia has substantial exposure to the Fund in terms of GDP, revenues, and exports relative to past UCT-quality arrangements for LICs, but capacity to repay the Fund is adequate and broadly unchanged from program approval (Table 13). - Total obligations to the Fund projected to rise over the medium term, peaking around an average of SDR 14 million in 2027–2 8, which corresponds to about 3 percent of exports of goods and services. - The Gambia has demonstrated a satisfactory track record of servicing obligations to the Fund. - Authorities committed to contingency measures as needed to achieve program objectives. ### Staff appraisal, policy recommendations, and outcomes - Growth and pandemic context: - Economic growth projected at 4.9 percent in 2021, compared with -0.2 percent in 2020. - Vaccination rate stands at 12 percent of the adult population following supplies from COVAX, World Bank, and Senegal-US-French governments. - Program performance: - Performance under the ECF-supported program broadly satisfactory; all quantitative performance criteria at end-June 2021 were met. - Budget execution aligned with the program through strict cash management. - Significant forex inflows and the recent SDR general allocation boosted reserves to more than 5 months of imports at end-September 2021. - One out of three structural benchmarks completed (use of the financial management information system); efforts continue on streamlining tax expenditure frameworks and conducting bank stress testing. - Fiscal policy recommendations: - Contain the pandemic, support recovery, and reduce debt vulnerabilities. - Vaccination campaign requires sufficient resources. - Attenuate weak revenue collection via streamlining tax exemptions and stronger revenue administration. - Prioritize spending by containing SOE subsidies and expanding investment project selection criteria. - Adhere to agreed borrowing plan and seek grants and concessional financing for infrastructure projects. - Use US$20 million from the US$85 million SDR allocation to create fiscal space in the 2022 budget; commit to transparency and accountability in such spending in 2022. - Monetary policy recommendations: - Maintain accommodative stance in near term given slight easing of inflation pressures in August and fragile recovery. - Recalibrate policy if inflation pressures re-emerge, liquidity remains ample, and private credit grows robustly: temper central bank forex purchases and increase the deposit facility rate. - Strengthen financial supervision, macroprudential tools, and crisis preparedness and management. - Structural and governance reform priorities: - Continue transparency of COVID-19 spending, complete SOE bill, anti-corruption bill, public finance bill, and public procurement act. - Implement business reform program to improve business environment, create jobs, and support recovery. - Advance digitalization, support women and youth, and adopt climate change mitigation policies for medium-term sustainable development. - Recommendation: - Staff recommends the Executive Board’s conclusion of the 2021 Article IV Consultation, modification of the end-December PC on NIR, and completion of the third review under the ECF arrangement and the associated financing assurances review. *Source: 1gmbea2021003 - 29. The authorities broadly agreed with staff’s assessment of the external position and* ### 48. Staff recommends that the next Article IV consultation take place within 24 months in ### 48. Staff recommends that the next Article IV consultation take place within 24 months in accordance with the Decision on Article IV Consultation Cycles. ### Recent economic developments - Growth: - "Following the sharp deceleration in 2020, growth is expected to somewhat recover in 2021 ... as some signs of recovery are emerging, but timid and fragile." - Real GDP growth series shown for 2014–21 with components: Other services, Tourism, Industry, Agriculture; SSA Real GDP Growth; GMB Real GDP Growth (figure context). - External and reserves: - "Large FX inflows in past years and the recent SDR allocation improved reserve coverage of imports, and confidence in the dalasi strengthened against US$." - Gross official reserves reported in Table 1: 225.0 (2019), 352.0 (2020), 352.1 (2021), and projections up to 486.8 (2026) in millions of US$; reserve coverage (months of next year's imports) reported as 4.0, 4.7, 4.7, 4.6, 5.4, 4.9, 4.7, 4.6, 4.3, 4.0 (2019–2028 context in table). - Prices: - "Inflation picked up in June 2021 due to global commodity price increases, but eased in August." - Consumer prices (average) in Table 1: 7.1, 5.9, 5.9, 6.0, 7.0, 6.3, 6.1, 5.5, 5.0, 5.0 (series through 2026). - Consumer prices (end of period) in Table 1: 7.7, 5.7, 5.7, 5.8, 6.5, 6.2, 6.0, 5.0, 5.0, 5.0. ### Fiscal sector: developments and projections - Fiscal stance and composition: - "The fiscal policy remains prudent despite challenges from COVID-19." - Large inflow of grants compensating for sluggish domestic revenue; overall spending described as "broadly prudent." - Key fiscal aggregates (Table 1, percent of GDP unless otherwise indicated): - Domestic revenue: 14.0, 13.8, 14.4, 13.8, 14.8, 15.2, 13.9, 14.2, 14.4, 14.9 (2019–2026). - Grants: 7.1, 8.1, 8.4, 7.7, 6.5, 10.7, 8.4, 7.8, 6.4, 5.7. - Total expenditures: 23.7, 24.0, 24.9, 25.5, 25.4, 28.9, 23.5, 22.4, 20.0, 20.6. - Net lending (+)/borrowing (–): -2.5, -2.1, -2.2, -4.0, -4.0, -3.0, -1.2, -0.5, 0.8, 0.0. - Primary balance: 0.6, 1.0, 1.0, -1.4, -1.2, -0.1, 1.2, 1.8, 2.8, 1.8. - Debt dynamics: - Total public debt (percent of GDP): 83.0, 77.2, 85.0, 76.7, 82.9, 77.3, 72.0, 64.4, 58.1, 53.4. - Domestic public debt: 35.8, 34.0, 36.1, 31.9, 34.0, 30.3, 27.5, 23.2, 21.3, 19.6. - External public debt (percent of GDP): 47.2, 43.2, 49.0, 44.8, 48.9, 47.0, 44.4, 41.2, 36.7, 33.8. - External public debt in millions of US$: 837.9, 820.4, 893.8, 905.6, 951.6, 987.7, 1,015.5, 1,027.7, 997.6, 987.8. - PV of overall debt-to-GDP ratio: 70.8, 67.4, 73.5, 66.7, 71.5, 66.6, 62.2, 55.8, 50.8, 46.7. - Table highlights: - "The overall fiscal deficit narrowed in 2019-20; the expansion in 2021 is in line with the program." - Domestic borrowing contained, supported by on-lending of the IMF's RCF and ECF augmentation (before the general SDR allocation). ### Monetary and external sector developments - Monetary policy and liquidity: - "The CBG relaxed monetary conditions at the onset of the COVID-19 pandemic, which expanded liquidity and helped soften T-bill yields." - Yields on 364-day T-Bills and policy rate series shown; T-bill yields resumed declining path since 2016/17 transition as liquidity eased. - Money and credit (Table 4b and Table 1): - Broad money (percent change): 27.1, 22.0, 22.0, 12.6, 11.2, 6.6, 7.2, 9.7, 9.7, 5.4 (series through 2026). - Net foreign assets (percent change): 18.9, 17.6, 17.6, 3.1, 2.6, -0.1, 3.4, 5.9, 5.1, 0.0. - Net domestic assets (percent change): 8.2, 4.4, 4.4, 9.6, 8.6, 6.7, 3.9, 3.7, 4.6, 5.5. - Credit to the private sector (percent change, memorandum): 35.8, 0.8, 0.8, 19.4, 12.9, 24.8, 16.3, 19.4, 18.5, 23.3. - Exchange rate and reserves operations: - "Private forex inflows (notably remittances) continue to surpass their historical averages, supporting strong NFA of the banking system..." - Interbank FX transactions and small CBG FX purchases used to smooth exchange rate movements and finance government’s FX debt service obligations. - Net foreign assets (in millions of US$) reported in Table 4a/4b and Table 5 (e.g., 328, 476, 476, 500, 496, 495, 490, 549, 600, 587). ### Financial sector conditions - Capitalization and liquidity: - "The financial sector is adequately capitalized with system-wide ratios above the statutory regulatory minimum." - Capital adequacy (Tier I capital / RWA) series for Deposit money banks and Microfinance institutions shown above statutory minimum. - Liquidity (Liquid assets / Total assets) remains high; system described as "highly liquid." - Credit quality and profitability: - "Private credit and its share in loan portfolios grew sharply, prior to the onset of the COVID-19 pandemic." - COVID-19 disrupted downward trend in nonperforming loans and "reduced average profitability." - Nonperforming loans (percent of gross loans) and Return on Assets (Net Income/Total Assets) series presented for 2017–21. ### Medium-term outlook and projections (2019–26) - Growth and inflation: - "Economic growth is expected to start rebounding in 2021, as remittance inflows support construction and retail trade." - Real GDP Growth (annual percent change) headline datapoint shown: 6.2, -0.2, -1, 1, 3, 5, 7, 9, 11 (contextual figure axis labels; Table 1 provides series). - Average inflation projected to drop toward the CBG's medium-term target of 5 percent. - External and fiscal paths: - "Expenditure restraint and improved tax effort, offsetting the decline in donor support, is expected to drive fiscal consolidation in the medium term." - "Public borrowing requirements are expected to lower and ... the public debt-to-GDP ratio is projected to decline steadily." - External current account deficit expected to narrow from 2023, once tourism recovers fully. - Selected projection highlights (from Table 1): - GDP at constant prices (annual percent change): 6.2, 0.0, -0.2, 4.9, 4.9, 6.0, 6.5, 6.5, 5.8, 5.6 (2019–2026). - Exports (US$ values, percent change): 23.9, -50.8, -51.2, 62.9, 57.3, 39.1, 23.1, 8.8, 8.2, 6.3. - Imports (US$ values, percent change): 14.4, -2.4, -5.0, 27.7, 33.6, 25.6, 5.0, 6.1, 2.1, 7.8. - External current account balance excluding official transfers (percent of GDP): -9.2, -8.3, -7.7, -14.5, -13.3, -18.2, -14.8, -13.0, -10.2, -10.3. - Gross investment (percent of GDP): 19.5, 19.4, 20.0, 24.2, 25.9, 27.9, 23.4, 23.4, 22.4, 23.6. ### Program-related financing, IMF support, and special facilities - Use of Fund resources (millions of SDRs, Table 1): - Disbursements: 0.0, 20.6, 20.6, 35.0, 35.0, 10.0, 5.0, 0.0, 0.0, 0.0 (series include RCF and ECF augmentation line items). - Of which: 2020 RCF ...15.6, 15.6 (noted in table). - Of which: ECF Augmentation ...20.0, 20.0. - Repayments: -4.3, -3.6, -3.6, -4.0, -3.0, -2.8, -4.1, -3.9, -5.2, -9.5. - Debt service relief under CCRT: - "The grant for debt service falling due through January 10, 2022 is available under the CCRT. Subject to availability of sufficient resources in the CCRT, debt service relief could be provided for a total period of two years, through April 13, 2022." ### Staff recommendation and timing - Article IV consultation timing: - "Staff recommends that the next Article IV consultation take place within 24 months in accordance with the Decision on Article IV Consultation Cycles." *Sources: The Gambian authorities; and IMF staff projections.* ### 1. Current account ### 1. Current account ### Goods and services (levels, US$ millions) - Goods and services: -336.5 -539.6 -521.8 -659.1 -671.1 -723.2 -732.9 -731.7 -727.4 -761.9 -755.6 -818.0 - Goods (net): -452.7 -511.9 -495.5 -629.2 -645.8 -679.0 -796.1 -696.4 -808.0 -852.7 -858.3 -928.7 - Exports, f.o.b.: 142.4 70.0 69.5 114.0 109.4 155.0 152.2 196.7 187.3 203.7 220.4 234.2 - Imports, f.o.b.: -595.1 -581.9 -565.0 -743.3 -755.1 -833.9 -948.3 -893.0 -995.3 -1056.5 -1078.7 -1162.9 - Services (net): 116.2 -27.6 -26.3 -29.8 -25.3 -44.2 63.2 -35.4 80.6 90.8 102.8 110.7 - Services exports: 226.3 82.5 82.8 121.0 116.4 197.2 220.4 233.9 242.5 264.3 285.5 304.8 - Of which: Travel income: 181.3 46.6 46.6 63.7 48.9 135.8 116.4 164.9 124.7 134.6 145.1 156.1 - Services imports: -110.1 -110.1 -109.1 -150.9 -141.7 -241.5 -157.3 -269.3 -161.8 -173.5 -182.7 -194.0 ### Income (net) - Income (net): -30.1 -31.0 -31.0 -32.1 -32.1 -32.4 -32.4 -31.2 -31.2 -32.4 -33.5 -34.8 - Income credits: 2.3 2.4 2.4 2.5 2.5 2.5 2.5 2.4 2.4 2.5 2.6 2.7 - Income debits: -32.4 -33.5 -33.5 -34.6 -34.6 -34.9 -34.9 -33.7 -33.7 -34.9 -36.2 -37.5 ### Current transfers - Current transfers (levels, US$ millions): 255.5 495.1 495.2 437.4 453.1 445.6 424.9 446.9 472.8 523.6 543.8 578.5 - Official transfers: 55.8 82.7 82.7 43.2 16.3 52.0 47.1 47.5 57.3 57.5 35.5 30.1 - Of which: COVID-19 assistance: ... 26.4 26.4 ........................... - Remittances: 187.4 400.1 400.2 381.6 424.2 380.8 365.0 385.2 401.4 451.5 493.4 533.1 - Other transfers: 12.3 12.3 12.3 12.6 12.6 12.9 12.9 14.2 14.2 14.6 14.9 15.3 ### Current account balances (levels and with prospective transfers) - Current account (excl. official transfers): -166.8 -158.3 -140.4 -296.9 -266.4 -361.9 -387.5 -363.5 -343.1 -328.2 -280.8 -304.4 - Current account (incl. prospective official transfers): -111.0 -75.5 -57.6 -253.7 -250.1 -310.0 -340.4 -316.0 -285.8 -270.6 -245.3 -274.3 ### Current account (percent of GDP) - Goods and services: -18.6 -28.4 -28.5 -32.3 -33.5 -32.5 -34.4 -31.4 -30.2 -27.5 -27.7 - Goods (net): -25.1 -26.9 -27.1 -30.8 -32.2 -30.5 -37.3 -34.8 -33.9 -31.3 -31.4 - Exports, f.o.b.: 7.9 3.7 3.8 5.6 5.5 7.0 7.1 8.1 8.1 8.1 8.0 7.9 - Imports, f.o.b.: -33.0 -30.6 -30.9 -36.4 -37.7 -37.5 -44.5 -42.9 -41.9 -39.3 -39.3 - Services (net): 6.4 -1.5 -1.4 -1.5 -1.3 -2.0 3.0 3.5 3.6 3.7 3.7 - Services exports: 12.5 4.3 4.5 5.9 5.8 8.9 10.3 10.5 10.5 10.4 10.3 - Travel income: 10.0 2.5 2.5 3.1 2.4 6.1 5.5 5.4 5.3 5.3 5.3 - Services imports: -6.1 -5.8 -6.0 -7.4 -7.1 -10.9 -7.4 -7.0 -6.9 -6.7 -6.6 - Income (net): -1.7 -1.6 -1.7 -1.6 -1.6 -1.5 -1.5 -1.3 -1.3 -1.2 -1.2 - Income credits: 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 - Income debits: -1.8 -1.8 -1.8 -1.7 -1.7 -1.6 -1.6 -1.5 -1.4 -1.3 -1.3 - Of which: Interest on government debt: 0.6 0.5 0.1 0.6 0.5 0.6 0.5 0.4 0.4 0.4 0.4 - Current transfers: 14.1 26.1 27.1 21.4 22.6 20.1 19.9 20.4 20.8 19.8 19.6 - Official transfers: 3.1 4.4 4.5 2.1 0.8 2.3 2.2 2.5 2.3 1.3 1.0 - Remittances: 10.4 21.1 21.9 18.7 21.2 17.1 17.1 17.3 17.9 18.0 18.0 - Current account (excl. official transfers): -9.2 -8.3 -7.7 -14.5 -13.3 -16.3 -18.2 -14.8 -13.0 -10.2 -10.3 - Current account (incl. prospective official transfers): -6.1 -4.0 -3.2 -12.4 -12.5 -13.9 -16.0 -12.3 -10.7 -8.9 -9.3 --- ### 2. Capital and financial account; overall balance ### Capital and financial account (levels, US$ millions) - Capital account: 73.5 66.9 66.9 110.7 103.9 123.8 179.1 130.3 136.4 137.8 139.2 139.9 - Financial account: 110.2 103.7 54.9 150.8 233.1 195.1 126.2 200.7 159.3 142.9 116.2 144.4 - Foreign direct investment: 93.4 72.3 69.3 121.0 134.5 130.7 129.5 139.7 113.6 122.6 129.5 130.4 - Portfolio investment: 4.1 4.0 3.8 3.9 3.8 4.2 4.0 4.6 4.4 4.8 5.2 5.6 - Other investment: 12.8 27.3 -18.2 25.8 94.8 60.1 -7.3 56.4 41.4 15.5 -18.5 8.4 - Capital and financial account (total): 183.7 170.5 121.8 261.4 337.0 318.8 305.2 331.0 295.8 280.6 255.4 284.3 ### Errors and omissions and overall balance - Errors and omissions: 1.6 0.0 30.9 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - Overall balance (levels): 74.3 ... 95.0 ... 70.6 8.9 -82.2 15.0 -47.3 -47.5 -25.5 -20.1 - Financing: -74.3 ... -95.0 -7.7 -70.6 -8.9 82.2 -15.0 47.3 47.5 25.5 20.1 ### Reserve changes and exceptional financing (levels, US$ millions) - Net international reserves (increase -): -74.3 ... -103.5 -15.4 -98.6 -10.0 34.0 -15.0 -10.0 -10.0 -10.0 -10.0 - Change in gross international reserves: -68.0 ... -127.1 -60.2 -144.4 -20.5 23.6 -16.4 -11.4 -4.3 -2.3 4.1 - Use of IMF resources (net): -6.3 ... 23.6 44.8 45.8 10.5 10.4 1.4 1.4 -5.7 -7.7 -14.1 - Exceptional financing: 0.0 ... 8.4 7.7 5.7 1.1 1.1 0.0 0.0 0.0 0.0 0.0 - Of which: CCRT debt relief: ... 4.4 4.4 5.7 5.7 1.1 1.1 0.0 0.0 0.0 0.0 0.0 - Of which: DSSI: ... 4.0 4.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - Prospective donor financing: 0.0 ... 0.0 ... 22.4 ... 47.1 57.3 57.5 35.5 30.1 - Budget support grants: 16.3 47.1 57.3 57.5 35.5 30.1 - Project support grants: 6.1 ............... --- ### Reserves, external accounts, and indicators (memorandum items) - Gross international reserves (US$ millions): 225.0 352.0 352.1 412.3 496.5 432.8 472.9 449.1 484.3 488.5 490.9 486.8 - Months of next year's imports of goods and services: 4.0 4.7 4.7 4.6 5.4 4.5 4.9 4.5 4.7 4.6 4.3 4.0 - Gross international reserves (w/o SDR allocation): 225.0 ... 352.1 ... 411.5 ... 387.9 ... 399.3 403.5 405.9 401.8 - Months of next year's imports (w/o SDR allocation): 4.0 ... 4.7 ... 4.5 ... 4.0 ... 3.9 3.8 3.6 3.3 - Net international reserves (US$ millions): 187.4 290.9 290.9 306.3 394.5 316.3 361.1 331.3 363.4 367.7 371.3 374.5 - Months of next year's imports: 3.3 3.9 3.9 3.4 4.3 3.3 3.7 3.3 3.5 3.5 3.3 3.1 - Exports of goods and services: 368.8 152.5 152.4 235.1 225.7 352.2 372.6 430.6 429.8 468.1 505.9 538.9 - Imports of goods and services: -705.2 -692.1 -674.1 -894.1 -896.8 -1075.4 -1105.5 -1162.3 -1157.2 -1230.0 -1261.4 -1356.9 - GMD per U.S. dollar, period average: 50.3 51.6 51.6 ........................... - External Debt service: 83.9 ... 33.2 ... 58.4 ... 48.3 ... 49.7 55.8 80.2 91.3 - NIR/External Debt Service (ratio): 2.2 ... 8.8 ... 6.7 ... 7.4 ... 7.4 6.7 4.8 4.3 --- ### External financing needs (Table 7, US$ millions) - 1. Total financing requirement: -320.4 -280.2 -387.2 -459.0 -413.6 -402.3 -394.1 - Current account deficit (excl. official transfers): -158.3 -140.4 -296.9 -266.4 -361.9 -387.5 -343.1 - Public debt amortization: -30.1 -7.8 -24.6 -44.1 -27.2 -34.5 -33.8 - Repayment to the IMF: -5.0 -5.0 -5.5 -4.1 -4.1 -4.0 -5.9 - Change in official reserves: -127.0 -127.1 -60.2 -144.4 -20.5 23.6 -11.4 - 2. Total financing sources: 179.0 138.9 279.7 380.9 346.0 339.7 329.5 - Capital transfers: 45.3 45.3 104.6 103.9 123.8 179.1 136.4 - Foreign direct investment (net): 72.3 69.3 121.0 134.5 130.7 129.5 113.6 - Portfolio investment (net): 4.0 3.8 3.9 3.8 4.2 4.0 4.4 - Public sector debt financing: 36.2 36.2 59.7 55.8 69.2 60.1 60.1 - Other net capital inflows: 21.2 -15.8 -9.5 83.0 18.0 -33.0 15.0 - 3. Total financing needs (gap): 141.4 141.4 107.5 78.1 67.7 62.6 64.6 - Budget support (grants): 82.7 82.7 43.2 16.3 52.0 47.1 57.3 - European Union: 38.0 38.0 23.2 16.3 20.0 19.8 21.3 - African Development Bank: 14.8 14.8 ......... 7.2 5.8 - Other current transfers: 21.6 21.6 6.1 6.1 ......... - IMF disbursements: 28.6 28.6 50.6 50.1 14.6 14.4 7.3 - Of which: ECF augmentation: ...... 28.9 28.6 ......... - Exceptional financing: 8.4 8.4 7.7 5.7 ... 1.1 0.0 - Of which: CCRT debt relief: 4.4 4.4 5.7 5.7 1.1 1.1 0.0 - Of which: DSSI: 4.0 4.0 2.0 0.0 1.1 0.0 0.0 - Memorandum: - Total WB financing ... 83.9 ... 81.7 ... 111.7 125.9 - COVID-19 assistance: 48.0 48.0 6.1 6.1 ......... --- ### Decomposition of public debt and debt service by creditor (Table 8) - Total public debt (US$ millions): 1,552.3 (2020) — 100.0 percent — 84.9 (percent GDP) - External debt (US$ millions / percent total debt): 893.8 / 57.6 - Multilateral creditors: 593.9 / 38.3 - IMF: 60.5 - World Bank: 127.8 / 8.2 - ADB/AfDB/IADB: 62.4 / 4.0 - Other Multilaterals (o/w IsDB and OFID): 346.6 / 22.3 (o/w IsDB and OFID 209.5 / 13.5) - Bilateral creditors: 266.3 / 17.2 - Paris Club: 2.9 / 0.2 - Non-Paris Club: 263.4 / 17.0 (o/w Saudi and Kuwait Fund 134.3 / 8.7) - Commercial creditors: 33.6 / 2.2 (o/w M.A. Kharafi and Sons 33.6 / 2.2) - Domestic debt: 658.4 / 42.4 - T-Bills: 369.2 / 23.8 - Bonds: 289.3 / 18.6 - Nominal GDP: 1,827.6 (millions US$) / 117.7 / 100.0 - Note: Some public debt is not shown in the table due to capacity constraints. Plans to fill the data gaps will be discussed at subsequent program reviews. --- ### Banking sector financial soundness indicators (Table 9, selected) - Capital adequacy ratio: 33.1 38.2 33.6 31.7 31.4 32.6 31.8 28.3 - Regulatory capital ratio (T1+T2): 34.8 39.8 35.1 33.0 32.7 33.8 32.9 29.5 - Primary capital ratio (T1): 31.4 35.9 31.9 30.3 30.1 31.1 30.4 27.0 - Non-performing loans/Primary capital: 7.9 9.8 6.8 3.4 5.8 7.8 8.9 6.4 - Sectoral distribution of credit (selected): - Agriculture and fishing: 3.6 6.5 8.5 1.7 2.0 3.8 3.5 2.7 - Building and construction: 8.5 9.9 13.7 19.7 27.3 27.6 30.1 30.4 - Commerce: 39.4 31.2 31.1 31.2 22.9 23.4 22.4 20.5 - Tourism: 2.6 2.4 5.2 10.8 5.6 5.6 4.3 4.0 - Asset quality ratios: - Non-performing loan ratio: 6.5 9.3 7.2 3.3 4.5 6.8 7.7 5.6 - Loan loss reserve ratio: 4.6 6.8 6.6 2.9 2.5 4.0 4.2 4.3 - Profitability and liquidity: - Net income to average assets (ROA): 0.5 0.7 1.6 1.6 1.9 2.1 1.5 - Net income to average equity (ROE): 3.5 4.2 11.0 11.3 15.4 15.3 17.7 14.3 - Net interest margin: 1.8 1.9 8.1 5.9 6.5 6.5 5.9 5.2 - Liquid assets ratio: 93.4 101.3 92.9 94.8 92.0 93.5 94.3 94.0 --- ### Indicators of capacity to repay the Fund (Table 10) - Principal repayments (millions of SDRs): 1.09 2.80 4.04 3.89 5.17 9.44 12.44 10.11 (2021–2028 act./proj. series) - Charges and interest (millions of SDRs): 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 - Total obligations (in millions of SDRs): 1.10 2.81 4.05 3.90 5.18 9.45 13.95 13.62 - Total obligations (in millions of US$): 1.57 4.06 5.91 5.74 7.68 14.09 20.49 20.08 - In percent of Gross International Reserves: 0.32 0.86 1.22 1.17 1.56 2.89 4.53 4.96 - In percent of exports of goods and services: 1.30 1.92 2.58 2.31 2.86 4.89 6.65 6.08 - In percent of debt service: 3.28 10.06 14.96 12.09 10.12 16.17 21.34 20.24 - Outstanding Fund credit (millions of SDRs): 74.05 81.26 82.21 78.33 73.16 63.72 49.78 36.17 - Outstanding Fund credit (millions of US$): 105.96 117.32 119.92 115.20 108.40 94.98 73.12 53.32 - Outstanding Fund credit as percent of Gross International Reserves: 21.34 24.81 24.76 23.58 22.08 19.51 16.17 13.17 - Net use of Fund credit (millions of SDRs): 32.04 7.19 0.94 -3.90 -5.18 -9.46 -13.96 -13.62 - Disbursements (millions of SDRs): 35.00 10.00 5.00 0.00 0.00 0.00 0.00 0.00 - Of which: ECF disbursements: 35.00 10.00 5.00 0.00 0.00 0.00 0.00 0.00 - Repayments and repurchases (millions of SDRs): 2.96 2.81 4.06 3.90 5.18 9.46 13.96 13.62 - CCR Trust debt relief: 3.97 0.78 0.00 0.00 0.00 0.00 0.00 0.00 - Memorandum: - Nominal GDP (millions of US$): 2,003.68 2,132.34 2,318.90 2,518.76 2,745.53 2,956.47 3,199.59 3,454.15 - Exports of goods and services (millions of US$): 120.94 210.84 229.42 248.83 268.62 287.80 308.32 330.13 - Gross International Reserves (millions of US$): 496.52 472.90 484.27 488.54 490.86 486.76 452.10 404.90 - Debt service (millions of US$): 48.00 40.35 39.50 47.43 75.83 87.11 96.02 99.19 - Quota (millions of SDRs): 62.2 62.2 62.2 62.2 62.2 62.2 62.2 62.2 --- ### Disbursements under the ECF Arrangement (Table 11) - March 23, 2020: 5.00 (millions of SDR) — 8.04 percent of quota — Approval of the Arrangement. - September 15, 2020: 20.00 — 32.15 percent of quota — Board completion of the first review based on observance of performance criteria for June 30, 2020. - March 15, 2021: 10.00 — 16.08 percent of quota — Board completion of the second review based on observance of performance criteria for December 31, 2020. - September 15, 2021: 5.00 — 8.04 percent of quota — Board completion of the third review based on observance of performance criteria for June 30, 2021. - March 15, 2022: 5.00 — 8.04 percent of quota — Board completion of the fourth review based on observance of performance criteria for December 31, 2021. - September 15, 2022: 5.00 — 8.04 percent of quota — Board completion of the fifth review based on observance of performance criteria for June 30, 2022. - March 15, 2023: 5.00 — 8.04 percent of quota — Board completion of the sixth review based on observance of performance criteria for December 31, 2022. - Total Disbursements: 55.08 (millions of SDR) — 88.4 percent of quota --- ### Key policy recommendations from 2017 Article IV Consultation and implementation status (Annex I) - Fiscal policy - Implement delayed revenue measures. - Status: "The recommendations from the 2018 TADAT were translated into a strategic reform plan (2020–24) that is being implemented with TA support." - Stolen asset sales continuing following Janneh Commission findings and the government’s White Paper. - Develop a MTEF as a forward-looking anchor to fiscal policy. - Status: "The Gambia produced its first 3-year MTEF in 2019 to guide the 2020 budget. It is being updated for annual budget preparations." - Debt policy - Carefully prioritize and sequence investment projects; possibly delay some debt-financed projects. - Status: PIMA mission and follow-up missions, development of a project selection tool for the Strategic Review Board (GSRB); GSRB evaluating externally financed and PPP projects; capacity development on investment evaluation tools in February and June 2020. - Refrain from contracting large new debt or contingent liabilities. - Status: "The Gambia has been prudent in contracting new debt. In 2020, out of the US$60 million approved in the borrowing plan only US$12 million were contracted. Similarly, no new debt has been contracted yet under the US$115 million borrowing ceiling for 2021. External borrowing by SOEs has been set to zero and all domestic borrowing is subject to the MOFEA’s approval." - Continue medium-term debt strategy, including maturity lengthening of domestic debt. - Status: Debt strategy prepared focused on lengthening debt maturity; quarterly debt bulletin; monthly bond issuances published on MOFEA and CBG websites. - Monetary and exchange rate policies - Strengthen central bank independence and operational effectiveness; improve liquidity management, forecasting, and overnight settlement facilities. - Status: "The CBG has transitioned to inflation targeting lite, established its own bills for monetary policy purposes, and holds quarterly monetary policy meetings. It is following up on provisions in the ongoing discussions under a new Constitution that seem to narrow its independence." - Maintain a flexible exchange rate to support rebuilding reserves. - Status: "The CBG maintains a de jure free flexible exchange rate regime and an exchange system free from restrictions and multiple currency practices. Its presence in the FX market is very limited and solely on the purchasing side to anticipate government’s forex transactions and prevent disorderly dalasi volatility." - Financial sector - Safeguard financial sector stability. - Status: "The CBG has changed on-site examination of financial institutions from a compliance-based to a risk-based system. It has strengthened its surveillance and is examining all banks annually." - Promote credit information systems and collateral registries; foster financial literacy and inclusion. - Status: "With support from Alliance for Financial Inclusion (AFI), the CBG is setting up a credit reference bureau, and has drafted the National Financial Inclusion Strategy 2020–25. Plans are afoot to promote digital financial inclusion including the use of E-wallets and other digital solutions." - Structural policies - Rehabilitate and reform SOEs with World Bank support to protect fiscal outcomes and improve service delivery. - Status: Measures enacted to improve governance and financial management of SOEs; special purpose audits on fiscally important SOEs; Government signed MOU with NAWEC and absorbed 75 percent of its debt; new SOE bill drafted, approval pending adoption of new Constitution. - Reduce income and gender inequalities. - Status: National Development Plan 2018–21 identifies women’s empowerment as cross-cutting priority; authorities plan to adopt gender budgeting approach with TA. *Sources: The Gambian authorities; and IMF staff estimates and projections.* ### Annex II. Impact of COVID-19 Pandemic and Responses, ### Annex II. Impact of COVID-19 Pandemic and Responses, 2020–21 ### Public Health: Infection spread and response - Findings: - From the first infection case recorded on March 18, the spread of COVID-19 infections remained slow until the easing of the lockdown conditions, which subsequently led to a sudden spike in new cases including through local transmission. - The number of confirmed cases reached 146 as of July 23, with 5 fatalities and continued to accelerate until mid-September when the first wave of infections started to subside. - Following the Christmas break and the surge in cases in Senegal, the country experienced a second wave of COVID-19 infections involving new strains of the virus that were less severe than the first wave. - As the region enters a third wave, the number of cases has accelerated starting July surpassing the level infection observed at the onset of the first wave in 2020. - Increased demand and pressure on health facilities and the use of PPEs. - The authorities’ responses: - Locked down and declared a state of public health emergency on March 27. - Closed the airspace, land and sea borders. - Closed schools, places of worship, markets and non-essential businesses and limited public gatherings to 10 people. - Limited passenger numbers in commercial vehicles to half capacity. - Imposed a curfew during the pick of the first wave of the pandemic in the third quarter of 2020. - Procured PPEs and additional medical supplies from Turkey and benefitted from development partners’ support including from the World Bank, EU, China and the Jack Ma Foundation. - Identified facilities and built new ones for quarantine and treatment purposes across the country. - Required testing and quarantine for incoming travelers, and recently, for passengers coming from countries affected by new strains of the virus. - Worked under the African Union’s COVAX initiative and with World Bank support to procure and roll-out the COVID-19 vaccines. ### Social impact and measures - Findings: - Surge in the price of essential commodities. - Lack of market access for local onions and horticultural products. - Loss of employment and earnings/salaries due to market closures, business closures and layoffs, affecting families live and livelihoods. - Suspension of in-person learning in schools and universities. - Reduced demand for non-COVID-19 health services. - The authorities’ responses: - Froze the price, and banned the re-export, of all essential commodities. - Partnered with the private sector to organize supply chains and imposed a temporal ban on onions import. - Provided GMD 850 million food aid targeting 84 percent of households and GMD 224 million food support to be distributed through the WFP. - Partnered with the UNDP, World Bank, WFP, UNICEF and FAO to make cash handouts to vulnerable households, some formal and informal sector employees, and women, and provided seeds and fertilizers to farmers. - Introduced E-learning (via public and private media) in schools and universities and switched to conducting regular lessons on radio and televisions. ### Economic impact: Tourism, trade, and recovery support - Findings: - Airport arrivals dropped by 62 percent in 2020. - Non-essential private and public businesses were closed, or their activities reduced to a bare minimum. - Re-export trade suffered from border closures. - Remittance inflows increased by 77 percent in 2020 and by 24 percent in the first half of 2021. - The authorities’ responses: - Are using hotels as quarantine facilities. - Provided GMD 100 million to support the comprehensive recovery plan with end-to-end safe travel experience, prepared by the tourism corporations with the support of the IMF and other development partners. - Are supporting municipalities, the Gambia Tourism Board and the Gambia aviation services affected by the absence of tourists. - Accelerated the airport renewal plan to enhance safety and security in the context of COVID-19. - The border reopening in Q4 and implementation of stimulus package of the SAP (which was expanded in the2021 budget) supported economic activities. ### Fiscal effects and policy support - Findings: - Companies faced difficulties in meeting tax obligations and filing of tax returns. - Slowdown in revenue intake prompted the GRA to revise downward its annual revenue target for 2020 by 2.2 percent of GDP. The actual shortfall turned out to be much lower and tax revenue reached 10.8 percent of GDP. - In 2021, revenue performance in Q1 was lower than projected due shortfall in corporate income tax suffering from the economic downturn in 2020. - Increased spending on health and COVID-19 containment programs (0.8 percent of GDP). - The authorities’ responses: - Extended the filing and payment of the 2019 and 2020Q1 tax returns until end-Q2. Provided tax break on rice and PPEs equipment. - Requested (and the IMF Board approved) a US$21.3 million (25 percent of quota) support under the RCF; requested (and IMF board approved) a US$28.8 million (32.15 percent of quota) ECF augmentation; benefitted from the CCRT, and are participating in the G20 DSSI. - Secured additional support from the AfDB, EU (partly frontloaded) and the World Bank disbursed COVID-assistance funds to help address the health and socio-economic impact of the pandemic. This, together with the IMF emergency assistance and a list of new spending priorities, was included in a Supplementary Appropriation Bill (SAP) that was approved by the National Assembly. - Prepared and approved a 2021 budget that includes enough resources to address the foreseen COVID-19 spending and a post pandemic recovery stimulus package as well as contingencies to address potential surges in infections. - Opened a dedicated project account for COVID-19-related spending in 2020, reinforced the Internal Audit’s presence at the Ministry of Health, published details of COVID-19-related spending and procurement contracts and initiated the audit of the COVID-19 spending, with a view to enhance transparency in the use of the COVID-19 resources. ### Banking system effects and supervisory actions - Findings: - Financial intermediation moderated since 2020Q1, with some tourist operators having problems servicing loans. - Credit growth dipped to 0.8 percent at end-2020 (was 35.8 percent in 2019). - F/X currency transport abroad ceased. - CBR problems heightened, disrupting trade financing. - Record high private FX inflows, resulting in a large accumulation of foreign assets by the CBG and the banks, driving a strong growth in broad money. - The authorities’ responses: - Reduced (i) the policy rate by 50 bps and increased the special deposit rate by the same amount in February 2020, and (ii) the policy rate and the statutory reserve requirements on banks by 200 bps to 10 percent and 13 percent respectively, in May 2020. - Are standing ready to discuss, on a bank-by-bank basis, client-specific loan servicing problems and advise on their resolution. - Strengthened banking supervision and re-prioritized (including frontloading TA on stress testing and crisis preparedness) in a strategic plan of actions to address the recommendations from the 2019 FSSR. ### Risk Assessment Matrix: Key risks and policy responses - External: Global resurgence of the Covid-19 pandemic - Relative Likelihood: Medium - Impact if Realized: High - Policy responses: - Strengthen government fiscal social and health response to pandemic. Prioritize infrastructure projects with high fiscal multipliers and value-for-money. - Strengthen regional cross-border pandemic response. - Roll out targeted support for tourism, construction and services sectors for previously well-run and profitable corporates. - External: Rising commodity prices amid bouts of volatility - Relative Likelihood: Medium - Impact if Realized: High - Policy responses: - Provide targeted support to vulnerable households. - Strengthen the fiscal oversight of NAWEC. - Accelerate implementation of national energy roadmap with World Bank support, including use of alternative energy production methods. - Higher frequency and severity of natural disasters related to climate change - Relative Likelihood: Medium - Impact if Realized: High - Policy responses: - Strengthen food security and rural feeding programs. - Build up fiscal and reserve buffers. - Build resilience to natural disasters. - Weak fiscal management - Relative Likelihood: Medium/ High - Impact if Realized: Medium - Policy responses: - Implement TA recommendations on PFM, cash management and budget execution. - Identify additional fiscal measures to create fiscal space for crisis support. - Implement SOE reforms. - Social discontent and political instability - Relative Likelihood: Medium - Impact if Realized: High - Policy responses: - Give priority to socio-economic stability and strengthen COVID-19 response. - Involve CSOs in policy decisions. - Implement findings from governance commissions. - Financial instability - Relative Likelihood: Low - Impact if Realized: Medium - Policy responses: - Increase provisions and capital to absorb losses; maintain prudential standards. - Discuss loan reprofiling for clients with strong business models. - Implement FSSR recommendations. - Ensure banks retain retail banking units to support private sector recovery. ### External Sector Assessment: Overall assessment and trajectories - Overall Assessment: - The external position of the Gambia in 2020 was broadly in line with the level implied by fundamentals and desirable policies. - Staff assess that the current account deficit (at 3.2 percent of GDP), after adjusting for cyclical and transitory factors related to the pandemic, was between 0-0.4 percent of GDP below the estimated norm, implying real effective exchange rate undervaluation in the range of 0.0-2.3 percent. - The current account balance external position is expected to deteriorate significantly in 2021, on the back of subdued recovery in tourism and increased imports related to large infrastructure projects. - Moving forward, lower-than-expected current transfers and the upcoming expiry of debt service deferrals are expected to exacerbate pressure on foreign exchange reserves. - Potential Policy Responses: - Exchange rate flexibility in the context of continued structural reforms and fiscal consolidation will help sustain The Gambia’s external position. - Maintaining strong external buffers is essential, considering the heightened vulnerabilities due to the COVID-19 shock and in anticipation of the conclusion of debt deferrals. ### Foreign assets and liabilities: position and trajectory (2020) - Background and assessment: - The Gambia’s net international investment position (NIIP) has gradually improved since 2014, reaching approximately -65 percent of GDP in 2020. - External debt and FDI liabilities have been the primary drivers of the Gambia’s NIIP, with a sizeable share of the liabilities denominated in US dollars. - Gross liabilities in 2020 were around 98 percent of GDP, half of which were debt liabilities. - FX reserves, which dropped to their lowest level in 2016, have been rising on the back of strong FX inflows due to robust inflows of remittances, private capital transfers, and budget support grants. - Efforts to ensure external debt sustainability would help improve the NIIP position in the medium term, while the persistent current account deficit remains a key contributing factor. - Limits set on external borrowing under the current ECF arrangement and a continued build-up of FX reserves buffers by the Central Bank of The Gambia (CBG) will help maintain external sustainability. - Key 2020 figures (percent of GDP): - NIIP: -65.5 - Gross Assets: 32.5 - Debt Assets: 13.6 - Gross Liabilities: -98.0 - Debt Liabilities: -47.3 ### Current account: drivers and outlook - Background and assessment: - The current account balance improved in 2020 despite the COVID-19 shock and the resulting halt in foreign tourism. This was primarily driven by strong current transfers, including disbursement of COVID-related budget support and a surge in remittances. - The current account deficit is expected to deteriorate significantly in 2021, on the back of a persistent slump in tourism and an uptick in imports related to ongoing large infrastructure projects. - Downward revisions to the current transfers in 2021, particularly budget support grants from donors, is expected to further weigh on the C/A deficit for the year. - The EBA-lite methodology’s current account (CA) approach produces a current account gap of 0.4 percent of GDP, after including adjustors to the current account for the temporary impact of the pandemic on tourism, oil imports, and remittances. An additional adjustor for COVID-related official transfers was also included. - This gap is associated with an adjusted current account deficit of -3.2 percent of GDP against a norm of -3.6 percent of GDP. - The CA gap of 0.4 percent of GDP is consistent with a REER undervaluation of 2.3 percent. The biggest drivers of the relative policy gap are the fiscal balance and the public health expenditure. ### Real exchange rate: assessment - Background and assessment: - The real exchange rate initially depreciated in the wake of the pandemic but stabilized towards the end of 2020 on the back of strong inflows of financial support from development partners and remittances. - Going forward, the real exchange rate is expected to continue to appreciate as the competitiveness of The Gambian economy is expected to strengthen through structural reforms and private and public investment. - The CA approach of the EBA-lite model implies an undervaluation of 2.3 percent, while the REER model implies marginal overvaluation of 0.5 percent. - Given the historically poor fit of the REER model for The Gambia, and the large residuals, staff assess that the real exchange rate is broadly in line with fundamentals as suggested by the undervaluation in the range of 0.0–2.3 percent, consistent with the CA gap (excess surplus) in the range 0.0–0.4 percent of GDP. ### Capital and financial accounts: flows and outlook - Background and assessment: - The Gambia’s capital account weakened from 4.1 percent of GDP in 2019 to 3.7 percent in 2020, as disbursements of project (i.e., capital) grants fell on the back of a slowdown in project execution in the wake of the pandemic. - The financial account showed a moderate deterioration, declining from 6.1 percent of GDP in 2019 to 4.7 percent in 2020, due to a drop in project loan disbursements and FDI. - Data reconciliation with donors and creditors on project grants and loan disbursements is expected to translate into downward revisions to the capital and financial account balances between 2021-2025. - Strong capital and financial accounts, together with improvements in the current account, have raised the overall balance-of-payments surplus. - Despite downward revisions to the capital and financial account balances due to data reconciliation with donors and creditors, net capital and financial flows are expected to be sustained over the medium term. ### FX intervention and reserves level - Background and assessment: - Gross international reserves stood at US$352.1 million in 2020, which is 19 percent of GDP or 4.7 months of prospective imports. - Gross reserves have risen markedly from a recent trough of US$60 million in 2016. - Reserves have risen by around US$ 170 million since end-2020, to over US$ 520 million in September 2021, on the back of the US$ 85 million SDR allocation received in end-August 2021. - Since 2017, the CBG has intervened on a limited scale in the FX market only to purchase FX from the interbank market, which has been showing persistent surpluses in recent years. Such (opportunistic) interventions have had the primary purpose of anticipating government’s forex transactions (such as for debt service) and dampening short-term exchange rate volatility. - Using the Fund’s approach to assessing reserve adequacy in credit-constrained economies (ARA-CC), under a cost of holding reserves of 3 percent, the estimated adequate level of reserves is 3 months of imports. - Staff assess that the central bank should be holding foreign exchange reserves corresponding to at least 4.5 months of prospective imports of goods and services. - Following the SDR general allocation in August 2021, gross reserves are over US$ 520 million, equivalent to around 5.7 months of prospective imports. *Source: The Gambian authorities.* ### Annex V. Capacity Development Strategy 2021–22 ### Annex V. Capacity Development Strategy 2021–22 ### Context - The Gambia continues to benefit from the IMF Technical Assistance (TA) program that is well aligned with surveillance and program objectives and the National Development Plan. - Successful implementation of structural reforms in public financial management (PFM), revenue mobilization, debt management, financial sector supervision, and SOEs governance—built on TA support—helped The Gambia transition from an SMP to an ECF in March 2020. - TA will continue to play a critical role in supporting achievement of program quantitative targets and advancing the structural reform agenda. - TA delivery priorities were refocused during COVID-19 to: - strengthen revenue mobilization, - rationalize public spending, - enhance cash management and fiscal reporting. - Capacity building is constrained by absorption and implementation gaps, now exacerbated by COVID-19, and could be further affected by the potential shift of priorities in the run-up to the December 2021 presidential elections. ### Strategy and Priorities - Authorities have reiterated their ECF program commitments and remain resolute in building on gains in debt sustainability and fiscal prudence. - COVID-19 has weakened capacity and increased the need to deepen capacity development (CD) engagement to deliver on ECF program structural benchmarks, particularly: - strengthening PFM, - improving revenue mobilization, - avoiding worsening of debt vulnerabilities as pandemic-related spending and BoP pressures have increased. - Slowing economic activity has raised potential financial stability concerns and weakened the private sector’s ability to weather the COVID-19 impact and recover. - CD support to help implementation of the FSSR is considered vital to: - help banks increase loss absorption, - avoid pressure on the Central Bank of The Gambia (CBG) to soften supervisory and prudential regulatory requirements. - The COVID-19 pandemic has triggered a marked expansion of mobile banking, requiring TA to develop appropriate regulatory, legal, and physical infrastructure. - An important CD focus for FY 2021 will be a governance diagnostic mission to help articulate potential future ECF program conditionality to tackle macro-critical areas of weak governance and vulnerability to corruption. ### Priorities and Objectives - Revenue Administration - Implement new tax exemption policy and the Gambia Investment and Export Promotion Agency 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. - Implement plans for embedding stable and effective tax administration information management systems that support revenue administration functions including completing implementation of the GAMTAXNET remediation plan and developing/implementing 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 in the medium term. - 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 strengthen the CBG’s resolution and crisis preparedness, particularly in the context of heightened 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. *Source: Annex V. Capacity Development Strategy 2021–22.* ### 4. We are preparing for the presidential and parliamentary elections scheduled for ### 4. We are preparing for the presidential and parliamentary elections scheduled for ### Elections preparation and governance support - Through the supplementary appropriation (SAP) approved in July 2021, financing for the Presidential elections was fully covered, including the purchase of the voter registration kits. - The Independent Electoral Commission has registered 11 percent more voters for the upcoming elections compared with the 2016 elections. - The voters’ validation process has been completed and the dates for nomination and the electoral campaign set. - Technical assistance and support are being provided by UN agencies, ECOWAS, and EU to ensure transparency at all stages of the electoral process and foster broad acceptance by all parties (as represented in the Inter-Party Committee). - With support from the British government, a mediation process led by Ibn Chambas has been put in place to help define a code of conduct and allow an orderly resolution of potential election disputes. ### Recent economic developments - Economic growth stood at -0.2 percent in 2020. - Remittance inflows reached US$ 535 million at end-August 2021 (compared to US$ 590 million realized during the full year 2020). - The CBG’s composite index of economic activity showed improvement, but the third wave of the pandemic weighed on recovery. - Headline inflation: - 5.7 percent (y/y) in December 2020 - 8.2 percent in July 2021 - 6.9 percent in August 2021 - Non-food inflation and core inflation followed a similar pattern to headline inflation. ### Fiscal position and budget execution (H1 2021) - Revenue collection: - Slow in 2021Q1; improved in 2021Q2. - Total tax collection reached about 93 percent of the target for 2021H1 (from 87 percent in 2021Q1). - Drivers of improvement: (i) higher collection of tax arrears after expiration of a tax moratorium, (ii) higher receipts on fuel products, (iii) significant reduction in duty waivers. - Non-tax revenue was slightly higher than projected, aided by collection of custom processing fees despite temporary suspension of sale of assets seized by the Janneh commission. - Delays in project grants and the US$20 million World Bank budget support disbursement contributed to overall low revenue intake. - Cash Management Committee held monthly meetings to align spending with available resources. - Overall fiscal deficit at end-June 2021: 2.7 percent of GDP (against a target of 2.6 percent of GDP). - Net domestic borrowing at end-June 2021: GMD 1.1 billion (remained within the program ceiling, after adjustment for budget support shortfall). ### Windfall revenue and SAP allocations - Received GMD1.5 billion (1.4 percent of GDP) settlement payments from British Petroleum for cancellation of an exploration contract for Block A1. - Allocation of GMD1.5 billion via SAP approved in July 2021: preparation of presidential and parliamentary elections, procurement of ambulances, road construction, and anti-drug enforcement. - The oil block has been returned to the government free of all encumbrances and will be put on the market for licensing. ### Balance of payments and reserves - Current account improved in 2020 due to strong current transfers despite tourism slump. - Current account deficit expected to widen in 2021 due to delayed resumption of tourism and increased imports for large infrastructure projects. - Gross reserves strengthened by US$ 173 million since end-December 2020, reaching 5.7 months of prospective imports at end-September 2021, including the US$85 million SDR allocation. - Commercial banks’ net foreign assets remained broadly unchanged in H1 2021. - CBG’s FX market presence limited to purchases to mobilize funds for government FX needs, including debt service. - Dalasi movement: slightly depreciated by an average 5.2 percent (y/y) against major international currencies but remained broadly stable against the US dollar at end-June 2021. ### Monetary policy and financial sector - CBG monetary policy rate: unchanged at 10 percent at MPC meetings in May and September 2021 (after a 200-basis point reduction in May 2020). - Reserve requirement ratio was reduced by 200 basis points in May 2020. - Broad money expanded by 27.5 percent (y/y) at end-June 2021. - Commercial banks’ net foreign assets increased by 31.0 percent. - CBG net foreign assets increased by 64.5 percent. - Private credit expanded by 5.7 percent y/y at end-June 2021 (compared to 0.8 percent at end-2020). - Non-performing loans (NPLs) of commercial banks narrowed to 5.6 percent of gross loans in June 2021. - Microfinance companies (MFCs) NPLs: - 4.4 percent of gross loans at end-2019 - 9.5 percent at end-2020 - Averaged 10.4 percent in 2021H1 - Banking system’s capital adequacy ratio at end-June 2021: 28 percent (statutory requirement: 12 percent). ### Performance under the ECF program (end-June 2021) - All quantitative performance criteria (QPCs) met; all but one indicative targets met. - Central government net domestic borrowing (NDB) ceiling observed with a margin of about GMD 380 million or 0.4 percent of GDP (after adjustment). - Adjusted floor on net usable international reserves (NIR) exceeded by US$58.7 million (about 22 percent). - Other QPCs met: zero-ceiling on non-concessional external debt contracted and guaranteed by the government; 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 the government. - Indicative targets: three out of four met. - Floor on poverty-reducing spending: on target despite slow execution and below-the-line implementation of about GMD 200 million on COVID-19 spending from the 2020 budget and other partner supports. - Domestic tax revenue collection: 0.4 percentage points of GDP below the indicative floor. ### Structural benchmarks (end-June 2021 status and rescheduling) - One out of three structural benchmarks met at end-June 2021; progress underway to complete the two unobserved SBs by end-December 2021. - (i) IFMIS extension roadmap prepared; roll-out started June 2021: - By end-2021: five (5) of the fifty-two (52) subvented agencies to go live. - By January 2022: an additional ten (10) agencies to go live. - Target: all agencies to go live by the first half of 2022. - (ii) Tax Expenditure Policy: approved by Cabinet; GIEPA Act requires further coordination among MoT, Ministry of Finance and Economic Affairs, GIEPA, and Gambia Revenue Authority. Proposal to re-schedule completion of this SB to end-December 2021. - (iii) Draft internal framework for stress testing banks’ balance sheets prepared but requires additional technical work. Proposal to re-schedule this SB to end-December 2021. ### Macroeconomic outlook - Growth: - Economic activity projected to rebound in 2021 at 4.9 percent. - Medium-term average growth projected at 6 percent per year. - Projections contingent on deceleration of the pandemic and peaceful presidential and parliamentary elections. - Tourism recovery slower than initially anticipated due to the third wave of COVID-19. - Inflation: - Expected to increase from 5.7 percent (y/y) at end-2020 to 6.5 percent by year’s end. - Drivers: projected increases in global oil and non-fuel commodity prices and freight charges; domestic recovery boosting demand amid supply bottlenecks. ### External position outlook - Projected further improvement in the medium term reflecting efforts to ensure external debt sustainability. - Support from continued accumulation of FX reserve buffers and limits on external borrowing under the ECF program. - Recent SDR general allocation boosted gross reserves, aiding preparedness for the expiry of the debt service deferral period. ### Macroeconomic policies and structural reforms A. The National Development Plan - Formulating a new long-term vision and National Development Plan (NDP) focused on post-pandemic recovery, the SDGs, and African Union Agenda 2063. - NDP will integrate the Gambia’s long-term climate vision 2050 and serve as strategic framework for successive medium-term plans. - Formulation of a new medium-term development plan started during 2021Q3 and is scheduled to be finalized in 2022 in time for the 2023 budgetary process. - Preparatory activities, including Cabinet briefs, have been held. - Draft Turn Around Allocation (TAA) strategy completed with World Bank support to address fragility and build resilience. - Global Fragility Index: improved from 89.4 in 2017 to 80.5 in 2021. - Ranking improved from 37th to 55th during this period. - The Gambia’s IDA Performance-Based Allocation (PBA) for FY 22 is $80 million, with similar annual levels expected in FY23-24. - TAA allocation for FY22-24 assumed to expand this envelope by 125 percent, subject to annual reviews of milestones. B. Fiscal policy - Continue implementation of the 2021 budget (as augmented by the SAP) in line with the ECF-supported program. - GRA’s annual revenue target remains unchanged, with risks; aim to extend 2021Q2 collection improvements into H2. - Non-tax revenues supported by BP settlement and efforts to accelerate sale of stolen assets per Janneh Commission recommendations. - Overall revenue likely to fall below original projections due to delays in budget support disbursements. - Continue prudent budget execution and strict adherence to PFM rules when implementing the SAP; protect resources for COVID-19 containment including mass vaccination and support to vulnerable populations. - Maintain fiscal balances and net domestic borrowing agreed in the second review of the ECF-supported program. - Adhere to Cash Management Committee decisions and discipline to align spending with available resources while protecting poverty-reducing spending. - Example: domestically financed spending (GLF) execution controlled to 49 percent at end-July 2021 instead of an expected 55-60 percent. - Some SOE subsidies budgeted likely not to be fully utilized. - Fast-track required structural reforms to unlock donor budget support and project grant disbursements: - GPPA act submitted to National Assembly and fast-tracking requested (prior action for disbursement of US$ 20 million World Bank budget support); approval delayed due to heavy legislative workload. - Requesting another fast-track procedure for GPPA act approval. - Progress on EU budget support triggers: completed revision of voters list; progress on NAO audit triggers for 2019 and 2020 financial statements; triggers on seats for female candidates and Vetting bill may be delayed. - 2022 budget and fiscal framework: - National Assembly approved 2022 budget targeting overall fiscal deficit of about 3 percent of GDP. - Domestic primary balance projected to stabilize at a surplus of ½ percent of GDP as in 2021. - Revenue side measures: - Continuation of exemption rationalization process, electronic payment platform, upgraded taxpayer registry, and other revenue administration measures. - Increased tax audit and data matching capacity; use of Rented Property Survey results. - Non-tax collections to be supported by sales of stolen assets, Senegambia Bridge toll receipts, and an expected one-off receipt of US$30 million from the petroleum sector. - Spending side provisions: - GMD400 million (about 0.3 percent of GDP) for vaccination logistics, COVID-19 hospitalization centers, and medical supplies. - Pandemic-related contingency envelope of GMD450 million (about 0.4 percent of GDP), same as 2021. - Personnel emoluments pressures due to increased health personnel compensation and resumption of recruitments in security sector after hiring freeze expiry. - Subsidies and transfers: input subsidies to GGC increased by GMD 225 million in 2022 to GMD 525 million. - Provision of GMD 150 million included for crop financing. - Other non-pandemic spending includes organization of the parliamentary elections (about GMD 120 million). - Capital expenditure: nearly 80 percent expected to be externally financed (bulk from grants); domestically-financed capital expenditure includes one-off provisions for last phase of Banjul Rehabilitation Project and construction of the Bertil-Harding Highway ahead of the 2022 OIC Summit. - Financing: budget support grants are expected to increase from 1.0 percent of GDP in 2021 to *Italic: Extracted from the IMF staff report chapter titled "We are preparing for the presidential and parliamentary elections scheduled for" (content unit 1gmbea2021003).* ### 2.3 percent of GDP in 2022, as the African Development Bank resumes support, and postponed ### 1gmbea2021003 - 2.3 percent of GDP in 2022, as the African Development Bank resumes support, and postponed ### Budget financing and composition (2022) - Project grants are projected to reach 8.4 percent of GDP to help support infrastructure development. - Net domestic borrowing required: GMD 659 million (assumes adequate provision for rollover of maturing domestic debt). - Domestic financing supplemented by privatization proceeds from the sale of MegaBank (consultant contracted; potential investors identified). - Use of SDRs: The 2022 budget uses US$20 million out of the US$85 million SDR allocation to The Gambia. - This amount will be lent by the Central Bank of The Gambia (CBG) to the Government in compliance with the Central Bank Act. - A legally binding memorandum of agreement between CBG and Government will stipulate terms and conditions, including safeguards: - loan made in foreign currency; - government to repay the loan to the central bank when and if the corresponding SDRs are redeemed; - loan made with an interest rate sufficient to cover the central bank’s interest or charges payments for the borrowing; - determination of an adequate maturity period of the loan. ### Debt sustainability - Trade-off: addressing financing needs versus ensuring debt sustainability amid COVID-19 and infrastructure/SDG needs. - External debt stock revisions: revised up to 47 percent of GDP in 2019 and 49.7 percent of GDP in 2020 following reconciliation with some bilateral creditors. - Target: reduce present value of total public debt below the benchmark of 55 percent of GDP around 2025. - Planned policy mix to achieve target: - strong medium-term fiscal framework and prudent borrowing policy; - bolster data collection and reconciliation, including on debt service deferrals agreed with creditors in 2019; - initiate bi-annual data reconciliation exercise with creditors; - coordinate with managers of foreign-financed projects to ensure disbursement requests are processed through MoFEA’s Directorate for Loans and Debt Management (DLDM) and communicated to DLDM. - Engagements: progress in re-engaging with Libyan authorities to resolve outstanding arrears; plan to engage Venezuelan authorities once international sanctions are lifted. - CCRT relief: extension between mid-October 2021 and mid-January 2022 will reduce debt service owed to the IMF by SDR1.1 million. ### Medium-term fiscal framework (2022–2026) - Primary fiscal balance objective: - bring primary fiscal balance from a deficit of 1.2 percent of GDP at end-2021 to an average surplus of 1-1½ percent of GDP between 2022 and 2026. - Public debt-to-GDP trajectory: - decline from 82.2 percent in 2021 to 54.6 percent in 2026. - Domestic revenue targets: - gradual increase in domestic revenue (excluding one-offs) from close to 13½ percent of GDP in 2021 to about 15 percent of GDP in 2026. - measures: implementation of GRA’s strategic reform plan, digitalization of tax administration, rationalization of tax exemptions, broaden tax base (hospitality, cable television, real estate). - Expenditure management: - improved public financial management (project selection criteria via Strategic Review Board, functioning cash management committee, e-procurement). - gradual phasing out of 2021-22 support package as economy recovers and rationalization of wages and subsidies to SOEs and subvented agencies progresses. ### Borrowing policy - Continue adherence to agreed borrowing plan; rely primarily on grants and highly concessional borrowings for infrastructure. - Prudence in contracting new loans. - Regular meetings with EIB and AfDB to ensure concessional financing for Banjul port extension. - For Bertil-Harding highway (OIC summit preparation), exploring alternative options including domestic resources to ensure least cost financing and avoid contracting non concessional loans. ### Debt management and transparency - Continued reconciliation and cleaning of external debt data and recording of domestic debt in the Meridian system. - Completed update of the debt strategy. - Regular publication of quarterly debt bulletin, annual borrowing plans revision and publication, and monthly bond issuance plans. ### State-Owned Enterprises (SOEs) governance and fiscal risks - Objective: strengthen governance and financial situation of SOEs to minimize contingent liabilities despite stalled constitutional reform. - SOE legislation and oversight: - align SOEs bill with existing constitution and submit to National Assembly by end-2021 (end-December 2021 SB). - by end-December 2021: (i) identify and agree on key financial indicators for main SOEs and set up system to collect relevant data quarterly; (ii) publish audited financial statements of SOEs approved by National Assembly (end-December 2021 SB). - sign performance contract with NAWEC in 2021; extend performance contracts between MoFEA and three additional key SOEs with target-based operational and financial indicators by end-September 2022 (end-September 2022 SB). - update cross arrears between SOEs and ensure effective functioning of new Directorate of SOE oversight in MoFEA. - Reduced fiscal risks: - trade credit facility risk declined as GGC settled outstanding balance and now relies on domestic banks for ground nut campaign; - NAWEC and GNPC servicing their debt obligations without government support. ### Monetary policy and financial sector - Monetary policy stance: - remain accommodative to support post-pandemic recovery; CBG may tighten if inflation pressures intensify. - March and September 2021: monetary policy committee maintained accommodative stance. - Reserve money, liquidity, and credit to private sector continued to expand. - If warranted, policy options include moderating CBG’s FX purchases and increasing deposit facility rate to narrow corridor with lending facility rate. - CBG to strengthen liquidity forecasting with IMF technical assistance. - Financial sector resilience and supervision: - overall broadly resilient except for a few banks and NBFIs exposed to pandemic-affected sectors. - withdraw progressively remaining case-by-case supervisory forbearance extended at pandemic onset. - develop in-house expertise and internal framework for bank stress testing; conduct balance sheet stress tests of one large and one medium-sized bank by end-September 2022 (end-September 2022 SB) with support from a prospective resident IMF advisor. - set up Financial Stability Unit/Department with macroprudential mandate per 2019 FSSR recommendations. - use RegCoSS software (introduced April 2020) for real-time supervisory information; strengthen risk-based supervision with AFRITAC West2 TA. - establish taskforce to review Business Continuity Plan and a crisis management and resolution team; parallel approach for NBFI supervision with TA needs. ### Safeguards and central bank governance - Strengthening CBG oversight and capacity per 2020 safeguards assessment recommendations: - CBG Board approved revised audit committee charter; new Board member on audit committee is a qualified accountant. - designated director for Internal Audit Department. - all foreign exchange cash handling moved to Currency Department. - plan to update investment policy and guidelines in line with IMF TA received April 2020. - auditors issued a clean audit opinion on FY2020 financial statements in May 2021. - for FY2021: joint auditors appointed including an international firm with central bank auditing experience; results to be published on external website once completed, after which joint audit arrangement will be reviewed with IMF Finance Department support. ### Foreign exchange reserves and exchange rate policy - Plan to maintain at least current level of FX reserves: - save part of general SDR allocation to ensure strong reserve position anticipating government demand for FX to meet debt service obligations at expiration of 2019 debt relief and as a buffer against shocks. - maintain flexible exchange rate regime to support reserve position and external competitiveness. - CBG will limit FX market presence to preventing disorderly volatility and, if warranted, anticipate government’s FX transactions. ### Structural reforms — Domestic Revenue Mobilization (GRA reforms) - GRA 2020-24 Corporate Strategic Plan anchored on TADAT-identified reforms. - Tax registry cleaning: - completed for Large Taxpayer Unit (LTU) and all tax offices in Greater Banjul; ongoing for remaining provincial offices. - project expected finalized by end-December 2021. - data held in Excel to be migrated to GAMTAXNET platform. - AFW2 STX mission planned to develop and implement registration data migration strategy to GAMTAXNET V4. - develop, approve, and use accurate tax ledger for large taxpayers by end-September 2022 (end-September 2022 SB) and later expand to all taxpayers. - GAMTAXNET remediation: - remediation plan executed; modules (registration, returns filings, payments, audit, refunds, MIS report and system fixes) developed and deployed in seven main tax offices: Banjul, Kanifing, Brusubi, Serrekunda, Tallinding, Wellingara, Brikama. - rollout of GAMTAXNET V4 to provincial offices envisioned complete by end-October 2021. - additional training and contract negotiations with developer underway to ensure operational maintenance and fixes during first year of full rollout. - Digital transformation: - migration from ASYCUDA++ to ASYCUDA World with AfDB support. - acquisition of new Integrated Tax Administration System (ITAS) with World Bank support under Fiscal Management Development (FMD) project to replace GAMTAXNET. - FMD project: contractor Ernest and Young (E&Y) Ghana appointed; project charter and inception reports finalized and approved; BPR mission undertaken; ‘To Be’ BPR report expected during 3rd quarter 2021. - E&Y Ghana to assist procurement of new ITAS including e-registration, e-filing, e-payment functionalities; benchmark visits recommended. - engagement with GAMTEL for faster internet (fiber optic) to tax offices for ASYCUDA World and new ITAS. - migrated from EPICOR version 9 to version 10. - Records Management system automation currently at pilot stage. - Tax Expenditure Policy (TEP) and exemptions: - consultant recruited with World Bank support to assist MoFEA with TEP implementation. - Cabinet adopted a Tax Expenditure Policy in late 2020. - revision of GIEPA act underway; committee (MoFEA-MoT-GRA) controlling tax exemptions rigorously applying duties. - year-to-date disallowance of exemption applications: GMD 1.3 billion. - tax audit campaign by end-September 2022 on at least five exempt entities holding EPZL or GEIPA Special Investment Certificates close to graduation and for a predetermined number of tax years as allowed by Paragraph 216 and 220 of IVAT 2012 (end-September 2022 SB). - envisaged outcomes: additional revenue collection, improved compliance, database creation, skills improvement, enhanced future TEP decision-making. - Other revenue measures: - Taxpayer Charter updated and internally validated; complete and adopt Taxpayer Charter by end-June 2022 (end-June 2022 SB). - negotiating regional bilateral and tripartite cooperation agreements (including Guinea Bissau and Mali). - working to gain access to Revised Kyoto Convention. - Customs Brokers Policy developed to guide registration. - strengthening audit activities via capacity building in Risk Management, Post Clearance Audits, Intelligence and Investigation, Tax Analysis and Revenue Forecasting, Data analytics. - WB FMD project: TOR drafted for comprehensive compliance management strategy; GRA website to be upgraded with TOR for bilingual website drafted and shared with WB FMD project PIU. ### Structural reforms — Public Financial Management (PFM) - 2021–25 PFM reform strategy guiding efforts. - Public procurement: - despite delay in GPPA Act revision at National Assembly, by July 2021 procurement processes digitalized and legal/regulatory framework standardized. - unified procurement contracts system implemented across MDAs and public sector entities. - website revamped to publish all contracts approved in 2021. - GPPA staff training on e-procurement including study tour in Ghana. - reduction in single sourcing and RFP contracts; majority of public contracts now awarded based on “restricted tender”. - plan to push for special National Assembly session to approve GPPA Act enabling approval of draft regulations and manuals prepared with EU and World Bank support. - Civil service reforms: - Civil Service reform program 2018-27 approved and implementation underway. - new pensions bill drafted and at National Assembly awaiting enactment. - new Pay and Grading system designed; review of allowances completed and approved by Cabinet. - payroll management function transfer initiated June 2020 completed. - Performance Management System policy validated January 2021; expected implementation in 2022. - since February 2021, all salaries paid electronically through commercial banks, microfinance institutions, mobile money service providers, and credit unions. - directive to purchase Biometric Time and Attendance Register System; specifications developed (integration with payroll). - IFMIS rollout: - despite COVID-19 challenges, IFMIS rolled out to all sub-Treasuries, local government authorities, six self-accounting projects and 22 embassies in 2021. - plans to roll out to remaining two embassies and remaining projects by end-December [content ends here]. *Source: IMF staff report excerpt (1gmbea2021003).* ### 2021. Two subvented agencies, namely the office of the Ombudsman and the Human Right ### 1gmbea2021003 - 2021. Two subvented agencies, namely the office of the Ombudsman and the Human Right Commission, have also been connected to IFMIS. For the remaining subvented agencies, a need assessment has been conducted, and five pilot sites have been identified (Independent Electoral Commission, National Nutrition Agency, Edward Francis Small Teaching Hospital, Gambia Bureau of Statistics, and Social Development Fund) to deploy the system. By end-June 2021 the IFMIS, MERIDIAN and the CBG’s T24 have been interfaced and they are currently under user acceptance test. ### IFMIS rollout, Treasury Single Account (TSA), and payment platform - IFMIS, MERIDIAN and the CBG’s T24 were interfaced and under user acceptance test by end-June 2021. - Five pilot sites identified for system deployment: Independent Electoral Commission, National Nutrition Agency, Edward Francis Small Teaching Hospital, Gambia Bureau of Statistics, and Social Development Fund. - TSA operationalization expected to be completed by end-December 2021. - TSA completion tasks to ensure: - (i) an updated inventory of government’s bank accounts in commercial banks; - (ii) the finalization of the design of the TSA structure; - (iii) the setting up of the TSA Implementation Unit. - Implementation notes: - Implementation of the TSA single view ledger system has commenced. - Contract signed and implementation of the revenue and payment platform has started. - A first edition manual is in place and will be revised/updated after all payment platforms are implemented. - Implementation of the payment platform is ongoing; design document submitted and under review. ### Cash management and Cash Management Committee - Cash Management Committee aligns spending with available resources amid donor budget support delays and uncertainty in domestic revenue collection; helps prevent fiscal slippages. - MOFEA actions: - Urge all key MDAs to update cash plans over the budget year. - Provide the Cash Management Unit (CMU) with essential inputs for monthly cash forecasts. - More government accounts at commercial banks have been moved to the Treasury account at the Central Bank. - Sweeping of accounts being carried out more frequently (examples: some sub-treasury accounts, SeneGambia bridge). ### Public Finance Act review, PFM strategy, and PFM Manual - Review and amendment to the Public Finance Act enacted in 2014, update of the PFM Strategy 2016-20, and development of the PFM Manual are underway. - Hiring of a consultant to review the Public Finance Act is proceeding. - Expected timeline: completion of the review and submission to the National Assembly now expected by end-June 2022 (reset end-June 2022 SB). ### COVID-19 spending transparency and audits - Plan to complete the second phase of the ex-post audit and transmit reports to the National Assembly by end-December 2021. - After National Assembly review, plan to publish jointly the reports from phase 1 and phase 2 audits by end-March 2022 (end-March 2022 SB). - Continue transparency requirements for COVID-19 spending to cover the entire years 2021 and 2022. ### Investment selection, project appraisal, and GSRB - 2019 MOFEA training on Project Selection and Appraisal Template conducted; projects’ mapping exercise completed. - Annual in-country portfolio performance review conducted for the World Bank, AfDB and IsDB; issues identified: - delays in project effectiveness and start-up; - inadequate qualified staff in financial management, safeguards and procurement; - inadequate oversight of steering committees of MDAs during implementation. - Recommendations to address challenges: - (i) increase use of trust funds and project preparation facilities for feasibility studies; - (ii) continuous capacity building on fiduciary and safeguard; - (iii) improve coordination between PIUs and beneficiaries; - (iv) conduct more frequent Country Portfolio Performance Reviews; - (vi) explore opportunities for a centralized fiduciary unit for donor financed projects including safeguards; - (vii) stakeholders meeting to discuss cross-cutting issues on Agriculture, Lands, Environment, Health, CBG, Energy, Petroleum and NAWEC. - Gambia Strategic Review Board (GSRB) status: - Evaluated nine foreign-financed public investment projects including one Public-Private Partnership (PPP) project in the tourism sector. - Has not reviewed any domestically financed project yet (most GLF projects initiated before full operationalization of GSRB). - Going forward: systematically submit all domestically and foreign-financed projects to GSRB and ensure a positive opinion before inclusion into the Budget. ### Public Investment Program (PIP) - Aid Coordination Directorate (ACD) working with a World Bank team on a pilot PIP for selected sectors: agriculture, education, health, infrastructure, energy, and environment. - ACD and DDP tasked to provide a draft Terms of Reference for sector working group of the PIP; draft TOR developed and shared for comments. - PIP objectives and features: - Intended as a policy action under the sustainable development financing policy for FY2022. - Five-year medium term investment resource envelope for 2022-26. - Aim: translate sector strategies into programs and projects, strengthen public investment management, align with debt situation and fiscal sustainability, and realize the NDP. ### Aid Policy Action Plan and Aid Bulletin - Gambia Aid Policy 2015-20 has expired; DAC drafting a new Aid Policy to strengthen alignment and harmonization of aid. - A consultant for the new Aid policy has been identified and requested to submit a proposal. - Plans underway to review, validate and publish an Aid Bulletin. ### Fiscal Risk Management - Commit to include a Fiscal Risk Statement in the 2023 budget documentation submitted to the National Assembly. - Will publish a Fiscal Risk Statement including information on macroeconomic and debt sustainability risks, and specific fiscal risks (contingent liabilities from SOEs, guarantees and eventually PPP contracts). ### Vehicle policy - June 2021: new government vehicle policy validated by MoFEA and Ministry of Justice (MoJ) to improve efficiency in handling government vehicles. ### Governance, corruption, and legal frameworks - Information access bill signed into law by the President in August 2021 after passage by the National Assembly. - Continue liaison with the National Assembly to ensure passage of the anti-corruption bill ahead of the 2022 Governance Diagnostic with IMF support. ### Human trafficking and AML/CFT actions - Human trafficking: - The Gambia remained at Tier 2 Watchlist on the US Department of State Human Trafficking Report. - Continue to work with the US State Department to avoid falling back to Tier 3. - Signed a 5-year US$15 million agreement to support NDP strategic priority on governance, human rights, rule of law, and citizen empowerment. - AML/CFT: - First national AML/CTF Risk Assessment exercise completed in 2019; finalized and submitted to Cabinet for approval in January 2021. - GoAML application provided to the Gambia FIU by UNODC to digitize suspicious transactions reporting; FIU staff trained and domestication process started. - Working closely with GIABA on steps for completion of the second round of the Mutual Evaluation Exercise: - Pre-assessment workshop held in February 2021. - Onsite visit by GIABA secretariat and assessors conducted from August 22nd to 3rd September. - Mutual Evaluation report expected to be discussed at the GIABA Plenary and Technical Committee meeting in May 2022. ### Business environment and private sector development - Private sector central to post-pandemic recovery to create jobs, reduce poverty and limit scarring. - Constraints identified: - low level of physical and human capital; - lack of access to long-term finance; - high cost and unreliability of energy supply; - delays in courts resolving commercial disputes. - Policy and reform actions: - Updating the GEIPA Act to refocus on business facilitation. - Launched second National Export Strategy by GEIPA in August 2020 to support export-ready and export-potential firms. - Working to finalize new financial inclusion strategy; actions include effective functioning of credit reference bureau, improving collateral registry, expanding digital finance, leveraging remittances. - Working with MoJ to re-establish commercial courts for contract enforcement. - Digitalizing the tax system. - Addressing electricity reliability and access as priority constraints. ### Poverty reduction, gender, and social programs - Social safety programs: - Annual government contribution of GMD 10 million to the World Bank-supported social safety net program. - Disbursed about GMD 70 million out of GMD 160 million included in the budget to support implementation of the Program for Accelerated Community Development (PACD). - Included GMD 250 million in the draft 2022 budget for the PACD. - National Health Insurance Bill submitted to the National Assembly. - Expand social registry to cover six additional districts to better target vulnerable populations (end-June 2022 SB). - Gender budgeting and support: - MOFEA with IMF support to develop a roadmap for Gender Budgeting (GB) implementation and present to cabinet. - Include a statement on Government’s commitment to GB in the FY22 Budget Speech and improve GB statement in subsequent budgets. - Ministry of Gender, Children and Social Welfare (MoGCSW) to develop a National Gender Results Framework to identify gaps and set objectives. - Women Enterprise Fund budget increased to GMD 10 million in 2021 from GMD 6 million in 2020: - Resulted in loans amounting to GMD 8.3 million with 2,060 direct beneficiaries. - Approval of 350 women groups applications with a total of 7,000 beneficiaries undergoing training. ### Climate change and resilience - Climate vulnerabilities: - Low topography, high dependence on rain-fed agriculture, inadequate drainage and stormwater management, tourism vulnerability to sea-level rise. - Actions and commitments: - The Gambia’s plans deemed compatible with Paris Agreement goals according to Climate Action Tracker. - Budget Directorate exploring climate sensitive budgeting. - Ministry of Environment and Climate Change working with MDAs (Ministry of Agriculture, Ministry of Energy) to foster resilience. - Enforced ban on the use of plastic bags. - Introduced feed-in tariff for renewable energy sources (2013 Renewable Energy Act). - Building a 20 MW solar photovoltaic plant with World Bank support. - Supplying 1,100 schools and hospitals with solar energy supported by the EU and EIB. - Initiated restoration of 10,000 hectares of forests, mangroves, and the savanna belt. - Working with Green Climate Fund on projects such as Ecosystem-Based Adaptation (EBA). - Launched in February 2021 a multi-donor funded US$80 million project, ROOTS, to enhance food security, nutrition, and smallholder farmers’ resilience to climate change. - Seeking IMF support to assess macroeconomic impact of climate change to design comprehensive reform plan. ### Capacity development - Continue to leverage technical assistance from development partners to strengthen: - revenue administration; - public financial management (cash management, fiscal transparency, project appraisal and selection processes); - macroeconomic statistics production; - debt management; - monetary policy design; - bank supervision capacity. ### Program monitoring and reviews - Government to meet quantitative targets and observe structural benchmarks under the ECF-supported program. - Program subject to semiannual reviews with performance criteria, indicative targets and structural benchmarks as set out in Tables 1–4 and the Technical Memorandum of Understanding. - The fourth and fifth program reviews based on targets and benchmarks through end-December 2021 and end-June 2022, respectively. ### Selected quantitative targets and indicators (Table 1 highlights; cumulative from beginning of calendar year to end of month indicated; local currency millions, unless otherwise indicated) - Performance criteria (select items and reported values from Table 1): - 1. Net domestic borrowing of the central government (ceiling): values listed include 1121,00039; Met5001,1991,119Met1,1001,2501,250. - 2. Stock of net usable international reserves of the central bank (floor, US$ million): 292250300 Met 260247314 Met 270280345. - 3. New external payment arrears of the central government (ceiling, US$ million): 0.00.00.0 Met 0.0...0.0 Met 0.00.00.0. - 4. New nonconcessional external debt contracted or guaranteed by central government (ceiling, US$ million): 0.00.00.0 Met 0.0...0.0 Met 0.00.00.0. - 5. Outstanding stock of external public debt with original maturity of one year or less (ceiling, US$ million): 0.00.00.0 Met 0.0...0.0 Met0.00.00.0. - 6. New concessional external debt contracted or guaranteed by central government (annual ceiling, US$ million): 121150.0 Met 115...0.0 Met115115115. - Indicative targets (select items): - 7. Total domestic tax revenue (floor): 10,3263,0002,678Not Met6,000...5,584Not Met8,70011,40011,400. - 8. Monthly ceiling on central bank credit to the central government at non-market terms (GMD millions): 0.00.00.0Met 0.0...0.0Met0.00.00.0. - 9. Stock of net domestic assets of the central bank (ceiling): 4,9188,1715,119 Met8,034...4,680Met8,2848,0348,034. - 10. Poverty-reducing expenditure (floor): 6,9751,300819Not Met2,800...2,800 Met4,4006,0006,000. - Memorandum items (select figures): - Budget Support (grants, US$ millions): 81.90.00.0...20.0...6.5...27.143.743.7. - Base Money (stock, GMD millions): 18,59519,62819,280...21,079...20,166...20,52720,54420,544. - IMF disbursements (SDR millions): 20.620.020.0...30.0...30.0...30.035.035.0. - ECF disbursements: 5.020.020.0...30.0...30.0...30.035.035.0 (Of which: augmentation...15.015.0...20.0...20.0...20.020.020.0). - CCRT debt relief (SDR millions): 3.20.00.0...1.1...1.1...1.13.03.0. *Source: Excerpt from the chapter on The Gambia in the provided IMF document.* ### 1. Net domestic borrowing of the central government (ceiling) 1,4621,462759659 ### 1gmbea2021003 - 1. Net domestic borrowing of the central government (ceiling) 1,4621,462759659 ### Key quantitative targets and indicative targets - 1. Net domestic borrowing of the central government (ceiling) 1,4621,462759659 - 2. Stock of net usable international reserves of the central bank (floor, US$ million) 359349367361 - 3. New external payment arrears of the central government (ceiling, US$ million) 2 0.00.00.00.0 - 4. New nonconcessional external debt contracted or guaranteed by central government (ceiling, US$ million) 2 0.00.00.00.0 - 5. Outstanding stock of external public debt with original maturity of one year or less (ceiling, US$ million) 2 0.00.00.00.0 - 6. New concessional external debt contracted or guaranteed by central government (annual ceiling, US$ million) 2, 3 115115115115 Indicative targets - 7. Total domestic tax revenue (floor)2,8005,7509,00012,000 - 8. Monthly ceiling on central bank credit to the central government at non-market terms (GMD millions) 4 0.00.00.00.0 - 9. Stock of net domestic assets of the central bank (ceiling) 5 7,8687,8687,8687,868 - 10. Poverty-reducing expenditure (floor) 1,4003,0004,8006,500 Memorandum Items: - Budget Support (grants, US$ millions) 6 0.026.333.450.9 - Base Money (stock, GMD millions)19,84519,20420,13920,886 - IMF disbursements (SDR millions) 0.05.05.010.0 - ECF disbursements0.05.05.010.0 - Of which: augmentation0.00.00.00.0 - CCRT debt relief (SDR millions) 7 0.00.80.80.8 Notes on applicability: - 2 These criteria apply on a continuous basis, including beyond end-December 2021. - 5 A performance criterion at end-December 2020. - 6 Excludes grants under the CCRT. - 7 The grant for debt service falling due through October 15, 2021 is available under the CCRT. Subject to the availability of sufficient resources in the CCRT, debt service relief could be provided for a total period of two years, through April 13, 2022. - Program test dates: 2022 Mar.Jun.Sep.Dec. - 1 For definitions and related adjustors, see the Technical Memorandum of Understanding (TMU). End-June and End-December are proposed test dates. End-March and end-September targets are indicative, except for continuous performance criteria. - 3 This includes US$65 million for Banjul Port expansion, of which US$50 million on concessional terms and US$15 million in nonconcessional borrowing, which is expected to blended with a grant to meet the required 35-percent grant-element requirement. - 4 The zero ceiling applies to all outstanding credit (for example, overdrafts and advances) at non-market terms as of the end of each quarter, excluding the RCF onlending and the 30-year bond held by the CBG. ### Definitions, adjusters, and reporting requirements (selected) - A. Net Domestic Borrowing of the Central Government - Definition: change in net claims on the Central Government by the domestic monetary sector (monetary authorities and deposit money banks) plus change in the discounted value of domestic government securities held by the non-monetary sector; covers change in other net claims on the Central Government by the 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) onlending of the IMF credit (under RCF or ECF) to the budget and lending to the Treasury of any portion of the SDR general allocation, (ii) changes in the balances of the project accounts listed in Table 1, and (iii) the face value of government securities issued to increase the CBG’s capital to the statutory level enshrined in the CBG Act. - Adjuster: NDB targets (ceilings) adjusted downward/upward by the excess/shortfall of the dalasi equivalent of total budget support grants received relative to program forecasts. Upward adjustment for shortfall in budget support disbursements may not exceed GMD 1.0 billion. - Supporting material: Reporting on net domestic borrowing included in the consolidated budget report described in ¶32. - B. Net Domestic Assets of the Central Bank - Definition: difference between reserve money and the net foreign assets of the CBG. Reserve money = currency issued by CBG + deposits of commercial banks at the CBG. Net foreign assets = foreign assets minus foreign liabilities. - Conversion for monitoring: use 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. Other currencies converted to USD at prevailing end-of-period rates and then into dalasi at the rate listed above. - Supporting material: CBG balance sheet (compiled based on TMU rates) submitted monthly within four weeks of the end of each month; current-rate basis balance sheet also submitted for analysis. - C. Net Usable International Reserves (NIR) of the CBG - Definition: difference between usable reserve assets and reserve liabilities. Usable reserve assets include CBG holdings of SDRs, foreign currency cash, foreign currency securities, deposits abroad, and the country’s reserve position at the IMF. Exclusions: assets pledged, collateralized or encumbered; claims on residents; claims in foreign exchange arising 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 to sell foreign exchange from derivatives, and all credit outstanding from the IMF, excluding liabilities to the IMF’s SDR Department. - Adjusters: quarterly NIR floors adjusted down/up by US dollar equivalent of shortfall/excess of total budget support grants and loans received relative to program forecasts; downward adjustment capped at US$20 million for shortfalls. In case of an SDR allocation by the IMF, NIR adjusted upward by full amount of the SDR allocation. - Supporting material: detailed reserve statement with end-month data on NIR transmitted within seven days of end of each month. - D. New External Debt Payment Arrears of the Central Government - Definition: external debt obligations of the central government not paid when due in accordance with contractual terms (taking into account contractual grace periods). - Exclusions for program purposes: (i) obligations for which creditor has accepted in writing to negotiate alternative payment schedules before the relevant payment; (ii) arrears on claims the government has represented as disputed; (iii) arrears that cannot be settled due to international sanctions; (iv) arrears on trade credits, except arrears due to ITFC. - Non-accumulation of new external debt payment arrears by the central government is a continuous target. - Supporting material: accounting of non-reschedulable external arrears (if any) by creditor, transmitted monthly within four weeks of end of each month; separate accounting 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: new non-concessional external debt contracted or guaranteed by the Central Government denominated in any currency other than the Gambian dalasi; includes commitments contracted/guaranteed for which value not received. Guarantees defined as explicit legal/contractual obligation of central government to service a debt owed by a third-party debtor. Debt considered contracted when conditions for effect have been met, including National Assembly approval. Excludes IMF loans/purchases and concessional debts and any debt with maturity of one year or less. - Concessionality rule (¶16): concessional if grant element ≥ 35 percent, calculated as (PV of debt subtracted from nominal value) / nominal value. PV calculated by discounting future payments at program reference rates. Program reference rate for six-month USD LIBOR = 2.42 percent (fixed for duration of program). Spreads: six-month EURIBOR over six-month USD LIBOR = -250 basis points; six-month JPY LIBOR over six-month USD LIBOR = -250 basis points; six-month GBP LIBOR over six-month USD LIBOR = -150 basis points. For debts with grant element ≤ 0, PV set equal to nominal value. Discount rate = unified discount rate of 5 percent per Executive Board Decision No. 15248-(13/97). - Supporting material: comprehensive loan-by-loan record of all new concessional and non-concessional debt contracted or guaranteed by the Central Government transmitted quarterly within four weeks of the end of each quarter. - MoFEA requirement: within four weeks of contracting/guaranteeing any new external loan, forward loan terms and conditions including interest rate, grace period, maturity, interest, fees, and principal payment schedule with all annexes. - F. New Concessional External Debt Contracted or Guaranteed by the Central Government - Definition: new concessional external debt contracted or guaranteed by Central Government denominated in any currency other than Gambian dalasi. Concessionality as defined in ¶16. - For blended packages: only loan components count toward borrowing limit; grant components excluded. - Supporting material: 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 (Central Government, regional governments, other public agencies, including the 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 quarter. - H. Tax Revenue (indicative target) - Definition: taxes and duties collected by the 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. Excludes nontax revenue (licensing fees, fines, levies collected by GRA) and levies collected on behalf of other organizations (National Education & Technology Training Levy, AU Levy, ECOWAS Levy). *International Monetary Fund — Technical Memorandum of Understanding excerpts and program tables as provided in source content.* ### 25. Supporting material: A monthly report on revenue collected by the GRA will be ### 25. Supporting material: A monthly report on revenue collected by the GRA will be ### Monthly revenue reporting - A monthly report on revenue collected by the Gambia Revenue Authority (GRA) will be transmitted within four weeks of the end of each month. - Text Table 2: Tax Revenues Collected by The Gambia Revenue Authority is referenced as the source tabulation for revenue collection. ### Definitions and scope: public debt and debt denomination - The term “debt” has the meaning set forth in ¶8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements attached to Executive Board Decision No. 15688-(14/107), adopted December 5, 2014, as amended. - “Domestic debt” is defined as debt denominated in Gambian dalasi. - “External debt” is defined as debt denominated in any currency other than the Gambian dalasi. ### I. Central Bank Credit to the Central Government at Non-Market Terms - Definition: The target covers the consolidated balance on the Treasury Main Account, the Consolidated Revenue Fund, and other revenue accounts; and all gross claims on the Central Government on the balance sheet of the central bank with terms (including maturity and yield) materially different from market terms for Treasury bills and bonds around the time of acquisition of these claims. - The target also covers any overdue payments of principal and interest on Central Government securities held by the central bank. - Assessment frequency: This performance criterion will be assessed at the end of each month. - Supporting material: Reporting on new central bank credit to the government at nonmarket terms will form part of the monetary sector data described in ¶34 and ¶35. ### J. Poverty-Reducing Expenditures - Definition: Poverty-reducing expenditures consist of expenditures financed out of The Gambia Local Fund (GLF) on the following areas: - Agriculture and Natural Resources - Education - Health - Nutrition, Population and HIV-AIDS - Infrastructure Program - Social Fund for Poverty Reduction - Implementation and Monitoring of Poverty Reduction Programs - Support to CrossCutting Programs - ICT Research and Development - Decentralization and Local Government Capacity Building - Governance and Civil Service Reform Program - The poverty-reducing expenditure includes the COVID-19 spending including those implemented through the COVID-19 project accounts. - Supporting material: A monthly report on poverty-reducing expenditures will be transmitted within four weeks of the end of each month. ### K. Prices - The monthly disaggregated consumer price index, including weights for each major category, with January 2020 = 100, will be transmitted within four weeks of the end of each month. ### L. Government Accounts Data - A monthly consolidated Central Government budget report (the analytical table) on budget execution for the month and cumulatively from the beginning of the year will be transmitted to the IMF within four weeks of the end of each month. - The report will cover: - (i) revenue data by major items (such as taxes on income, profits, and capital gains; domestic taxes on goods and services; taxes on international trade and transactions; other taxes; non-tax revenue); - (ii) external grants by type (e.g., budget support grants, project grants); - (iii) details of recurrent expenditure (including goods and services, interest payments, and subsidies and other current transfers); - (iv) details of capital expenditure and net lending (including data on externally financed capital expenditure, expenditure from the Gambia Local Fund, and net lending); - (v) the overall balance, the primary and the basic balance; and - (vi) details of budget financing (including net domestic and net external borrowing and their components). - End-week data on net domestic borrowing (including data on the project accounts listed in Table 1) will be transmitted weekly within five business days of the end of each week. ### M. Monetary Sector Data - The balance sheet of the CBG, prepared on the basis of current and program exchange rates, will be transmitted on a monthly basis to the IMF within four weeks of the end of each month. - The balance sheet will explicitly identify all claims on, and liabilities to, the government. Claims include overdrafts, holdings of treasury bills, government bonds, advances to the government in foreign currency, and other claims on the government. Liabilities include balances in the treasury expenditure account, the consolidated revenue fund and other revenue accounts, the treasury bill special deposit account, the privatization proceeds account, and other deposit accounts. - The transmission will include the individual balances on the government accounts listed in Table 1. - The consolidated balance sheet of the commercial banks and a monetary survey (a consolidation of the accounts of the CBG and commercial banks), including foreign currency deposits held by residents of The Gambia with commercial banks, will be transmitted within four weeks of the end of each month. - Daily data on reserve money will be transmitted weekly within five business days of the end of each week. ### N. Treasury Bill Market and Interbank Money Market - Weekly data on the amounts offered and issued, net issuance, over/under subscription, and yields (interest rates) of the various instruments will be transmitted on a weekly basis within five business days of the end of each week. - Data on treasury bills and CBG bills outstanding (both at face value and at discounted value and including information on the distribution by bank and non-bank holders) will be transmitted on a monthly basis within six weeks of the end of each month. - 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. ### O. External Sector Data - The CBG will forward within four weeks of the end of each month, data on transactions in official reserves. - 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. ### P. Public Enterprises’ Data - 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. *Source: 1gmbea2021003 - 25. Supporting material: A monthly report on revenue collected by the GRA will be (IMF).* ### 45. MoFEA will forward within eight weeks of the end of each quarter, data on the stock ### 1gmbea2021003 - 45. MoFEA will forward within eight weeks of the end of each quarter, data on the stock ### Quarterly reporting commitment - 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. ### Projects accounts excluded from the calculation of NDB - ACCOUNT NUMBER — PROJECT ACCOUNT NAME - 1101004067 — NATIONAL AGRICULTURAL LAND & WATER MANAGEMENT DEV. PROJECT (NEMA) - 1103002218 — BUILDING RESILIENCE TO RECURRING FOOD INSECURITY IN THE GAMBIA IDB COMPONENT - 1101005064 — AGRICULTURAL VALUE CHAIN PROJECT (GCAV) - 1101004689 — BUILDING RESILIENCE AGAINST FOOD & NUTRITION INSECURITY IN THE SAHEL PROJECT. - 1101004483 — GAMBIA COMMERCIAL AGRICULTURE VALUE CHAIN PROJECT. - 1101004201 — FOOD & AGRICULTURE SECTOR DEV. PROJECT. FASDEP - 1103001613 — BILINGUAL EDUCATION SUPPORT PROJECT - 1101003606 — DEV. OF THE UNI. OF THE GAMBIA PROJECT. - 1101003709 — AFRICA CENTRE OF EXCELLENCE (ACE) - 1101000832 — RURAL WATER & SANITATION PROJECT - 1103001754 — TRANS GAMBIA CORRIDOR PROJ. - 1103000685 — GLOBAL FUND MALARIA GRANT - 1101003864 — GEF PROJ. IMPLEMENTATION IN THE GAMBIA UNIDO/GEF 5 PROJ. MNGMNT. OFFICE - 1101004304 — IFMIS ADDITIONAL FINANCING PROJ. - 1101004988 — INST. SUPPORT ECON/FIN GOV (ISEFG) III PROJ. - 1101004902 — NDEMBAN ULTRA MODERN TVET CENTRE PROJ. - 1201200228 — UNICEF PRIMARY EDUC. PRJ - 1201200252 — ENERGY INFRASTRUCTURE (ROC) - 1201200371 — IDA 3RD EDUC. PHASE 11 GLF - 1201200399 — PROJ. IMPL.MNGMT A/C PIMA - 1201200451 — WORLD BANK DEV. POLICY OP ACCO - 1201200491 — IFMIS PHASE II - 3201200403 — INST. SUPPORT ECON/FIN GOV A/C - 3201200486 — IFMIS II - 3201200290 — GLOBAL FUND/ MALARIA - 9201200436 — GOLBAL FUND/HIV ### Data reporting requirements (selected entries) - Frequency and reporting deadlines (responsible institutions 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)) - Weekly (7 days after week-end) - T-bills auction data, Inter-banks rates & other accompanying data & tables - Project accounts data - International reserves and Foreign & Domestic Assets data (NIR, NFA & NDA) - Foreign exchange liquidity forecasts statement/report - Monthly (30 days after month-end) - Commercial banks' balance sheets - Commercial banks' Forex net open position statement/report - CBG balance sheet (including NDA) - CBG reserves statement/report - Statement/report on CBG credit to Gov. at non-market interest rates; and Gov.'s overdue payments to CBG - Statement/report of transactions in official reserves - Financial Soundness Indicators - Statement of Government Operations (SGO) - Poverty-reducing expenditure data - Consolidated Central Gov. budget execution - SOE cash flow statements (i.e. 13 SOEs) - External debt reports - Statement of external payment arrears by Central Government & SOEs - Staff Monitored Program (SMP) implementation matrix - Monthly Revenue Report - Oil volumes and tax collected on oil imports - Revenue collection by tax type - Tax exceptions\duty waivers - Consumer price index (CPI) - Producer price index (PPI) - Data on exports (by product type, quantity, country, etc.) - Data on imports (by product type, quantity, country, etc.) - Tourists arrivals by nationality - Out-of-pocket tourists expenditures - Quarterly (30 days after quarter-end) - Commercial banks' income statements - Balance of payments (BOP) - Stock of outstanding public debt of maturity not exceeding 1 year - Statement/report on concessional & non-concessional debts contracted or guaranteed by government - Annual - Gross domestic product (GDP) — Annually — 90 days after year-end - Other periodicities with deadlines - 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 ### Fund relations, quotas, and financial arrangements (selected figures) - Membership status: Joined September 21, 1967; accepted obligations under Article VIII on January 21, 1993. - Quota and holdings (General Resources Account) - Quota — 62.20 — 100.00 - Fund holdings of currency — 52.91 — 85.06 - Reserve Tranche Position — 9.35 — 15.03 - SDR Department - Net cumulative allocation — 89.38 — 100.00 - Holdings — 61.92 — 69.27 - Outstanding Purchases and Loans (SDR Million % Quota) - RCF Loans — 32.66 - ECF arrangements — 37.49 - 52.50 - 60.27 - Latest Financial Arrangements (ECF) - ECF — Mar. 23, 2020 — Jun. 22, 2023 — 55.00 — 35.00 - ECF — May 25, 2012 — May 20, 2015 — 18.66 — 10.89 - ECF — Feb. 21, 2007 — Mar. 31, 2011 — 24.88 — 22.55 - Outright Loans (RCF) - RCF — Apr. 15, 2020 — Apr. 17, 2020 — 15.55 — 15.55 - RCF — Jun. 26, 2017 — Jul. 05, 2017 — 11.66 — 11.66 - RCF — Apr. 02, 2015 — Apr. 13, 2015 — 7.78 — 7.78 - Projected Payments to Fund (SDR million; based on current use of resources and present holdings of SDRs) — Forthcoming - 2021 Principal — 1.09 - 2022 Principal — 2.80 - 2023 Principal — 4.04 - 2024 Principal — 3.89 - 2025 Principal — 5.17 - 2021 Charges/interest — 0.00 - 2022 Charges/interest — 0.02 - 2023 Charges/interest — 0.02 - 2024 Charges/interest — 0.02 - 2025 Charges/interest — 0.02 - 2021 Total — 1.09 - 2022 Total — 2.81 - 2023 Total — 4.06 - 2024 Total — 3.90 - 2025 Total — 5.18 ### Implementation of debt relief and catastrophe relief - HIPC Initiative - Decision point date — Dec 2000 - Assistance committed (year-end 2000 NPV terms) — Total assistance (US$ million) — 66.60 - Of which: IMF assistance (US$ million) — SDR equivalent, million — 2.30 — 1.80 - Completion point date — Dec 2007 - Disbursement of IMF assistance (SDR million) - Assistance disbursed to the member — 1.80 - Interim assistance — 0.44 - Completion point balance — 1.36 - Additional disbursement of interest income — 0.49 - Total disbursement — 2.29 - MDRI (Multilateral Debt Relief Initiative) - MDRI-eligible debt (SDR million) — 9.42 - Financed by: MDRI Trust — 7.44 - Remaining HIPC resources — 1.98 - Debt Relief by Facility — Eligible Debt Delivery Date GRA PRGT Total — December 2007 N/A 9.42 9.42 - Catastrophe Containment and Relief (CCR) - Apr. 13, 2020 — Amount Committed (SDR million) — 2.10 — Amount Disbursed (SDR million) — 2.10 - Oct. 02, 2020 — Amount Committed (SDR million) — 2.10 — Amount Disbursed (SDR million) — 2.10 - Apr. 01, 2021 — Amount Committed (SDR million) — 1.87 — Amount Disbursed (SDR million) — 1.87 ### Safeguards assessment and recommendations for the CBG - An updated safeguards assessment of the CBG, completed in July 2020, noted: - Progress: strengthening the legal framework, modernizing the internal audit function, and improving financial reporting. - Remaining issues: capacity challenges; need for more active oversight by the CBG Board and the Audit Committee. - Recommendations included: - (i) Signing a Memorandum of Understanding with the Auditor General to formalize the joint audit arrangement by a local audit firm and an international audit firm with central banking experience. - (ii) Requesting a formal legal opinion from the Constitutional Review Commission to confirm that a person holding a public service office will not qualify to be appointed as a non-executive Board member of the CBG. - (iii) Recognizing income for the 30-year government bond in accordance with the effective interest rate method required by international financial reporting standards. - (iv) Addressing capacity constraints in the Internal Audit Department (IAD) by appointing the Director/Deputy Director and allocating resources for professional certification of selected IAD staff. - (v) Clarifying the Audit Committee Charter to explicitly provide for its independence, including prohibition of Deputy Governors attending meetings except when the committee meets with management. - (vi) Engaging an independent expert advisor in financial reporting and/or auditing to assist the Audit Committee. - The authorities implemented most of these recommendations. ### Technical assistance (selected entries and timing) - Fiscal Affairs Department (selected missions) - Implementing IPSAS Cash and preparing roadmap for migration to accrual system (AFW2) — Oct 2021 - Follow up support in Implementing TSA (AFW2) — Aug 2021 - TA mission on gender-based budget preparation — Jun 2021 - TA mission on Cash Forecasting (EUD project) — May 2021 - TA mission on Better Budget Preparation — May 2021 - Training ministry officials on monitoring and managing SOE and PPP related fiscal risks (AFW2) — Apr 2021 - Support for implementation of customs post clearance controls (AFW2) — Mar 2021 - Support for implementation of customs post clearance controls & exemptions — Dec 2020 - TA mission to support GRA to build and maintain integrity of taxpayer ledger and tax account — Oct 2020 - Support GRA to strengthen tax arrears management and enforcement — Oct 2020 - (Additional missions and training listed for 2018–2020 in the source) - Monetary and Capital Markets Department (selected missions) - TA mission on Banking Cybersecurity Resilience — Jul 2021 - TA mission on FOREX Reserves Management — Apr 2021 - TA mission on Risk-based Supervision — Dec 2020 - Improving Monetary Policy and Liquidity Forecasting Management (AFW2) — Nov 2020 - (Additional missions listed for 2018–2020) - Statistics Department (selected missions) - Strengthen compilation and dissemination of financial institutions’ statistics — Jun 2021 - TA mission on Government Finance Statistics, funded by Data for Decisions (D4D) fund — Apr 2021 - Ongoing TA mission on the National Accounts with AFRITAC West 2 — Mar 2021 and earlier dates *Source: STAFF REPORT FOR THE 2021 ARTICLE IV CONSULTATION, THIRD REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT, REQUEST FOR MODIFICATION OF A PERFORMANCE CRITERION, AND FINANCING ASSURANCES REVIEW—INFORMATIONAL ANNEX (November 8, 2021).* ### 1. Gambia DPF2 ### 1. Gambia DPF2 ### Fund work program and planned engagement - New DPF series: Gambia new DPF series. - Projects: - FMD Project (DRM, Procurement, SOE sector, Telecom). - Gambia Public Administration Modernization for Citizen Centric Service Delivery Project. - Technical assistance / Analytical services / Policy advice: - Gambia Programmatic TA on Fiscal Management. - Gambia iSOEF Assessment. - Gambia Economic Update. - Gambia Poverty and Gender Assessment. - Timing and missions (selected entries as listed): - October 19-23, 2021. - January 2022. - November 2021, January 2022. - February 2022, March 2022. - March 2022, May 2022. - February 24, 2022 (tentative). - DPF1: February 2023; DPF1: February 2024 (tentative). - October 19, 2022 (tentative). - Policy advice and Article IV / ECF reviews: - Article IV consultation and 3rd ECF review mission: Q3 2021; November 2021. - 4th ECF review mission: Q2 2022 (tentative); June 2022. - 5th ECF review mission: Q3 2022 (tentative); December 2022. - Joint Bank-Fund coordination: - Fund request to Bank: Periodic updates on: CPIA, tax administration (IT system) work, debt management TA, public procurement, civil service and SOE reforms. Ongoing. - Bank request to Fund: Periodic updates on macroeconomic framework. Ongoing. - Joint products in next 12 months: Joint DSA. Ongoing. ### Statistical issues — assessment of data adequacy for surveillance - General assessment: - "Data provision is broadly adequate for surveillance, despite some shortcomings. However, the authorities are making strong efforts to improve statistics." - Most affected areas: monetary and financial data, balance of payments, and external debt statistics. - National Accounts (NA): - GBoS implemented SNA 2008 through rebasing GDP exercise of base year 2013. - GBoS disseminated in April 2019 the annual GDP estimates by production approach and in February 2020 published for the first time the annual GDP estimates by expenditure approaches—for 2004-18. - GBoS working on quarterly GDP estimates but faces capacity and financial constraints; additional resources required for future census and surveys. - Price Statistics: - New CPI published in February 2020 (January 2020=100) using expenditure weights from 2015/16 IHS. - Methodological improvements: introduction of geometric mean for averaging prices and imputation of missing prices. - AFRITAC West 2 to provide technical assistance to improve PPI compilation methods (at GBoS request). - Government Finance Statistics: - Authorities implementing upgraded IFMIS to apply GFSM 2014 for budgetary central government. - Challenges: ensuring consistency across budget documents, accounting system, and fiscal reports; expanding coverage; compilation of project grant disbursements and project grant use remains a challenge. - Monthly data on domestic government financing available with a delay of about four weeks. - Monetary and Financial Statistics: - CBG reports monetary data using Standardized Report Forms; published in International Financial Statistics. - Reporting lags of 3 to 6 months to STA; large gap in historical data between May 2015 and December 2016. - For some financial assets/liabilities (including loans and deposits of ODCs), economic sector and currency breakdowns consistent with the MFS Manual are not available. - Coverage of ODCs excludes credit institutions and deposit-taking microfinance companies. - CBG developing data for other financial corporations (insurance corporations and the National Provident Fund). - CBG reports several FAS indicators and 12 core FSIs and 8 additional FSIs for publication; CBG reported FSIs to STA in October 2016 (11 of 12 core indicators and 8 encouraged indicators for deposit takers) but does not regularly update FSIs. - Financial sector surveillance: - Data quality improved following introduction of automated platform for regulatory returns; enabled implementation of comprehensive stress tests for the first time. - Cross-border exposure data for financial corporations not available. - External sector statistics: - CBG produces quarterly balance of payments statistics following BPM6; IIP statistics at a preliminary stage. - Shortcomings: estimation of direct investment, accurate identification of current and capital grants, timely and accurate recording of external debt (inflows and outflows). - FALS discontinued in 2015. - Financial account transactions of central bank and commercial banks are estimated as differences of positions—without exchange rate changes adjustments; revaluations are incorrectly recorded as transactions. - Need to improve coordination within CBG and with other agencies and use administrative data (including financial statements of nonfinancial corporations) and validate financial account transactions of general government with external debt data from Ministry of Finance and Economic Affairs. ### Data standards and dissemination - Implemented enhanced General Data Dissemination System (e-GDDS) in May 2018: publishing data and launching the National Summary Data Page (official website). - A data ROSC was published on December 1, 2005. - Common Indicators Required for Surveillance (as of November 2, 2021) — selected entries preserved exactly as listed: - Exchange Rates: Date of latest observation: Current; Date received: Current; Frequency of Data: D W M; Frequency of Reporting: blank; Frequency of Publication: blank. - International Reserve Assets and Reserve Liabilities of the Monetary Authorities: Date of latest observation: Current; Date received: Current; Frequency of Data: W W M. - Reserve/Base Money: 9/2021; 10/2021; D W M. - Broad Money: 9/2021; 10/2021; M M M. - Central Bank Balance Sheet: 8/2021; 9/2021; M M M. - Consolidated Balance Sheet of the Banking System: 8/2021; 9/2021; M M M. - Interest Rates: Current; Current; W W M. - Consumer Price Index: 9/2021; 10/2021; M M M. - Revenue, Expenditure, Balance and Composition of Financing – Central Government: 9/2021; 10/2021; M M M. - Revenue, Expenditure, Balance and Composition of Financing – General Government: N/A; N/A. - Stocks of Central Government and Central Government-Guaranteed Debt: 12/2020; 9/2021; M M M. - External Current Account Balance: Q2/2021; 9/2021; Q Q Q. - Exports and Imports of Goods and Services: Q2/2021; 9/2021; Q Q Q. - GDP/GNP: 2020; 9/2021; A A A. - Gross External Debt: 12/2020; 9/2021; Q I A. - International Investment Position: N/A; N/A. - Frequency notations explained in the source: Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA). ### Debt sustainability analysis — key findings and risk assessments - Joint Bank-Fund Debt Sustainability Analysis (DSA) summary: - Risk of external debt distress: High. - Overall risk of debt distress: High. - Granularity in the risk rating: Sustainable. - Application of judgment: No. - Overall assessment: - "The Gambia’s overall and external debt distress risk ratings remain “High” and public debt continues to be deemed sustainable, similar to the previous DSA." - Under updated macro framework reflecting staff's revised assessment of COVID-19 impact, there remain temporary breaches of indicative thresholds: - PV of external debt-to-exports ratio: breaches in 2021-22. - External debt service-to-exports ratio: breaches in 2021 and between 2025–29. - PV of external debt service-to-revenue ratio: breaches in 2021 and between 2026-2029. - PV of overall debt-to-GDP ratio: remains on a downward sloping path and drops below its threshold by 2025 (one year later than estimated in previous DSA), indicating public debt outlook remains sustainable. - Downside risks: potential resurgence of the pandemic triggering prolonged recession and added fiscal pressures. - Composite index and debt-carrying capacity: - "The Gambia’s Composite Index is estimated at 2.90 and is based on April 2021 WEO and 2019 WB CPIA; the debt carrying capacity remains medium." - Public debt levels and revisions: - Total public debt to GDP: 85.0 percent as of end-2020. - External debt to GDP: 49.7 percent as of end-2020. - External debt figures revised upward for end-2019 and end-2020 compared to previous DSA: - Upward revisions of external debt figures for 2019 and 2020 were 2.6 percent and 6.1 percent of GDP respectively, to 47.3 percent and 49.7 percent of GDP respectively. - Total public debt ratios revised upward by 2.9 percent and 7.7 percent respectively compared to previous DSA. - Authorities committed to improving data collection and reconciliation and increasing frequency of data reconciliation with creditors and managers of foreign-financed projects. - Debt-service relief and pressures: - Debt-service deferrals secured in 2019: around US$129 million (7 percent of GDP). - CCRT support: expected to total SDR7.9 million (SDR 6.1 million already approved). - Data reconciliation with creditors led to cumulative increase in debt service of around US$72 million between 2021-30, equivalent to about 4 percent of GDP. - Resulted in worsening of key DSA ratios and extended breach of PV of public debt and external debt ratios in near-term. - Debt-service-to-exports ratio: estimated to reach 21.4 in 2021. - PV of debt-to-exports ratios: over 300 in 2021. - Exports expected to gradually recover in 2022; debt-service pressures likely to abate but may resurface as debt deferrals expire in 2024/25. ### Composition of public and external debt — key figures (selected) - As reported in Text Table 2 (values preserved as in source): - Total (US$ millions): 2020 — 1,552.3; 2021 — 84.9; 132.4; 2022 — 133.5; 113.4 7.3 6.8 5.4 (Note: table formatting in source conveys columns for debt stock, percent total debt, percent GDP, and debt service across 2020–22; entries preserved without reinterpretation.) - External: 893.8; 57.6; 48.9; 33.2; 59.9; 49.1; 1.8 3.0 2.3. - Multilateral creditors: 593.9; 38.3; 32.5; 26.9; 47.5; 35.3; 1.5 2.4 1.7. - IMF: 60.5; 3.9 3.3. - World Bank: 127.8; 8.2 7.0. - ADB/AfDB/IADB: 62.4; 4.0 3.4. - Other Multilaterals: 346.6; 22.3 19.0 (o/w: IsDB and OFID 209.5; 13.5 11.5). - Bilateral Creditors: 266.3; 17.2 14.6 2.9; 9.0; 10.4; 0.2 0.5 0.5. - Paris Club: 2.9; 0.2 0.2 0.0 1.8; 0.9; 0.0 0.1 0.0. - Non-Paris Club: 263.4; 17.0 14.4 2.9; 7.2; 9.5; 0.2 0.4 0.4 (o/w: Saudi and Kuwait Fund 134.3; 8.7 7.4). - Commercial creditors: 33.6; 2.2 1.8 3.4; 3.4; 3.4; 0.2 0.2 0.2 (o/w: M.A. Kharafi and Sons 33.6; 2.2 1.8). - Domestic: 658.4; 42.4 36.2 99.3; 73.6; 64.2; 5.4 3.8 3.1. - T-Bills: 369.2; 23.8 20.2 28.9; 27.6; 28.5; 1.6 1.4 1.4. - Bonds: 289.3; 18.6 15.8 70.4; 46.0; 35.7; 3.9 2.4 1.7. - Nominal GDP: 1,827.6; 117.7 100.0. - Creditor composition notes: - "Around 66 percent of the Gambia’s PPG external debt is owed to multilateral creditors, with bilateral creditors (30 percent) and commercial creditors (4 percent)..." - "Approximately 30 percent of the PPG external debt is owed to the IMF and MDBs, a combined 45 percent of debt is owed to various creditors from the Middle East." - Arrears: combined debt owed to Libya and Venezuela approximately US$23 million, equivalent to around 1.2 percent of GDP; arrears attributed to technical problems rather than indication of debt distress. *Prepared by the staffs of the International Monetary Fund and the International Development Association — November 8, 2021* ### 6. The Gambia will continue to benefit extensively from grants and loan disbursements ### 6. The Gambia will continue to benefit extensively from grants and loan disbursements ### Financing flows and donor support - Annual net financing flows from the World Bank (IDA resources) are projected at US$105.3 million during 2021-24 and US$38.8 million during 2025–30. - Net financing flows from the IMF during the ECF program (2020-23) amount to US$91 million. - Projected gross grant disbursements from donors during 2021–30 amount to US$1.81 billion (staff estimates). - Recent debt data reconciliation with creditors resulted in a downward revision of US$110 million in expected loan disbursements over the next few years. - Following that revision, an estimated US$233 million in project loan disbursements are expected from creditors between 2021–24. - The Gambia benefited from debt service suspension of US$4 million under the Debt Service Suspension Initiative (DSSI) in 2020, including relief by the ECOWAS Bank for International Development (EBID) worth US$1.4 million. - Authorities requested further relief for January-June 2021 but did not request further DSSI relief for the rest of 2021, given substantial debt relief through 2024-25 from bilateral creditors in the 2019 agreement. ### Underlying macroeconomic assumptions - The DSA is consistent with the macroeconomic framework in the staff report and assumes: implementation of sound macroeconomic policies, structural reforms, and an ambitious infrastructure investment plan. - Real GDP growth: - 2020: -0.2 percent (revised from 0.0 percent in previous DSA). - 2021 projection: 4.9 percent (revised from 6.0 percent earlier). - Credit to the private sector showed growth of about 5.8 percent (y/y) in August 2021 (compared to zero growth in December 2020). - Inflation: - End-2019: 7.7 percent (y/y). - End-2020: 5.7 percent (y/y). - End-June 2021: 8.1 percent. - End-August 2021: 6.9 percent. - Average inflation is projected to decline towards the central bank’s target of 5 percent in the medium term. - Fiscal deficit and consolidation: - Framework foresees switch from primary deficit to surpluses starting in 2023. - Fiscal consolidation underpinned by: (i) projected gradual increase in domestic revenue via tax-base broadening, rationalization of tax expenditures and exemptions, strengthening revenue administration; (ii) phasing-out/streamlining most one-off COVID-related spending and rationalization of subsidies to SOEs and transfers to subvented agencies; (iii) strict cash management. - Enforcement of infrastructure project selection criteria supported through the IDA Sustainable Development Financing Policy in FY21 and development of priority sector PIPs supported in FY22. - Infrastructure projects: - Loan agreements and disbursements assumed to align with external borrowing plan schedule. - Some large projects (Banjul Port project and Bertil-Harding highway road project) are materializing at a slower pace than anticipated. - Gross financing needs: - Average gross financing needs over the medium term fall to around 17 percent of GDP (lower than in previous DSA). - External financing mix and terms: - Prudent borrowing strategy: gradually increase domestic debt share and seek new external financing only on concessional terms. - Financing needs driven by COVID-19 health and economic implications, delayed tourism resumption, support to economic recovery, and large infrastructure projects for OIC conference. - Authorities contracted US$12 million in new concessional debt in 2020 (program target US$60 million for the year). - Aggregate US$195 million in concessional external debt can potentially be contracted or guaranteed between 2021-23: 2021 (US$55 million), 2022 (US$100 million), 2023 (US$40 million). - Given assumption of higher proportion of concessional financing from some multilateral creditors in later years, the grant element in 2031 is marginally above the medium-term average. - Domestic borrowing: - Contained in 2020 due to on-lending to government of the IMF’s RCF disbursement. - Net domestic borrowing was within program ceiling targets throughout 2020 and H1 2021. - Public borrowing requirements expected to steadily decrease; use of portion of SDR allocation and budget-support disbursements from donors estimated to keep domestic borrowing within program ceilings in 2021. - Domestic borrowing for remainder of program expected to remain consistent with reducing debt vulnerabilities and providing space for private sector financing. - Exports: - Exports of goods and services fell to around 8 percent of GDP in 2020. - Projected to partially rebound in 2021 to 11 percent of GDP and return to pre-pandemic averages around 2022-23. - Current account (C/A) and remittances: - C/A deficit narrowed to 3.6 percent of GDP in 2020 (compared to 6.2 percent projected in previous DSA). - C/A projected to widen to 14.5 percent of GDP in 2021 and average around 12 percent of GDP in the medium term (previous DSA projected average 10.7). - Remittances rose to 22 percent of GDP in 2020 (compared to 8 percent projected in previous DSA). - Remittances projected to average around 17 percent of GDP in the medium term (previous DSA projected around 11 percent). - FX reserves: - Gross foreign exchange reserves rose to US$352 million in 2020 (equivalent to 4.7 months of imports; previous DSA projection US$330 million). - Reserves projected to rise sharply in 2021 to US$497 million (or above 5 months of imports) following new SDR general allocation. - Reserves estimated to average around US$495 million in the medium term. ### DSA realism, classification, and stress testing - Realism checks: - Drivers of projected medium-term debt-creating flows comparable to historical outturns, though forecast errors have been large; large residuals partly attributed to debt data reconciliation. - Projected fiscal adjustment for next three years is well below the top quartile of distribution of approved Fund-supported programs for LICs since 1990. - Contribution of government capital to real GDP growth is conservative and in order of historical magnitudes. - Baseline projection for 2021-22 deviates from growth paths under different fiscal multipliers but rebound appears reasonable given partner support, sector resilience, and strong macroeconomic policies; outlook subject to high uncertainty and downside risks. - Debt carrying capacity: - CI score of 2.90 (marginally higher than previous DSA 2.70); classification remains the same as previous round. - Import coverage of reserves is the most significant contributor to CI score, followed by CPIA value. - CI score updated with April 2021 WEO. - Stress tests: - Standardized settings; none of the individual tailored stress tests applicable. - Combined contingent liabilities test assumes shock of 8.7 percent of GDP (5 percent of GDP financing sector shock and 3.7 percent of GDP for non-guaranteed SOEs debt). ### External DSA findings - Baseline scenario breaches: - PV of external debt-to-exports breaches threshold level of 180 in 2021–22, then falls below and declines thereafter. - Debt-service-to-exports breaches threshold level of 15 in 2021, and between 2025–29. - External debt service-to-revenue ratio breaches threshold level of 18 in 2021 and between 2025–28, before falling below the threshold for the remainder of the horizon. - PV of external debt-to-GDP remains within threshold level of 40 for entire forecast horizon. - Stress scenario outcomes: - All indicators breach thresholds for varying periods. - PV of debt-to-GDP breaches threshold 40 in 2022 and falls below in 2030. - PV of debt-to-exports breaches threshold 180 in 2021 and remains above for remainder of forecast horizon. - Debt-service-to-exports breaches threshold 15 in 2021, remains marginally above until 2030, declines below thereafter. - Debt-service-to-revenue breaches threshold 18 in 2024 and remains above for most of forecast horizon. - Exports shock is most severe for PV of debt-to-exports and debt-service-to-exports ratios; combination shock most severe for PV of debt-to-GDP and debt-service-to-revenue ratios. - Assessment: - Risk of external debt distress remains high, but debt is judged sustainable. - Weak near-term export-related debt service indicators largely due to tourism slowdown; breaches are temporary if exports recover as forecast in 2022 and beyond. - Breaches of debt-service thresholds in later years reflect expiry of debt-service deferrals negotiated with creditors, leading to higher payments due. - Highlights limited space for additional borrowing in near term and need to build buffers for increased debt-service burden. ### Public DSA findings - Baseline scenario: - PV of total public debt-to-GDP breaches benchmark level of 55 between 2020–24, but falls within benchmark in 2025 and declines thereafter. - PV of debt-to-revenue and PV of debt service-to-revenue trend downward for entire forecast horizon. - Stress scenario: - PV of total public debt-to-GDP remains above benchmark for length of forecast horizon. - Growth shock is most extreme for PV of total public debt-to-GDP under stress scenario. - Non-debt creating flows stress test is most extreme for PV of debt-to-revenue ratio, underscoring importance of grant disbursements in baseline projections. - Assessment: - Overall public debt position assessed at high risk of debt distress but remains sustainable. - PV of total public debt-to-GDP follows downward path and remains within benchmark from 2025 onward. - Indicator falls below benchmark within 4 years of projection horizon and remains under benchmark thereafter, supporting sustainability conclusion. - Assessment subject to downside risks from pandemic resurgence, prolonged recession, and added fiscal pressures. ### Risks, vulnerabilities, and data issues - Downside risks dominate: - High uncertainty linked to evolution of pandemic, global recovery, and tourism resumption. - Strong remittance and donor inflows might not persist, adding pressures on debt servicing. - Downside scenario with pandemic resurgence and travel restrictions could keep tourism subdued until end-2021: growth could fall to 3.0 percent (2.0 percent below the baseline). - Fiscal deficit would widen, financing needs increase, and PV of total public debt could fall below benchmark level of 55 later than under baseline. - Other material risks: potential political instability from upcoming presidential and parliamentary elections, oil price volatility, natural disasters. - Data and project execution factors: - Future assessments could be affected by data revisions and speed of infrastructure project execution. - Need to bolster data collection and reconciliation for debt and external sector statistics. - Ongoing World Bank TA to support debt recording (Meridien system), annual borrowing plan formulation/implementation, and government guarantees framework. - Acceleration of public investment projects for 2022 OIC conference and Port of Banjul extension; financing plans remain in flux and could affect external borrowing ceilings. Deviations from borrowing plan could pose risks to debt outlook. ### Authorities’ views and commitments - Authorities acknowledge trade-off between near-term financing needs and medium-term debt sustainability. - Committed to reducing debt vulnerabilities and aiming to reduce PV of total public debt below 55 percent of GDP by 2025 via strong medium-term fiscal framework and prudent borrowing policy. - Committed to improving data collection and reconciliation, including on debt service deferrals agreed in 2019. - Will initiate a bi-annual data reconciliation exercise with creditors and coordinate with managers of foreign-financed projects to ensure disbursement requests are processed through the debt management office (DLDM) and communicated to DLDM. - Progress reported on re-engagement with Libyan authorities to resolve external arrears; plan to re-engage with Venezuelan authorities once sanctions are lifted. *IMF staff report chapter: "6. The Gambia will continue to benefit extensively from grants and loan disbursements"* ### Introduction ### 1gmbea2021003 - Introduction ### Overview and context - Authorities appreciate candid engagement during the virtual 2021 Article IV Consultations and third review of the Extended Credit Facility (ECF). - Emergency financing, debt relief, and the SDR allocation bolstered the response to the COVID-19 pandemic. - Political transition in 2016/17 was followed by: increased growth, reduced debt vulnerabilities, strengthened external stability, progressed structural and legislative reforms, and improved social indicators. - The COVID-19 pandemic disrupted pre-pandemic momentum, producing: - a real decline in GDP per capita of over 3 percent; - an increase in poverty rates. - Vaccination campaign: - mass vaccination from March 2021 supported by COVAX, a World Bank COVID-19 grant, and bilateral partners; - vaccination rate reached around 12 percent of the adult population compared to less than 1 percent of the population at the time of the last review in May; - progress has helped reduce new COVID-19 cases drastically, though the vaccination rate remains low. ### Recent economic developments - Growth and outlook: - Real GDP growth is estimated to have partly recovered in 2021. - Growth is expected to recover in part to 4.9 percent in 2021 before converging in the medium-term to the pre-pandemic average of 6 percent. - Recovery supported by strong remittance inflows boosting construction activity. - Inflation: - Projected to decline to the authorities’ 5 percent target in the medium-term. - Inflation declined to 6.9 percent, year-on-year, in August 2021 from 8.1 percent in June 2021. - Main inflation risks: elevated global oil and non-fuel commodity prices, higher freight charges, depreciation of the dalasi, supply bottlenecks, and increased domestic demand. - External sector: - Current account improved in 2020 due to strong current transfers. - Deficit projected to widen in 2021 with delayed tourism resumption, increased COVID-related imports, and large infrastructure spending. - Timely donor support remains crucial to offset deterioration in the current account and safeguard reserve coverage. - Delays in project grants and budget support have placed authorities under immense pressure. ### Program performance - Overall: Program performance remains satisfactory despite the pandemic. - Quantitative performance criteria (QPC) through the end-June test date were met, including: - ceiling on central government net domestic borrowing (NDB); - floor on the stock of net international reserves (NIR); - zero-ceiling on non-concessional external debt contracted and guaranteed by the government and on the outstanding stock of external public debt. - Indicative targets (IT) for end-June 2021: - Three out of four ITs met: floor on poverty-reducing spending; ceiling on stock of net domestic assets of the central bank; monthly ceiling on central bank credit to the central government at non-market terms. - The floor on total domestic tax revenue was missed by 0.3 percent of GDP. - Structural benchmarks (SBs) for end-June 2021: - Of three SBs, one was met and two are close to completion; missed SB target dates moved to end-December 2021. - Authorities are fast-tracking the procurement Act and preparing a draft stress testing framework pending Fund technical inputs. ### Fiscal policy and debt sustainability - Authorities balance recovery support with fiscal and debt sustainability. - FY2021 budget was augmented via supplementary appropriation with a revenue windfall, without altering program parameters. - FY2022 budget includes fiscal consolidation measures while protecting priority expenditures (pandemic mitigation, social spending, post-pandemic recovery). - Revenue mobilization measures include: - rationalizing tax exemptions; - digitalization of tax administration; - upgrading the taxpayer registry; - regularizing tax audits and data matching in the commercial real estate sector. - Expected revenue boosts: - Senegambia Bridge toll receipts; - a one-off receipt of US$30 million from the petroleum sector. - Cash and spending management: - strict cash management practices to align spending with resources; - contain SOE subsidies; - US$20 million from the US$85 IMF SDR allocation will help create fiscal space in the 2022 budget for pandemic-related spending. - PFM reforms and systems: - IFMIS rolled out to more spending entities and projects; salary payments executed electronically effective February 2021; - Treasury Single Account (TSA) is being operationalized. - Debt management and governance: - Borrow only on highly concessional terms while pursuing grants for infrastructure; - Updated debt strategy, quarterly debt bulletin, revised annual borrowing plans, and monthly bond issuance plans published; - Reconcile and validate external debt data; record domestic debt in the Meridian system; - Strengthening governance, transparency, and accountability of SOEs to minimize contingent liabilities. - Creditor engagement: - Re-engaging with Libyan authorities to resolve outstanding arrears; - Will engage with Venezuelan authorities once sanctions are lifted. ### Monetary and financial sector policies - Monetary stance: - Central Bank of The Gambia (CBG) maintained an accommodative monetary policy to support recovery; - Monetary policy committee (MPC) maintained the policy rate unchanged at 10 percent in its March and September 2021 meetings; - CBG stands ready to recalibrate policy if inflationary pressures resume. - CBG committed to a flexible exchange rate regime and will limit foreign exchange interventions to smoothing disorderly market conditions. - Financial sector resilience: - Banks and micro-finance companies (MFCs) remain liquid, profitable, and well capitalized with capital adequacy ratios well above statutory levels. - Non-performing loans (NPLs) of commercial banks narrowed to 5.6 percent in June 2021, though NPL ratios remain high in a few small banks and NBFIs exposed to pandemic-affected sectors. - Authorities addressing pockets of vulnerabilities, strengthening risk-based supervision of banks and NBFIs, and crisis preparedness and management by implementing IMF FSSR recommendations. - CBG uses RegCoSS software for real-time supervisory information and is developing stress testing capacity; a Financial Stability Unit with a macroprudential mandate is being set up. - CBG reviewing its Business Continuity Plan and addressing IMF 2020 safeguards assessment recommendations. - Expansion of mobile banking has helped boost financial inclusion; monitoring of MFCs will help contain risks. ### Infrastructure and structural reforms - Financing the infrastructure gap: - Staff analysis finds remaining financing gap of at least 1.8 percent of GDP per year, with development partner support critical. - Infrastructure investments expected to significantly impact the economy, including boosting tourism. - Government projects include construction and repair of road networks, power and water utilities, transport facilities, and hotels. - Structural reform priorities: - Completing procurement Act, SOE bill, anti-corruption and Public Finance bills; - Drafted pensions bill and designed new pay and grading system for civil service pay reforms; - Strengthening AML/CFT framework and working with GIABA to complete the second round of the Mutual Evaluation Exercise in 2021; - Implementing a business reform program to improve the business environment, enhance competitiveness, and enable job creation and inclusive growth; - Strengthening policies to build climate resilience. ### Transparency, accountability, and governance - COVID-19 funds transparency: - Authorities published the list of all COVID-19-related procurement contracts and beneficiary owners up to end-June 2021 on the Gambia Public Procurement Agency (GPPA) website. - National Audit Office (NAO) completed first phase of ex-post audit of COVID-19 spending and transmitted the report to the National Assembly. - NAO conducting second phase of the audit with intent to transmit reports to the National Assembly by end-December 2021. - Authorities will publish the two audit reports by end-March 2022. - Human trafficking: - Authorities committed to combatting human trafficking; The Gambia remained at Tier 2 in the last Watchlist of the US Department of State Human Trafficking Report and is working closely with the US State Department to avoid regression to Tier 3. ### Conclusion and policy intent - Authorities remain committed to reforms under the ECF program despite COVID-19 challenges. - They value Fund support for capacity development and effective policy implementation to support recovery. - Fund support is regarded as an important complement to efforts to realize objectives articulated in the National Development Plan (NDP). *Source: 1gmbea2021003 - Introduction* --- _Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1gmbea2021003.pdf_