## 1gmbea2022001 ## Source details **Canonical URL:** [1gmbea2022001](https://www.imf.org/-/media/files/publications/cr/2022/english/1gmbea2022001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2022/english/1gmbea2022001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2022/english/1gmbea2022001.pdf.json) --- ### Executive Summary — Context and headline facts - Political: President Barrow reelected for a second five-year term in December 2021; his party and its alliance hold half of parliamentary seats following April 2022 elections. - COVID-19: fourth wave (Omicron) in late 2021–early 2022; new infection cases dropped to close to zero since February 2022. - Vaccination rate: about 20 percent of the adult population (reported as 20.5 percent in MEFP ¶1). - External shock: war in Ukraine contributed to global fuel and commodity price pressures. ### Recent macroeconomic developments and outlook - Real GDP growth: - 2020: estimated at 0.6 percent. - 2021: estimated at 4.3 percent. - Remittances: US$777 million in 2021 (vs US$590 million in 2020). - Tourism: tourist arrivals began to recover since 2021Q4 but remained significantly below pre-pandemic levels. - Private credit growth: - 20.7 percent (y-on-y) in 2021. - 33.6 percent at end-March 2022 (33.6 percent y-o-y). - Inflation: - 7.6 percent (y-o-y) in December 2021. - 8.2 percent in March 2022. - 11.7 percent at end-April 2022. - Exchange reserves: - 6 months of imports at end-2021. - 5.8 months of imports in March 2022. - Current account: widened in 2021 but less than anticipated due to softer imports and stronger-than-expected services exports late in 2021. - Key risks: COVID-19 resurgence; protraction of the war in Ukraine; further domestic food and fuel price increases; fiscal and debt sustainability pressures. ### Fiscal performance and public debt (outturns and early-2022) - 2021 fiscal aggregates (Act./Prel.): - Revenue: 21.4 percent of GDP. - Domestic revenue: 14.8 percent of GDP. - Grants: 6.5 percent of GDP. - Expenditures: 25.4 percent of GDP. - Net lending (+)/borrowing (–): -4.0 percent of GDP. - Primary balance: -1.2 percent of GDP. - Adjusted net domestic borrowing: 2.2 percent of GDP. - Public debt: 84.2 percent of GDP at end-2021 (declined by 0.8 percentage point). - Revenue shortfalls: tax revenue below target by ½ percent of GDP in 2021; one-off US$30 million petroleum sector receipt supported non-tax receipts. - Early-2022: - Tax revenue exceeded program target by 6½ percent in Q1 2022. - Sale of recovered assets yielded about GMD 100 million (0.1 percent of GDP). - Large down payment for road construction: 1 percent of GDP. - Net domestic borrowing ceiling breached by 0.2 percent of GDP at end-March 2022. - As of end-March: almost one-third of the budget for subsidies spent; almost half of domestically financed project budget depleted. ### Monetary policy actions and financial sector health - CBG policy stance (February 2022 meeting): - policy rate at 10 percent. - reserve requirement ratio at 13 percent. - window of possible monetary tightening left open. - Liquidity management actions: - Reduced forex purchases in late 2021; tapered FX purchases and switched to FX sales in early 2022. - Carried out reverse repos through sales of CBG bills to mop up liquidity. - Plans to continue sale of CBG bills and increase the special deposit facility. - Financial sector indicators (end-2021 / early-2022): - Banking system risk-weighted capital adequacy ratio: 29 percent (statutory ratio: 10 percent). - Banking system NPLs: 5.1 percent of gross loans at end-2021 (down from 6.8 percent at end-2020). - MFCs NPLs: 7.0 percent at end-2021 (down from 10.9 percent at end-2020). - Banks’ exposure to sovereign assets at end-2021: 33.5 percent of total assets. - Profitability ratios (end-2021): banks net incomes at 1.7 percent of average assets; MFCs net incomes at 0.4 percent of average assets. - Credit expansion: 33.6 percent (y-o-y) at end-March 2022. - Banking system accounts for ninety percent of financial sector assets. - Regulatory initiatives: - Capital Market and Securities Act 2021 expected to encourage risk taking and enhance access to long-term financing. - Balance sheet stress tests planned for one large bank and one medium-sized bank (SB for end-September 2022). ### Program performance under the ECF-supported program - Overall assessment: broadly satisfactory implementation despite pandemic and electoral challenges. - End-December 2021 targets: - Five out of six quantitative performance criteria (QPCs) met. - Adjusted QPC ceiling on net domestic borrowing (NDB) exceeded by 0.4 percent of GDP in 2021. - Three out of four indicative targets (ITs) met; IT on domestic tax revenue missed. - Structural benchmarks (SBs) for end-December 2021: of four SBs, two met and two satisfied with delays. - Corrective and program measures: - Authorities requested waiver for non-observance and are implementing corrective actions including rolling quarterly revenue and spending projections, strengthened cash management provisions in the new Public Finance Bill (SB for end-June 2022), and disallowing cash allocation to MDAs that do not submit rolling cash forecasts. - Multi-stakeholder committee set up to ensure implementation of reforms and completion of budget support triggers. ### Economic outlook, shocks, and projections (baseline) - Baseline GDP growth: - 2022: 5.6 percent (½ a percentage point below pre-war projections). - Medium term average: 5.7 percent (one-third a percentage point below pre-war projection). - Inflation path: - 2021 (Prel): consumer price inflation average 7.4 percent. - 2022 Baseline: 8.1 percent (Text Table 2 average). - Text Table 2 projections (consumer price inflation, average): 2023 8.0; 2024 6.3; 2025 5.0; 2026 5.0; 2027 5.0. - Inflation projected to increase from 7.6 percent (y-o-y) at end-2021 to 8.5 percent at end-2022 and converge to CBG medium-term target in 2024. - Selected baseline projections (Text Table 2): - Real GDP growth (percent): 2021 Prel. 4.3; 2022 Baseline 5.6; 2023 6.2; 2024 6.5; 2025 5.8; 2026 5.0; 2027 5.0. - Tourist arrivals (percent change): 2021 13.6; 2022 5.8; 2023 7.1. - Tax revenue (percent of GDP): 2021 10.3; 2022 10.1; 2023 10.9; 2024 11.4; 2027 12.6. - Primary balance (percent of GDP): 2021 -1.6; 2022 -1.5; 2023 0.0; 2024 0.7. - Current account balance (percent of GDP): 2021 -8.0; 2022 -13.3; 2023 -11.8; 2024 -9.7. - PV of public debt (percent of GDP): 2021 70.6; 2022 66.7; 2023 62.6; 2024 58.5. - Gross official reserves (months of prospective imports): 2021 6.0; 2022 4.7; 2023 4.4; 2024 4.2. - Risks: tilted to the downside — protraction of the pandemic, escalation of the war in Ukraine, natural disasters, pressures on fiscal management. ### Fiscal pressures, measures, and financing for 2022 - Total fiscal pressures (Text Table 3): -2,594 million dalasis (-2.2% GDP). - Revenue pressures: -2,279 million dalasis (-1.9% GDP). - Forgone tax receipts from petroleum products: -810 million dalasis (-0.7% GDP). - Loss of budget support: -1,469 million dalasis (-1.3% GDP). - Expenditure pressures: 315 million dalasis (0.3% GDP) — subsidies and transfers. - Measures and financing to cover pressures (2,594 million dalasis; 2.2% GDP): - Revenue measures: 600 million dalasis (0.5% GDP). - Sale of additional assets (Janneh): 300 million dalasis (0.3% GDP). - Other assets sales: 200 million dalasis (0.2% GDP). - CBG profits: 100 million dalasis (0.1% GDP). - Expenditure measures/updates: -560 million dalasis (-0.5% GDP). - Current spending: -259 million dalasis (-0.2% GDP). - Interest payments: -301 million dalasis (-0.3% GDP). - Financing/Deficit increase: 1,434 million dalasis (1.2% GDP). - On-lending of ECF disbursement: 735 million dalasis (0.6% GDP). - Domestic borrowing: 1,000 million dalasis (0.9% GDP). - Foreign amortization: -301 million dalasis (-0.3% GDP). - Policy actions: - Domestic fuel pump prices revised upwards in early May 2022, currently about 25 percent higher relative to December 2021. - Forgone revenue to avoid full passthrough limited at about 0.7 percent of GDP. - Accelerate sale of stolen assets under the Janneh Commission; non-tax revenue bolstered by central bank operational profits and asset sales. - Expected savings from decline in government bonds’ domestic interest rates and streamlining of subsidies and goods and services spending. - Pandemic-related spending to be preserved. - Widening of overall fiscal deficit contained to 1.2 percent of GDP relative to initial budget through measures above. ### Debt sustainability and DSA findings - Debt stance: public debt deemed sustainable but risks of external and overall debt distress remain high. - DSA findings (baseline and stress): - PV of external debt-to-exports, external debt service-to-exports and external debt service-to-revenue ratios temporarily breach indicative thresholds in 2022. - PV of overall debt-to-GDP ratio remains on a downward sloping path and drops below its benchmark from 2025. - PV of total public debt-to-GDP breaches benchmark of 55 between 2022–24 but falls below by 2025 in baseline; under stress remains above benchmark until 2029. - Key debt statistics: - Nominal GDP: 2,034.4 (US$ millions). - Total debt (US$ millions): 1,671.5. - External debt (US$ millions): 965.9 (57.8 percent of total). - Domestic debt (US$ millions): 705.6 (42.2 percent of total). - Total public debt-to-GDP ratio at end-2021: 83.8 percent. - External debt-to-GDP at end-2021: 48.4 percent. - Creditor composition of PPG external debt: 66 percent multilateral; 30 percent bilateral; 4 percent commercial. - PV of public debt-to-GDP (selected projections): 2021 70.6; 2022 66.7; 2023 62.6; 2024 58.5; 2025 53.8; 2027 44.3. - Debt service projections (existing debt) — cumulative 2022–2030: Overall debt service US$627 million; Amortization US$564 million; Interest charges US$63 million. - Stress tests: exports shock and combination shocks generate the most severe breaches of thresholds. ### Transparency, governance, and PFM / SOE reforms - COVID-19 spending transparency: - All procurement contracts, including COVID-19 contracts approved by GPPA since 2021, published on GPPA website with beneficial owners. - First phase audit of COVID-19 spending published on NAO website; three out of five components of second phase audit completed. - PFM reforms and IFMIS/TSA: - Strengthen Treasury Single Account by closing remaining core ministry accounts in commercial banks and shift from bi-weekly to real-time remittance. - IFMIS extended to subvented agencies and integration with CBG in advanced stages. - Public Finance Bill first draft to be completed by end-June 2022 (revised SB timing). - Cash management: conditional cash allocations to MDAs on submission of rolling quarterly cash plans starting 2022Q2. - SOE governance: - SOE bill submitted to National Assembly in April 2022. - SOE annual performance report for 2020 produced using IMF’s SOE health check tool. - Extend performance contracts to three additional SOEs: Gambia Port Authority, Social Security and Housing Finance Corporation, and Gambia National Petroleum Corporation (SB for end-September 2022). - Subsidies to SOEs declined in 2021; subsidies to GGC expected to increase in 2022 due to fertilizer purchases and groundnut volumes (~46,000 tons vs ~7,000 tons in 2021). - Anti-corruption and governance: - Anti-corruption bill awaiting adoption by the new National Assembly; intention to set up an anti-corruption commission by end-2022. - Authorities requested an IMF governance diagnostic mission. ### Program financing, SDR allocation, and repayment capacity - SDR allocation: SDR equivalent to US$85 million received in August 2021 (about 4.5 percent of GDP). - US$20 million of SDR allocation to finance health-related spending in the 2022 budget; remainder saved to boost reserves. - Balance-of-payments and financing needs: - Financing needs estimated to average around $49 million in 2022–23; Fund disbursements would cover 40 percent and 11 percent in the respective years. - No financing gap envisaged from 2024, subject to uncertainty. - 2022 financing gap: US$35.1 million. - Expected coverage: IMF financing US$14 million (ECF disbursements) and US$1.1 million under the CCRT; donor support expected US$20 million in budget support grants to close the gap. - Repayment capacity: - Repayments to the Fund projected to rise over the medium-term, peaking at around SDR10 million in 2027–29. - Total obligations based on existing and prospective credit peak at about 0.6 percent of GDP (2027-2028) and about 5.5 percent of exports of goods and services in the same year. - Fund credit outstanding currently about 5.3 percent of GDP and will decrease to median comparator values in 2029. ### Data reporting, TMU, and monitoring requirements - Quantitative targets defined and reported with specified adjustors (e.g., NDB adjuster for AfDB budget support). - Key reporting and frequency (selected): - Detailed reserve statement with end-month NIR within seven days of month end. - CBG and commercial banks balance sheets monthly within four weeks / 30 days. - Monthly consolidated Central Government budget report within four weeks / 30 days. - Weekly T-bill auction and interbank market data: weekly within five business days. - SOE cash flow statements (13 SOEs): monthly — 30 days after month-end. - Project accounts excluded from NDB calculation listed (selected project account names and numbers provided). - Performance criteria and indicative targets schedules provided for 2021 and 2022 (selected exact figures in Tables 1 and 2). ### Capacity development strategy and technical assistance priorities - TA priorities: revenue administration, public financial management, debt management, financial sector supervision, SOE governance. - Selected CD objectives and actions: - Revenue Administration: implement new tax exemption policy; implement GAMTAXNET remediation; procure and implement ITAS. - PFM: extend IFMIS to project and subvented agency accounts; implement TSA roadmap; prepare gender sensitive budget. - Bank supervision: strengthen stress testing and macroprudential framework; develop safety nets and resolution capabilities. - Debt management: lengthen maturity of domestic debt and reduce rollover risk. - Statistics: improve national accounts (quarterly GDP), price statistics, and balance of payments data. - Recent CD outcomes: - Met five out of six QPCs and three out of four ITs at end-December 2021; remediation actions ongoing for missed NDB QPC and missed tax revenue IT. ### Policy priorities and recommendations (staff appraisal and program stance) - Fiscal: - Strengthen domestic revenue collection (Taxpayer Charter, ITAS roadmap, tax arrears strategy). - Prioritize spending, contain subsidies and domestically financed infrastructure within available resources. - Accelerate asset sales (Janneh) and mobilize non-tax revenues including CBG profits. - Strict cash management: rolling quarterly projections; disallow cash allocations to non-compliant MDAs. - Monetary and financial sector: - Continue cautious monetary tightening to tackle inflation while protecting recovery. - Continue sale of CBG bills and increase special deposit facility to mop up liquidity. - Strengthen supervision and conduct stress tests (SB for end-September 2022). - Implement financial inclusion strategy and measures to strengthen credit intermediation: credit information bureau, collateral register, commercial credit courts. - Governance and structural: - Accelerate adoption of GPPA Act and anti-corruption bill; set up anti-corruption commission. - Strengthen SOE governance, adopt IFRS, extend performance contracts. - Improve AML/CFT framework alignment with FATF standards. - External and debt management: - Maintain adequate external buffers, adhere to external borrowing plan, rely on grants and concessional financing to mitigate elevated debt distress risks. *Source: IMF staff report (May 24, 2022) — 1gmbea2022001.* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Context - The Gambia is consolidating democratic change after peaceful and transparent presidential and parliamentary elections: President Barrow was reelected for a second five-year term in December 2021; his party and its alliance hold half of the parliamentary seats following an election in April 2022. - The country experienced a fourth COVID-19 wave (Omicron) in late 2021–early 2022; new infection cases have dropped to close to zero since February 2022. - Vaccination rate: about 20 percent of the adult population (reported as 20.5 percent in MEFP ¶1). - The Gambia is facing significant repercussions from the war in Ukraine, contributing to global fuel and commodity price pressures. ### Recent macroeconomic developments and outlook - Economic growth: - 2020: estimated at 0.6 percent. - 2021: estimated at 4.3 percent, supported by record-high remittances and robust construction activity. - Remittances: US$777 million in 2021 compared to US$590 million in 2020. - Tourism: tourist arrivals began to recover since 2021Q4 but remained significantly below pre-pandemic levels. - Private credit growth: 20.7 percent (y-on-y) in 2021 and 33.6 percent at end-March 2022. - Inflation: - 7.6 percent (y-o-y) in December 2021. - Accelerated to 8.2 percent in March 2022 (noted in the summary). - Reached 11.7 percent at end-April 2022, driven primarily by global oil and food price increases induced by the war in Ukraine. - Exchange reserves: - Reached 5.8 months of imports in March 2022. - Bolstered to 6 months of imports at end-2021 (supported by remittances and SDR allocation). - Current account: widened in 2021 but less than anticipated due to softer imports (fall in re-exports and weaker demand from foreign-financed infrastructure) and stronger-than-expected services exports late in 2021. - Risks to the outlook: - Potential resurgence of COVID-19 and protraction of the war in Ukraine could endanger the fragile recovery, particularly tourism. - Domestic food and fuel prices could rise further. - Fiscal and debt sustainability could be challenged by additional pandemic spending and further fuel revenue loss. ### Fiscal performance and public debt - 2021 fiscal outturns were weaker than programmed due to shortfalls in tax collection and budget support, and some excess spending related to the pandemic and elections. - Key fiscal figures and developments (from Text Table 1 and narrative): - Revenue: 21.4 percent of GDP (2021, Act./Prel.); domestic revenue 14.8 percent of GDP. - Grants: 6.5 percent of GDP in 2021 (with budget support below projections). - Expenditures: 25.4 percent of GDP (2021, Act./Prel.). - Net lending (+)/borrowing (–): -4.0 percent of GDP (2021, Act./Prel.). - Primary balance: -1.2 percent of GDP (2021, Act./Prel.). - Adjusted net domestic borrowing: 2.2 percent of GDP (2021, Act./Prel.). - Public debt: declined by 0.8 percentage point to 84.2 percent of GDP at end-2021. - Revenue performance and explanations: - 2021 tax revenue was below target by ½ percent of GDP, due to weak early-year direct tax collections and lower-than-anticipated import volumes (high freight costs, high international commodity prices, election-related uncertainty). - Non-tax revenue was in line with projections, supported by a one-off US$30 million petroleum sector receipt. - Strong tax arrears collection, improved SOE tax compliance, and reduction in duty waivers partially offset shortfalls. - Early 2022 developments: - Tax revenue collection outperformed the program target (tax revenue target exceeded by 6½ percent), driven by strong PIT, CIT, VAT and Excise collections as businesses—especially in tourism and hospitality—performed better in 2021Q4. - Non-tax revenue showed good performance (e.g., Senegambia bridge traffic recovery; sale of recovered assets yielded about GMD 100 million, 0.1 percent of GDP). - Spending pressures: a large down payment for road construction (1 percent of GDP) in preparation for the OIC conference and subsidies to the GGC for a fertilizers campaign. - Net domestic borrowing ceiling: breached by 0.2 percent of GDP at end-March 2022. - As of end-March: almost one-third of the budget for subsidies spent; almost half of domestically financed project budget depleted due to accelerated road infrastructure projects. ### Program performance under the ECF - Overall assessment: performance under the ECF-supported program was broadly satisfactory despite pandemic and electoral challenges. - Quantitative targets and structural benchmarks: - All but one quantitative performance criteria (QPCs) at end-December 2021 were met. - All but one indicative target (ITs) at end-December 2021 were met. - Of four structural benchmarks (SBs) for end-December 2021, two were met and the remaining two were satisfied with delays. - Staff recommendation: given satisfactory implementation and strong policy commitments, staff recommends completion of the fourth ECF review and supports the authorities’ requests for a waiver of nonobservance and modification of a performance criterion. ### Policy framework and 2022 program objectives - Fiscal strategy aims to balance supporting the post-pandemic recovery, addressing the repercussions of the war in Ukraine, and safeguarding debt sustainability via: - Domestic fuel price adjustment. - Revenue collection efforts. - Prioritization of spending. - Some relaxation of the fiscal deficit and financing. - Monetary policy: some tightening of the monetary policy stance will be initiated to address mounting inflationary pressures while safeguarding the nascent recovery. - Structural reform priorities: revenue administration, public financial management, governance (including digitalization, public procurement, prioritization of public investment), state-owned enterprises, and anti-corruption measures. ### Staff mission and consultations - Mission format and dates: hybrid mission during March 28–April 8, 2022. - Core mission team: Messrs. Razafimahefa (head), Kemoe, Kumah, and Nachega, and Ms. Singh (all AFR), Ms. Han (FAD), and Messrs. Suryakumar (SPR), Barry (resident representative), and Mendy (local economist). - Meetings: President Adama Barrow; Vice President Isatou Touray; Finance Minister Mambury Njie (and later Finance Minister Seedy Keita after a cabinet reshuffle); Central Bank Governor Buah Saidy; other public officials; private sector operators; development partners; press conference. - Development partner participation: staff from the African Development Bank, the European Union, and the World Bank attended several meetings. *Source: IMF staff report — Executive Summary (May 24, 2022).* ### 6. The CBG took some initial measures in late 2021 to contain inflationary pressures ### 6. The CBG took some initial measures in late 2021 to contain inflationary pressures ### Monetary policy actions and liquidity management - As inflationary pressures built up in late 2021, the CBG reduced forex purchases and carried out reverse repos through sales of CBG bills, which helped reduce excess liquidity and moderate reserve money growth. - At its policy meeting in February 2022, the CBG maintained its key instruments unchanged: - policy rate at 10 percent - reserve requirement ratio at 13 percent - while leaving open the window of possible monetary tightening. - The CBG tapered FX purchases in the final weeks of 2021 and switched to FX sales in early 2022, partly helping to mop up liquidity. - The CBG plans to continue: - sale of CBG bills - increase the special deposit facility - objective: effectively mop up excess liquidity (including from the on-lending to the Treasury of the fifth and sixth ECF disbursements) and ensure attainment of the target inflation rate. ### Financial sector health and developments - Risk-weighted capital adequacy ratios at end-December 2021 were above the statutory limits on banks and micro-finance companies (MFCs). - System-wide balance sheets strengthened amid a strong asset rebound: - banking system non-performing loans declined from 6.8 percent of gross loans at end-2020 to 5.1 percent at end-2021 - MFCs NPLs declined from 10.9 percent to 7 percent over the same period - Profitability ratios remained low at end-2021: - banks: net incomes at 1.7 percent of average assets - MFCs: net incomes at 0.4 percent of average assets - Banks’ exposure to sovereign assets at end-2021: 33.5 percent of total assets. - Private credit extension is highly concentrated in two main sectors: building and construction, and commerce. - Credit growth and liquidity indicators: - credit expansion stood at 33.6 percent (y-o-y) at end-March 2022 (compared to 20.7 percent at end-2021) - banking system accounts for ninety percent of financial sector assets. - Regulatory and supervisory initiatives: - Capital Market and Securities Act 2021 expected to encourage risk taking and enhance access to long-term financing. - CBG leveraging technical assistance to strengthen risk-based supervision. - Balance sheet stress tests planned for one large bank and one medium-sized bank (SB for end-September 2022). - CBG strengthening supervisory capacity and safeguards; cautious implementation of the National Financial Inclusion Strategy. ### Performance under the program (end-December 2021 and early 2022) - Five out of six quantitative performance criteria (QPCs) at end-December 2021 were met. - The adjusted QPC ceiling on net domestic borrowing (NDB) was overshot by 0.4 percent of GDP due to shortfalls in tax collection and budget support, and some unforeseen excess spending. - Preliminary end-March 2022 NDB indicative target was also breached due to a large down payment on an OIC project and fertilizers subsidies. - Authorities requested a waiver for non-observance of a QPC and are implementing corrective actions, including: - institutionalizing rolling quarterly revenue and spending projections - strengthening provisions in the new Public Finance Bill (SB for end-June 2022) to require that, as a general rule, any additional spending should be matched with an equivalent additional revenue or spending reallocations in the context of a supplementary budget - strengthening cash management by disallowing cash allocation to MDAs if they do not submit rolling updated quarterly cash forecasts to the ministry of finance - requesting monthly rolling cash forecast for selected pilot MDAs - aligning rolling quarterly spending plans with the treasury and borrowing plans, consistent with the NDB target under the program from 2022Q2 - setting up a multi-stakeholder committee, including key development partners, to ensure implementation of reforms and completion of budget support triggers - Indicative targets (ITs): - Three out of four ITs, including the IT on poverty reduction spending, were met. - The IT on the floor of domestic tax revenue was missed owing to pandemic-induced weak tax base in early 2021. - Structural benchmarks (SBs) for end-December 2021: - Of four SBs, two were met and two satisfied with delays. - Audited and approved financial statements of SOEs were published on MoFEA’s website. - A memorandum on tax expenditure was approved and regulations were issued to strengthen control over investment tax incentives. - CBG prepared an internal framework for banking sector stress testing. - Revised SOE bill submission to the National Assembly (prior action for ECF review) was completed in early April 2022. - End-March 2022 SB on publication of COVID-19 spending audit reports was not completed but the first report was published; the second report publication set as an SB for end-September 2022. - Regarding quantitative targets at end-March 2022 for which preliminary data are available, all but the NDB were met. ### Economic outlook, shocks, and risks - The war in Ukraine has heightened uncertainties, dampening the post-pandemic recovery and spurring inflationary pressures. - Baseline projections (changes from pre-war and Text Table 2 projections): - GDP growth projected at 5.6 percent in 2022 (½ a percentage point below pre-war projections) - average 5.7 percent in the medium term (one-third a percentage point below pre-war projection) - Inflation projected to increase from 7.6 percent (y-o-y) at end-2021 to 8.5 percent at end-2022 and start converging to the CBG medium-term target in 2024 - Terms of trade shock would widen fiscal and current account deficits and lower post-shock forex reserves - Key projections from Text Table 2 (Baseline, selected indicators): - Real GDP growth (percent): 2021 Prel. 4.3; 2022 Baseline 5.6; 2023 6.2; 2024 6.5; 2025 5.8; 2026 5.0; 2027 5.0 - Tourist arrivals (percent change): 2021 13.6; 2022 5.8; 2023 7.1; 2024 7.8; 2025 6.4; 2026 4.5; 2027 5.6 - Consumer price inflation (average, percent change): 2021 7.4; 2022 8.1; 2023 8.0; 2024 6.3; 2025 5.0; 2026 5.0; 2027 5.0 - Tax revenue (percent of GDP): 2021 10.3; 2022 10.1; 2023 10.9; 2024 11.4; 2025 11.8; 2026 12.1; 2027 12.6 - Primary balance (percent of GDP): 2021 -1.6; 2022 -1.5; 2023 0.0; 2024 0.7; 2025 1.4; 2026 1.3; 2027 1.3 - Domestic primary balance (percent of GDP): 2021 -0.2; 2022 0.3; 2023 0.5; 2024 1.1; 2025 2.5; 2026 2.6; 2027 2.9 - Current account balance (percent of GDP): 2021 -8.0; 2022 -13.3; 2023 -11.8; 2024 -9.7; 2025 -10.3; 2026 -9.5; 2027 -9.4 - PV of public debt (percent of GDP): 2021 70.6; 2022 66.7; 2023 62.6; 2024 58.5; 2025 53.8; 2026 48.9; 2027 44.3 - Gross official reserves (months of prospective imports): 2021 6.0; 2022 4.7; 2023 4.4; 2024 4.2; 2025 4.1; 2026 4.0; 2027 3.7 - Risks tilted to the downside: - potential further deterioration of the global geo-political environment - protraction of the pandemic - downside scenario: delayed recovery, soaring inflation, wider fiscal and external financing gaps, upward shift of the debt path, downward shift of forex reserves - other risks: higher frequency and severity of natural disasters; potential pressures on fiscal management ### Fiscal policy, budgetary pressures, and debt sustainability - The execution of the 2022 budget faces significant challenges from the war in Ukraine, lingering pandemic effects, and anticipated shortfall in budget support. - Fiscal pressures and measures (Text Table 3): - Total pressures: -2,594 million dalasis (-2.2% GDP) - Revenue pressures: -2,279 million dalasis (-1.9% GDP) - Forgone tax receipts from petroleum products: -810 million dalasis (-0.7% GDP) - Loss of budget support: -1,469 million dalasis (-1.3% GDP) - Expenditure pressures: 315 million dalasis (0.3% GDP) - Subsidies and transfers: 315 million dalasis (0.3% GDP) - Total measures and financing: 2,594 million dalasis (2.2% GDP) - Revenue measures: 600 million dalasis (0.5% GDP) - Sale of additional assets (Janneh): 300 million dalasis (0.3% GDP) - Other assets sales: 200 million dalasis (0.2% GDP) - CBG profits: 100 million dalasis (0.1% GDP) - Expenditure measures/updates: -560 million dalasis (-0.5% GDP) - Current spending: -259 million dalasis (-0.2% GDP) - Interest payments: -301 million dalasis (-0.3% GDP) - Financing/Deficit increase: 1,434 million dalasis (1.2% GDP) - On-lending of ECF disbursement: 735 million dalasis (0.6% GDP) - Domestic borrowing: 1,000 million dalasis (0.9% GDP) - Foreign amortization: -301 million dalasis (-0.3% GDP) - Policy actions and adjustments: - Authorities revised upwards domestic fuel pump prices in early May 2022, currently about 25 percent higher relative to December 2021. - Forgone revenue to avoid full passthrough from global to domestic prices is limited at about 0.7 percent of GDP. - Authorities will accelerate sale of stolen assets under the Janneh Commission. - Non-tax revenue bolstered by receipt of central bank’s operational profits and sale of other identified government assets. - Expected savings from decline in government bonds’ domestic interest rates and streamlining of subsidies and goods and services spending. - Pandemic-related spending will be preserved. - Widening of overall fiscal deficit contained to 1.2 percent of GDP relative to the initial budget. - Additional deficit and external amortization pressures covered by on-lending of two ECF disbursements in 2022 from the CBG to the government and an increase in net domestic borrowing. - Reforms to support fiscal framework and minimize execution risks (MEFP SBs and actions): - Strengthen domestic revenue collection: - adoption in April 2022 of a Taxpayer Charter (SB for end-June 2022) - auditing tax exempted entities under Special Investment Certificates (SB for end-September 2022) - preparing and using accurate tax ledgers for large taxpayers (SB for end-September 2022) - revising fiscal provisions in the GIEPA act - drafting, approving and commencing implementation of the ITAS roadmap - developing and implementing a strategy for managing tax arrears - setting up a fully functional Internal Affairs Unit at the GRA - developing and implementing a national policy for customs control and risk management - On the spending side: strict cash management, moderate subsidies to SOEs, dedicate adequate resources to social and pandemic-related interventions, ensure civil service reforms contained within the 2022 budget envelope and available resources. - Debt sustainability: - The Gambia’s public debt is deemed sustainable but risks of external and overall debt distress remain high. - DSA findings: - PV of external debt-to-exports, external debt service-to-exports and external debt service-to-revenue ratios temporarily breach indicative thresholds in 2022. - PV of external debt-to-exports stays below threshold for the remainder of forecast; debt service-to-exports and debt service-to-revenue ratios breach threshold again between 2025-2029. - PV of overall debt-to-GDP ratio remains on a downward sloping path and drops below its benchmark from 2025. - Expirations of global debt service relief initiatives (DSSI ended December 2021; CCRT covers debt service until April 2022) and the expirations of The Gambia’s debt rescheduling require strict adherence to borrowing commitments and maintenance of strong reserve buffers. ### Policy priorities and recommendations - Monetary and financial sector: - Continue cautious monetary policy tightening to tackle inflation while protecting recovery. - Continue CBG bill sales and increase the special deposit facility to mop up excess liquidity. - Use supportive policies to foster intermediation: credit information bureau, collateral register, commercial credit courts. - Strengthen supervision and conduct stress tests (SB for end-September 2022). - Fiscal and structural reforms: - Implement revenue-enhancing measures and strengthen tax administration (Taxpayer Charter, ITAS roadmap, tax arrears strategy). - Strengthen public financial management: rolling quarterly revenue and spending projections, stricter cash management, require rolling cash forecasts from MDAs. - Pursue asset sales (Janneh) and non-tax revenue measures (CBG profits) to finance pressures. - Contain new spending within available resources and implement expenditure rationalization measures (e.g., restrictions on travel, subsistence allowances, fuel allocations). - Maintain adequate external buffers and adhere to agreed external borrowing plan under the ECF-supported program to mitigate elevated debt distress risks. *Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1gmbea2022001.pdf* ### 19. The authorities are delivering on their commitments to ensure transparency of the ### 1gmbea2022001 - 19. The authorities are delivering on their commitments to ensure transparency of the ### Transparency of COVID-19 spending and audits - All procurement contracts, including COVID-19 contracts, approved by the Gambia Public Procurement Agency since 2021 are published on its website, together with the beneficial owners for the COVID-19 contracts. - The report from the first phase audit of COVID-19 spending is published on the National Audit Office (NAO) website. - Three out of the five components of the second phase audit were completed; the NAO is working on the other components and will publish the full report after its review by the new National Assembly. ### Public financial management (PFM) reforms and SOE governance - Authorities will strengthen the Treasury Single Account by closing the remaining accounts of core ministries/departments in commercial banks and shifting from bi-weekly to real-time remittance of government revenues. - The use of performance contracts with MoFEA will be extended to three additional SOEs: the Gambia Port Authority, the Social Security and Housing Finance Corporation, and the Gambia National Petroleum Corporation (SB for end-September 2022). - An SOE annual performance report for the year 2020 was produced, using the IMF’s SOE health check tool. - The social registry is being expanded to ensure that social safety net programs are targeting the poor and most vulnerable population (SB for end-June 2022). ### Pending governance and legal reforms - Swift adoption of the GPPA act by the new National Assembly will significantly improve the procurement legal framework and value-for-money on the use of public resources. - The anti-corruption bill is awaiting adoption by the new National Assembly and the authorities intend to set up an anti-corruption commission by end-2022. - The Gambia will host a regional governance summit and welcomes a governance diagnostic mission from the IMF. - The Gambia should take measures to align its AML/CFT framework with the Financial Action Task Force standards. - Ministry of Trade and The Gambia Investment and Exports Promotion Agency are taking measures to improve the business environment, including the creation of trade and tourism hub, opening of GIEPA regional offices, and coordination with the Ministry of Justice to accelerate the resolution of commercial cases. ### Climate policy and vulnerabilities - The Gambia has been implementing climate-related policies compatible with the goals of the 1.5°C Paris agreement. - Mitigation actions include initiating a mini solar grid project to provide electricity access to remote households. - Adaptation actions include restoration of forests and mangroves. - The country faces frequent and severe windstorms, floods, sea level rise, coastal erosion, and droughts. ### Capacity development and technical assistance - Technical assistance will continue to focus on strengthening revenue administration, public financial and debt management, fiscal governance, and financial sector supervision. - Staff encourages authorities to strengthen internal institutional capacity by making full use of TA support and resident advisors at MoFEA, GRA, and CBG. ### Program modalities, SDR allocation, and financing - Program performance will be assessed through semi-annual reviews; the end-June and end-December 2022 QPCs and ITs remain unchanged from the 3rd ECF-supported program review except net domestic borrowing adjustments. - SDR allocation: - The Gambia received an SDR allocation equivalent to US$85 million (about 4.5 percent of GDP) in August 2021. - US$20 million of the SDR allocation will be used to finance health-related spending in the 2022 budget. - The remainder of the SDR allocation will be saved to help boost reserves and prepare against downside risks and higher debt service obligations starting in 2025. - Balance-of-payments and financing needs: - Financing needs are estimated to average around $49 million in 2022–23, of which Fund disbursements would cover 40 percent and 11 percent in the respective years. - No financing gap is envisaged from 2024, subject to high uncertainty and downside risks. - Financing assurances and 2022 gap: - The financing gap in 2022 is estimated to be US$ 35.1 million. - Expected coverage: IMF financing with US$14 million in disbursements under the ECF arrangement, and US$1.1 million under the CCRT debt service relief. - Donor support expected to be US$20 million in budget support grants, which is expected to close the financing gap in 2022. ### Repayment capacity and Fund obligations - The Gambia’s capacity to repay the Fund is expected to remain adequate conditional on successful implementation of program conditionality and structural reforms. - Repayments to the Fund are projected to rise over the medium-term, peaking at around SDR10 million in 2027–29. - Total obligations based on existing and prospective credit will peak at about 0.6 percent of GDP (2027-2028) and about 5.5 percent of exports of goods and services in the same year. - Fund credit outstanding is currently at about 5.3 percent of GDP and will only decrease to median values of the comparator group in 2029. ### Risks, mitigation, and safeguards - Key risks: - Potential protraction of COVID-19 pandemic and war in Ukraine could widen fiscal and BoP financing gaps, worsen debt vulnerabilities, weigh on forex reserves, and strain the financial sector. - Government’s fast-tracking of infrastructure projects and declining development partners’ budget support could undermine fiscal strategy and compromise debt sustainability. - Mitigation: - Program monitoring will be strengthened with greater emphasis on maintaining policy buffers. - Safeguards: - The CBG has implemented most key recommendations from the Fund’s 2020 safeguards assessment; progress is being made on residual recommendations. - A revised investment policy and guidelines have been drafted, in line with IMF TA recommendations, but have not yet been approved by the CBG Board. - The FY2021 audit of the CBG’s financial statements is at the final stages, and arrangements are in place for the FY2022-25 financial audits. ### Staff appraisal: macro outlook and policy priorities - Growth and inflation: - Anticipated 5.6 percent economic growth for 2022. - Inflation reached 8.2 percent in March 2022. - External sector and reserves: - Forex reserves stood at 5.8 months of imports in March 2022, bolstered by SDR allocations. - Policy priorities: - Continue the COVID-19 vaccination campaign given the risk of pandemic resurgence. - Fiscal framework in 2022 aims to balance recovery support, war repercussions, and debt sustainability through domestic fuel price adjustment, revenue collection efforts, spending prioritization, and some relaxation of the fiscal deficit and financing. - Emphasize grants and highly concessional loans, adhere to the external borrowing plan, modernize revenue administration, rationalize tax exemptions, phase-out large infrastructure projects, rigorously appraise domestically financed investment, and reduce subsidies to SOEs. - Monetary policy should be recalibrated to address inflationary pressures while supporting recovery: CBG tapered forex purchases in late 2021 and switched to forex sales in early 2022, plans to continue sale of CBG bills and increase the special deposit facility rate. - Implement the financial inclusion strategy launched in late 2021 and strengthen credit intermediation via the credit information bureau, collateral register, and commercial credit courts. - Accelerate and finalize key pending reforms: adoption of the procurement act, adoption of the anti-corruption bill and setting-up of the anti-corruption committee, enhancement of the investment promotion agency, acceleration of resolution of commercial court cases, and better alignment of AML/CFT framework with international standards. *Source: 1gmbea2022001 - 19. The authorities are delivering on their commitments to ensure transparency of the (PDF chapter).* ### 36. In view of The Gambian authorities’ broadly satisfactory performance under the ECF- ### In view of The Gambian authorities’ broadly satisfactory performance under the ECF-supported program ### Program recommendation and conditionality - Staff recommends the Executive Board’s completion of the fourth review under the ECF arrangement and the completion of the financing assurances review. - Staff supports the authorities’ requests for a waiver of nonobservance and modification of a performance criterion, and the financing assurances review. ### Recent economic developments (high-level findings) - Preliminary information points to a rebound in growth in 2021, following a sharp deceleration in 2020. - T-Bill rates continued to decline throughout the year, as liquidity conditions eased. - Large FX inflows in past years and the recent SDR allocation improved reserve coverage of imports, and confidence in the dalasi strengthened against US$. - Inflation picked up, reflecting an acceleration in global commodity prices, higher shipping costs, and a weakening of the dalasi against major trade partners' currencies. - The fiscal situation deteriorated due to a significant shortfall in budget support and increased spending pressures. - Domestic borrowing increased markedly as the authorities relied mostly on local borrowing to make up for the shortfall in budget support grants. - Private credit expansion remains tepid, while private inflows (notably remittances) continue to surpass historical averages. - The financial sector is adequately capitalized with system-wide ratios above the statutory regulatory minimum; total assets have expanded since the 2016/17 democratic transition; NPLs disrupted by COVID-19 declined in 2021; average profitability remains subdued; the system remains highly liquid. ### Key fiscal sector findings - Tax collection was adversely affected by the delayed economic recovery and a shortfall in grants. - The overall fiscal balance deteriorated in 2021. - Despite multiple spending pressures, overall expenditures declined in 2021. - Total public debt-to-GDP ratio is estimated to have declined in 2021. - Selected fiscal figures (percent of GDP or levels from the source): - Primary balance and public debt series (selected public debt-to-GDP): 85.9, 82.9, 83.8, 77.3, 79.5, 74.6, 69.4, 63.7, 58.0, 52.9. - Gross official reserves (millions of US$): 352.1, 496.5, 530.4, 472.9, 467.7, 459.5, 472.4, 483.5, 489.1, 488.1 (months of next year's imports of goods and services shown elsewhere). - External public debt (millions of US$) series shown in the source for corresponding years (e.g., 893.8, 951.6, 965.9, 987.7, 985.8, 1,024.7, 1,053.3, 1,055.3, 1,047.7, 1,046.8). - External current account balance (percent of GDP) excluding official transfers: -7.5; -13.3; -8.8; -18.2; -14.2; -14.1; -11.9; -11.6; -10.5; -10.4. - Including official transfers: -2.9; -12.5; -8.0; -16.0; -13.3; -11.8; -9.7; -10.3; -9.5; -9.4. ### Monetary and external sector highlights - The CBG relaxed monetary conditions at the onset of the COVID-19 pandemic, which expanded liquidity and helped soften T-bill yields through 2021. - While the pickup in official inflows receded in 2021, private inflows (notably remittances) continued to surpass historical averages, enabling robust interbank FX activity. - CBG FX purchases were tempered in 2021 to contain inflationary pressures, resulting in a decline in excess reserves of banks by year’s end and reserve money growth dipped. - Broad money and domestic asset growth remained strong as banks financed central government and private credit; private credit expansion remains tepid. - Monetary aggregates (selected from source, end-of-period stocks and growth): - Broad money (levels in millions of local currency, selected end-of-period): 52,288; 58,145; 62,494; 62,005; 66,322; 70,636; 76,638; 84,341; 89,329; 94,541. - Broad money growth (percent change): 22.0; 11.2; 19.5; 6.6; 6.1; 6.5; 8.5; 10.1; 5.9; 5.8. - Reserve money (levels in millions of local currency, selected): 18,595; 21,565; 21,124; 20,886; 20,233; 19,740; 20,697; 21,659; 22,659; 23,658. - Net foreign assets (in millions of U.S. dollars, selected): 476; 476; 496; 559; 495; 564; 523; 587; 643; 637; 628 (as presented across projections and historicals). ### Financial sector indicators (selected) - Capital Adequacy (Tier I capital/risk-weighted assets; in percent): system-wide ratios remained above statutory minimum for Deposit Money Banks and Microfinance Companies (figures shown in source charts). - Private credit and NPLs: private credit growth declined sharply at the onset of the COVID-19 pandemic with a rebound starting in 2021; NPLs rose with the pandemic but declined in 2021. - Liquidity (liquid assets/total assets; in percent): the system remains highly liquid (figures in source charts). ### Medium-term outlook and projections (selected) - Economic growth is expected to accelerate in 2022 as the recovery takes hold. - Inflation peaked in 2021 and is projected to gradually converge toward the CBG medium-term target. - Fiscal consolidation in the medium term is expected to be driven by expenditure restraint and improved tax effort offsetting the decline in donor support. - Borrowing needs are expected to gradually decline and the public debt-to-GDP ratio is projected to decline steadily. - Selected projections and medium-term series drawn from the source: - GDP at constant prices (annual percent change / series in table): 0.6; 4.9; 4.3; 6.0; 5.6; 6.2; 6.5; 5.8; 5.0; 5.0 (presented across 2020–27 in the source). - Consumer prices (average): 5.9; 7.0; 7.4; 6.3; 8.1; 8.0; 6.3; 5.0; 5.0; 5.0 (source series). - Public debt-to-GDP (selected projected path in percent): 79.5; 74.6; 69.4; 63.7; 58.0; 52.9 (as presented in medium-term table). - Gross official reserves (millions of US$) projected path (selected): 472.4; 483.5; 489.1; 488.1 (source projections). ### Policy implications and priorities implied by staff analysis - Complete the fourth review under the ECF arrangement and finalize the financing assurances review to maintain program support and donor confidence. - Address the shortfall in budget support through a mix of expenditure restraint and improved revenue mobilization to stabilize fiscal balances. - Limit domestic borrowing pressures where feasible to avoid crowding out private credit; consider pacing of domestic debt issuance. - Maintain cautious monetary conditions to contain inflation while preserving liquidity needed for financial stability and recovery. - Prioritize measures to strengthen resilience of bank balance sheets, monitor NPLs, and support a gradual revival of private credit. - Continue mobilizing and managing external inflows (including SDR allocations and official financing) to rebuild reserves and support exchange rate stability. *Source: The Gambian authorities; and IMF staff estimates and projections.* ### 1. Current account ### 1. Current account ### A. Goods and services (levels, US$ millions) - Goods and services: -517.0 -671.1 -620.2 -732.9 -773.3 -832.7 -833.2 -876.4 -898.8 -949.9 - Goods (net): -490.8 -645.8 -597.9 -796.1 -822.4 -920.9 -968.4 -1026.3 -1063.6 -1129.3 - Exports, f.o.b.: 69.3 109.4 72.4 152.2 96.3 118.0 130.6 140.8 149.9 159.5 - Imports, f.o.b.: -560.1 -755.1 -670.3 -948.3 -918.7 -1038.9 -1098.9 -1167.0 -1213.5 -1288.7 - Services (net): -26.2 -25.3 -22.3 63.2 49.1 88.1 135.1 149.8 164.8 179.4 - Services exports: 82.6 116.4 105.3 220.4 196.2 247.3 303.1 327.4 351.0 376.2 - Of which: Travel income: 46.6 48.9 53.6 95.3 116.4 115.9 152.9 196.1 211.6 227.9 245.5 - Services imports: -108.8 -141.7 -127.6 -157.3 -147.1 -159.2 -168.0 -177.6 -186.2 -196.9 ### B. Income (net) (levels, US$ millions) - Income (net): -31.0 -32.1 -32.1 -32.4 -32.4 -31.2 -32.4 -33.5 -34.8 -36.1 - Income credits: 2.4 2.5 2.5 2.5 2.5 2.4 2.5 2.6 2.7 2.8 - Income debits: -33.5 -34.6 -34.6 -34.9 -34.9 -33.7 -34.9 -36.2 -37.5 -39.0 ### C. Current transfers (levels, US$ millions) - Current transfers: 495.2 453.1 489.2 424.9 516.4 586.7 619.1 626.4 655.2 690.3 - Official transfers: 82.7 16.3 16.2 47.1 20.0 55.6 55.9 35.5 30.1 32.4 - Of which: COVID-19 assistance: 26.4 ..................... ...... - Remittances: 400.2 424.2 460.0 536.5 483.5 516.9 548.6 576.0 609.8 642.2 - Other transfers: 12.3 12.6 12.6 12.9 12.9 14.2 14.6 14.9 15.3 15.7 ### D. Current account balances (US$ millions) - Current account (excl. official transfers): -135.6 -266.4 -179.3 -387.5 -309.3 -332.9 -302.4 -319.0 -308.5 -328.2 - Current account (incl. prospective official transfers): -52.9 -250.1 -163.1 -340.4 -289.3 -277.2 -246.5 -283.5 -278.4 -295.8 ### E. Current account (percent of GDP) - Goods and services: -28.6 -33.5 -30.5 -34.4 -35.5 -35.4 -32.7 -31.9 -30.6 -30.2 - Goods (net): -27.1 -32.2 -29.4 -37.3 -37.8 -39.1 -38.0 -37.3 -36.2 -35.9 - Exports, f.o.b.: 3.8 5.5 3.6 7.1 4.4 5.0 5.1 5.1 5.1 5.1 - Imports, f.o.b.: -31.0 -37.7 -32.9 -44.5 -42.2 -44.2 -43.1 -42.4 -41.3 -40.9 - Services (net): -1.4 -1.3 -1.1 3.0 2.3 3.7 5.3 5.4 5.6 5.7 - Services exports: 4.6 5.8 5.2 10.3 9.0 10.5 11.9 11.9 11.9 11.9 - Of which: Travel income: 2.6 2.4 2.4 2.6 5.5 5.3 6.5 7.7 7.7 7.8 7.8 - Services imports: -6.0 -7.1 -6.3 -7.4 -6.8 -6.8 -6.6 -6.5 -6.3 -6.3 - Income (net): -1.7 -1.6 -1.6 -1.5 -1.5 -1.3 -1.3 -1.2 -1.2 -1.1 - Income credits: 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 - Income debits: -1.8 -1.7 -1.7 -1.6 -1.6 -1.4 -1.4 -1.3 -1.3 -1.2 - Of which: Interest on government debt: 0.1 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.3 - Current transfers: 27.4 22.6 24.0 19.9 23.7 24.9 24.3 22.8 22.3 21.9 - Official transfers: 4.6 0.8 0.8 2.2 0.9 2.4 2.2 1.3 1.0 1.0 - Remittances: 22.1 21.2 22.6 17.1 22.2 22.0 21.5 20.9 20.8 20.4 - Other transfers: 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 - Current account (excl. official transfers): -7.5 -13.3 -8.8 -18.2 -14.2 -14.1 -11.9 -11.6 -10.5 -10.4 - Current account (incl. prospective official transfers): -2.9 -12.5 -8.0 -16.0 -13.3 -11.8 -9.7 -10.3 -9.5 -9.4 --- ### 2. Capital and financial account; overall balance; reserves ### A. Capital and financial account (levels, US$ millions) - Capital account: 66.9 103.9 103.6 179.1 85.8 105.0 101.4 137.7 138.4 139.1 - Financial account: 66.8 233.1 224.4 126.2 128.5 162.7 163.6 164.4 159.3 175.9 - Foreign direct investment: 68.5 134.5 99.3 129.5 99.7 108.1 114.1 120.8 126.8 133.9 - Portfolio investment: 3.8 3.8 3.9 4.0 4.1 4.5 4.8 5.2 5.6 6.0 - Other investment: -5.5 94.8 121.2 -7.3 24.7 50.1 44.7 38.4 26.9 36.1 - Capital and financial account (total): 133.7 337.0 327.9 305.2 214.3 267.7 265.0 302.1 297.7 315.1 ### B. Errors and omissions; overall balance; financing (levels, US$ millions) - Errors and omissions: 30.9 0.0 -42.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - Overall balance (note 1): 111.7 70.6 105.9 -82.2 -95.0 -65.2 -37.4 -16.9 -10.8 -13.1 - Financing: -96.4 -70.6 -105.9 82.2 95.0 65.2 37.4 16.9 10.8 13.1 - Net international reserves (increase -): -104.9 -98.6 -133.8 34.0 73.9 9.5 -18.5 -18.6 -19.3 -19.3 - Change in gross international reserves: -127.1 -144.4 -178.3 23.6 62.8 8.2 -12.9 -11.1 -5.6 1.0 - Use of IMF resources (net): 22.2 45.8 44.5 10.4 11.2 1.3 -5.6 -7.5 -13.7 -20.3 - Exceptional financing: 8.4 5.7 5.6 1.1 1.1 0.0 0.0 0.0 0.0 0.0 - Of which: CCRT debt relief: 4.4 5.7 5.6 1.1 1.1 0.0 0.0 0.0 0.0 0.0 - Of which: DSSI: 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - Prospective donor financing: 0.0 22.4 22. 247.1 20.0 55.6 55.9 35.5 30.1 32.4 - Budget support grants: 16.3 16.2 47.1 20.0 55.6 55.9 35.5 30.1 32.4 - Project support grants: 6.1 6.1 ..................... ### C. International reserves and related indicators (levels) - Gross international reserves (US$ millions): 352.1 496.5 530.4 472.9 467.7 459.5 472.4 483.5 489.1 488.1 - Months of next year's imports of goods and services: 5.3 5.4 6.0 4.9 4.7 4.4 4.2 4.1 4.0 3.7 - Gross international reserves (w/o SDR allocation, US$ millions): 352.1 411.5 445.4 387.9 382.7 374.5 387.4 398.5 404.1 403.1 - Months of next year's imports of goods and services (w/o SDR): 5.3 4.5 5.0 4.0 3.8 3.5 3.5 3.4 3.3 3.1 - Net international reserves (US$ millions): 292.3 394.5 427.7 361.1 364.2 354.7 340.5 351.4 362.3 372.7 - Months of next year's imports of goods and services (net): 4.4 4.3 4.8 3.7 3.6 3.4 3.0 3.0 2.9 2.9 - Net international reserves (w/o SDR allocation, US$ millions): 291.6 309.5 342.7 276.1 279.2 269.7 255.5 266.4 277.3 287.7 - Months of next year's imports of goods and services (net, w/o SDR): 4.4 3.4 5.0 3.9 2.9 2.8 2.6 2.3 2.3 2.2 ### D. External flows and exchange rate (levels) - Exports of goods and services: 151.9 225.7 177.6 372.6 292.6 365.4 433.7 468.2 500.8 535.7 - Imports of goods and services: -668.9 -896.8 -797.9 -1105.5 -1065.8 -1198.1 -1266.9 -1344.6 -1399.7 -1485.6 - GMD per U.S. dollar, period average: 51.6 ........................... - External Debt service: 21.1 58.4 59.5 48.3 66.1 47.4 51.1 74.8 86.8 92.5 - NIR/External Debt Service (ratio): 13.8 6.7 7.2 7.4 5.5 7.5 7.3 5.2 4.7 4.7 --- ### Key summarized balances and financing needs (selected tables) - Total financing requirement (Table 7, US$ millions): -264.1 -459.0 -406.9 -402.3 -300.9 -363.1 - Current account deficit (excl. official transfers): -135.6 -266.4 -179.3 -387.5 -309.3 -332.9 - Public debt amortization: 5.0 -44.1 -44.1 -34.5 -51.5 -32.7 - Repayment to the IMF: -6.4 -4.1 -5.2 -4.0 -2.9 -5.7 - Change in official reserves: -127.1 -144.4 -178.3 23.6 62.8 8.2 - Total financing sources (US$ millions): 122.7 380.9 329.1 339.7 265.8 300.3 - Capital transfers: 45.3 103.9 103.6 179.1 85.8 105.0 - Foreign direct investment (net): 68.5 134.5 99.3 129.5 99.7 108.1 - Portfolio investment (net): 3.8 3.8 3.9 4.0 4.1 4.5 - Public sector debt financing: 36.2 55.8 99.2 60.1 60.2 70.2 - Other net capital inflows: -31.1 83.0 23.2 -33.0 16.1 12.6 - Total financing needs (after identified sources, US$ millions): 141.4 78.1 77.7 62.6 35.1 62.7 - Budget support (grants): 82.7 16.3 16.2 47.1 20.0 55.6 - IMF disbursements: 28.6 50.1 49.9 14.4 14.0 7.1 - Exceptional financing: 8.4 5.7 5.6 1.1 1.1 0.0 - Of which: CCRT debt relief: 4.4 5.7 5.6 1.1 1.1 0.0 - Of which: DSSI: 4.0 0.0 0.0 0.0 0.0 0.0 --- *Source: The Gambian authorities; and IMF staff estimates and projections.* ### 1. Budget support grants in 2021 fell below projections as the related triggers were not ### 1. Budget support grants in 2021 fell below projections as the related triggers were not ### Budget support outcomes in 2021 - World Bank: - US$20 million budget support was postponed to 2022 after the authorities could not meet one of the eight triggers required for its disbursement, namely the gazetting of Procurement Regulations related to the Public Procurement Bill, which is still pending Parliament approval. - The World Bank has recently decided to proceed with the disbursement in 2022, recognizing the authorities’ strong efforts. - European Union: - The authorities lost EUR 10.8 million out of EUR 19.1 million programmed by the EU in 2021. - The EU disbursed EUR 5.6 million in May 2021. - The remaining EUR 13.5 million was linked to five triggers, each unlocking EUR 2.7 million: (1) Submission of budget execution report for 2020 to the National Audit office before end-June 2021; (2) Completion and publication of 2019 public external audit report to the National Assembly before end-July 2021; (3) Completion of the revised list of voters in anticipation of the Constitutional referendum and the Presidential elections; (4) Adaptation and publication of the Gazette of the Vetting bill; and (5) Revision of the Election Act to support the provision for reserving seats for female candidates in National Assembly elections. - Only the third trigger was assessed as met by the EU, which consequently disbursed only EUR 2.7 million at end-December 2021. ### Budget support revisions and implications for 2022 - EU policy shift: - The EU is reorienting development support to The Gambia, putting more emphasis on project grants and reducing budget support grants. - EUR 16.4 million EU budget support grants included in staff projections for 2022 at the time of the third ECF review will not be disbursed. - AfDB policy shift: - A similar shift at the AfDB prioritizes project over budget support grants. - It has become uncertain whether the SDR 5 million AfDB budget support initially scheduled for 2022 will be disbursed. - Fiscal impact: - These changes lead to a resource shortfall of 1.3 percent of GDP. ### Table A I.1. Revisions to Budget Support Grants (US Million) — reported figures - 2021: - 2nd ECF Rev: World Bank 20.0; European Union 22.3; AfDB -; Total 42.3 - 3rd ECF Rev: World Bank 16.0; European Union 16.0; AfDB -; Total 16.0 - Actual: World Bank 9.7; European Union 9.7; AfDB -; Total 9.7 - 2022: - 2nd ECF Rev: World Bank 20.0; European Union 23.4; AfDB 7.1; Total 50.5 - 3rd ECF Rev: World Bank 20.0; European Union 23.9; AfDB 7.1; Total 50.9 - 4th ECF Rev: World Bank 20.0; European Union -; AfDB -; Total 20.0 - Sources: The Gambian authorities, development partners, and IMF staff estimates. ### Medium-Term Fiscal Framework: headline projections and drivers - Fiscal deficit and balances: - Overall fiscal deficit expected to decline from 4.2 percent of GDP in 2022 to about ½ percent of GDP in 2027. - Domestic primary surplus expected to increase from 0.3 percent of GDP in 2022 to 3 percent of GDP in 2027. - Primary balance expected to improve from a deficit of 1.5 percent of GDP in 2022 to zero percent of GDP in 2023 and an average surplus of 1.2 percent of GDP in the medium term. - Revenues: - Total revenue and grants projected to increase from about 19½ percent in 2022 to 20¾ percent of GDP in 2027. - Tax revenues expected to increase by 2.5 percent of GDP during 2022-27. - Non-tax revenues projected to decline from 4.6 percent of GDP in 2022 to about 3 percent of GDP in 2027 due to the end of one-off petroleum sector penalties and Janneh Commission asset sales. - Grants expected to pick up in 2023-25 as donors enter a new financing cycle. - Expenditures: - Total government expenditure projected to decline from 23.8 percent of GDP in 2022 to 22.5 percent of GDP in 2023, then gradually to 21.3 percent of GDP in 2027. - Government to unwind the one-off 1 percent of GDP COVID-19 spending included in the 2022 budget. - Compensation of employees (percent of GDP) expected to peak at 4.5 in 2023 from 4.3 in 2022 and decline to 3.9 percent of GDP in 2027 (and to increase by about 10 percent annually in nominal terms). - Subsidies and transfers expected to decline by ½ percent of GDP in 2023 due to the end of COVID-related support; stabilize at 3.3 percent between 2025-27. - Domestically financed (GLF) investment expected to show a 0.7 percent of GDP drop in 2023; foreign-financed investment projected to average 7.1 percent of GDP. - Revenue administration and reforms: - Measures include clean-up of the tax registry; cleansing and maintenance of accurate tax ledgers for large taxpayers; development of an end-to-end process for registration, filing, payments and management of tax arrears; audit of companies graduating from the special investment certificate program; gradual digitalization of tax collection; road cargo and electronic cargo tracking system; engagement with commercial banks to allow taxpayers to make payments via mobile apps. - In 2021, Cabinet approved a memorandum on Tax Expenditure Policy. - Staff estimates tax collection efforts in The Gambia are about 6-16 percent below the best performing peer countries. ### Table A II.1. Drivers of Fiscal Consolidation (In percent of GDP) - Revenue: 0.2 - Domestic Revenue: -1.2 - Taxes: 0.8 — Partial phase-out of forgone revenue related to the Ukraine crisis; control over tax expenditure; yield from revenue administration measures. - Non-tax: -2.1 — End of petroleum royalties; gradual end of asset sales under the Janneh Commission. - Grants budget support: 1.4 — Start of key donors' new financing cycle. - Expenditure: -1.9 - Expenses: -1.2 — Phase-out of COVID spending. - Domestic investment: -0.7 — Near completion of infrastructure projects under the OIC conference. - Overall balance: 2.1 - Sources: The Gambian authorities; and IMF staff estimates and projections. ### SOE sector reform and fiscal risks - SOE landscape and reforms: - The Gambia has 14 state owned enterprises (SOEs) operating across air and sea transport, telecommunications and media, agriculture, energy, water, and services. - E&Y forensic audits (2019 and 2020) identified weak accounting systems, poor business models, weak corporate governance, and political interference. - A new SOE bill was submitted to the National Assembly; the bill: - Establishes a dedicated SOE Commission with centralized oversight powers. - Determines qualification for Directors and composition for SOEs’ Boards. - Requires adoption of IFRS by SOEs. - Calls for clear definition and compensation of public service functions, including government subsidies. - Expands signing of performance contracts between SOE management and the government. - Gaps persist per the WB 2021 Integrated SOE Framework (iSOEF) Assessment, including formal independence of SOEs pending the new Constitution. - Management and governance actions: - Plans to liberalize the telecom sector with World Bank support. - New management teams appointed at the groundnut company (NFSPMC/GGC) and NAWEC; NAWEC signed a performance contract with MOFEA. - IMF capacity development on IFRS and SOE health check tool. - New SOE directorate established; 2019 audits completed for all SOEs, some 2020 audits well advanced. - Fiscal risk developments: - GGC no longer uses ITFC trade financing and relies solely on local financial institutions. - Use of ITFC financing was declining for NAWEC and GNPC before increasing recently due to soaring global oil prices; NAWEC has been meeting ITFC obligations without government support. - Subsidies to SOEs declined significantly in 2021 and were limited to GGC for fertilizer subsidies and groundnut purchases. - Subsidies to GGC expected to increase in 2022 due to higher international fertilizer prices and large volume of groundnuts purchases (about 46,000 tons compared to around 7,000 tons in 2021), pointing to the need to improve price setting mechanism and leverage increasing development partner support. ### Risk Assessment Matrix — selected risks, likelihood, impact, and policy responses - External: Russia’s invasion of Ukraine leads to escalation of sanctions and other disruptions - Relative Likelihood: High - Impact if realized: High - Policy Response: - Build policy buffers to allow deploying measures to support economic activities or some specific sectors in case of further spillovers from the war. - Diversify the structure of the economy to reduce vulnerabilities to shocks in some specific sectors, and strengthen an overall resilience. - External: Rising and volatile food and energy prices - Relative Likelihood: High - Impact if realized: High - Policy Response: - Adopt a balanced approach combining (i) an upward adjustment in fuel pump prices to minimize fiscal revenue losses, (ii) a roll-out of well-targeted support to vulnerable households, (iii) stronger revenue mobilization in other areas, and (iv) prioritization of spending. - Strengthen the fiscal oversight of NAWEC. - Accelerate implementation of national energy roadmap with World Bank support, including use of alternative energy production methods. - External: Outbreaks of lethal and highly contagious Covid-19 variants - Relative Likelihood: Medium - Impact if realized: High - Policy Response: - Accelerate vaccine rollout. Improve vaccination communication efforts across the country. - Strengthen government fiscal, social and health response to pandemic. - Rollout targeted support for tourism, construction and services sectors for previously well-run and profitable corporates. - External/Domestic: Social discontent and political instability - Relative Likelihood: Medium - Impact if realized: Medium - Policy Response: - Involve CSOs and other political stakeholders in policy decisions. - Strengthen governance further. - External/Domestic: Higher frequency and severity of natural disasters related to climate change - Relative Likelihood: Medium - Impact if realized: High - Policy Response: - Strengthen food security and rural feeding programs. - Build up fiscal and reserve buffers to allow deploying supporting policies if needed. - Build resilience to natural disasters. - Domestic: Weak Fiscal Management - Relative Likelihood: Medium - Impact if realized: High - Policy Response: - Implement TA recommendations on PFM, cash management and budget execution. - Identify additional fiscal measures to create fiscal space for crisis support. - Implement SOE and governance reforms. *Source: The Gambia: IMF staff report content provided in the supplied PDF excerpt.* ### 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. - Progress on key 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-supported program in March 2020. - TA will continue to play a critical role in supporting the 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 its lingering effects. ### Strategy and Priorities - Authorities remain committed to their ECF-supported program commitments and to 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-supported program structural benchmarks, particularly: - strengthening PFM, - improving revenue mobilization, - avoiding worsening debt vulnerabilities amid increased pandemic-related spending and BoP pressures. - An important CD focus will be a governance diagnostic mission to articulate potential future ECF-supported program conditionality to address macro-critical governance weaknesses and vulnerability to corruption. - Prioritized CD objectives and measures (as stated): - 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 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. ### Key Recent Developments, Findings, and Targets - Program implementation and performance (end-December 2021): - Met five out of six quantitative performance criteria (QPCs) and three out of four indicative targets (ITs). - The QPC on net domestic borrowing was exceeded due to additional election security and pandemic mitigating spending, acceleration of key road construction projects, and shortfall in budget support. - Two out of the four structural benchmarks (SBs) at end-December 2021 were timely implemented: formulation of a framework for banking sector stress testing and publication of audited financial statements of SOEs approved by the National Assembly. - The SB related to tax expenditures and GIEPA regulations was completed in early 2022. - Submission to the National Assembly of the revised SOEs bill was completed in April 2022. - For the SB at end-March 2022, the first phase audit report of COVID-19-related spending was published in February 2022; NAO completed three out of five components of the second phase audit and the final report will be published after review by the new National Assembly. - Government adjusted domestic fuel pump prices for 2022 and will prioritize spending while protecting the vulnerable population and the fragile recovery. - Requests and commitments - Government requests completion by the IMF Executive Board of the fourth review of the ECF-supported program, the associated financing assurances review, a waiver for the non-observance of the QPC on net domestic borrowing at end-December 2021, and modification of the QPCs on net domestic borrowing at end-June and end-December 2022. - Requesting disbursement of the fifth ECF tranche of SDR 5 million to be on-lent from the CBG to the treasury to help finance the 2022 budget and address unforeseen challenges, including repercussions of the war in Ukraine. - Government will consult with the IMF prior to adopting additional measures or revising policies in the MEFP and will continue to provide information needed to monitor implementation. ### Background and Recent Economic Developments (selected statistics and analysis) - Political and governance context - Presidential elections in December 2021 registered a record turn-out of 89 percent of registered voters; President Barrow won a second 5-year term. - Follow-up parliamentary elections in April 2022: coalition won 24 of the 53 elected seats; with 5 President-nominated seats this is expected to give the President 50-percent parliamentary support. - The Government will publish a white paper on the final TRRC report soon; anti-corruption bill passed all required stages at the National Assembly. - Health and pandemic - Vaccination rate about 20.4 percent of the adult population as of mid-April 2022. - Growth, activity, and external sector - Tourist arrivals nearly stagnated in the first three quarters of 2021 and were less than half of pre-pandemic levels. - Remittance inflows increased by more than 30 percent to US$777 million in 2021. - Credit to the private sector expanded by 20.7 percent (y-o-y) as of end-2021 and picked up further to 29.8 percent at end-February 2022. - Economic growth is estimated at 4.3 percent in 2021, following an upward revision of growth in 2020 from -0.2 to 0.6 percent. - Inflation accelerated from 5.7 percent (y-o-y) at end-2020 to 7.6 percent at end-2021 and picked up to 8.3 percent at end-February 2022. - Current account deficit worsened from 3.2 percent of GDP in 2020 to 9.4 percent of GDP in 2021. - Gross reserves reached US$530 million (or almost 6 months of prospective imports) at end-December 2021. - Fiscal outcomes and public debt - Fiscal deficit exceeded projection by 0.6 percent of GDP in 2021. - Net domestic borrowing missed the adjusted program ceiling by 0.4 percent of GDP. - Domestic primary balance was below projections by 0.7 percent of GDP to stand at -0.2 percent of GDP. - Public debt-to-GDP ratio declined by 0.8 percentage point to 84.2 percent of GDP at end-2021. - Shortfalls in tax collection were driven by fragile recovery, international trade constraints, low tourism, and seaport clearance delays; budget support grants from donors declined in 2021. - Monetary and financial sector policy actions - To ease inflationary pressures, the CBG reduced foreign exchange purchases and issued CBG bills, which helped contain excess liquidity and slow reserve money growth. - Broad money growth was 19.5 percent y-o-y, driven by increases in the banking system’s net foreign assets and net domestic assets (including a 20.7-percent expansion in private credit and a large increase in credit to government). - At its policy meeting in February 2022, the CBG maintained the monetary policy rate at 10 percent, and the reserve requirement ratio at 13 percent to support the fragile economic recovery. The interest rates on both overnight facilities were also kept unchanged. *Source: Annex V. Capacity Development Strategy 2021–22; Appendix I. Letter of Intent; Attachment I. Memorandum of Economic and Financial Policies (MEFP).* ### 7. The financial sector remains resilient. Risk-weighted capital adequacy ratios at end- ### 7. The financial sector remains resilient. Risk-weighted capital adequacy ratios at end- ### Financial sector status and indicators - Risk-weighted capital adequacy ratios at end-December 2021 were above the respective statutory limits for banks and micro-finance companies (MFCs). - Banking system capital adequacy ratio at end-December 2021: 29 percent; statutory ratio: 10 percent. - Commercial banks non-performing loans (NPLs): 5.1 percent of gross loans at end-2021 (after deterioration in December 2020 and March 2021). - MFCs NPLs: declined from 10.9 percent of gross loans at end-2020 to 7.0 percent at end-2021. - Banks and MFCs remain liquid, profitable, and well capitalized. ### Transparency and COVID-19-related spending - COVID-19-related spending in 2021: about GMD 930 million; 20 percent executed through a below the line account from funds allocated in the 2020 budget. - Publication actions: - Continued regular publication on GPPA website of procurement contracts approved by the Agency and their beneficial owners for COVID-19 contracts. - NAO published first phase of ex-post audit covering March through October 2020 following National Assembly review. - Completed three out of five components of the second phase of the audit; final report to be published after review by the new National Assembly. - Completed flow of funds audit of the AfDB’s COVID-19 support before end-2021. - Plan: resume reporting on COVID-19 spending in the monthly budget execution report shortly. ### Performance under the ECF Program (end-December 2021 and early 2022) - Quantitative performance criteria (QPCs) and indicative targets at end-December 2021: - Met all but one quantitative performance criteria and all but one indicative targets. - Adjusted floor on stock of net usable international reserves (NIR): exceeded by US$117 million (about 38 percent). - Four external debt-related 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 (no new debt contracted out of the US$115 million ceiling). - Adjusted QPC on net domestic borrowing (NDB): exceeded by GMB 441 million (0.4 percent of GDP). - Causes and responses: - NDB breach due to challenges implementing reforms needed to trigger budget support disbursements and necessary spending. - World Bank decided to proceed with disbursement of total amount of US$20 million in 2022. - Set up multi-stakeholder reform implementation and monitoring committee including key development partners. - Strengthen cash management from 2022Q2: disallow cash allocations to MDAs if rolling quarterly spending forecasts not pre-submitted to MoFEA; request monthly rolling spending forecasts for selected pilot MDAs; align rolling quarterly spending plans with treasury and borrowing plans consistent with NDB target starting 2022Q2. - New public finance bill to include provision requiring additional spending to be matched with proportional additional revenue or spending reallocations in context of a supplementary budget. - Indicative targets: three out of four end-December 2021 indicative targets met, including floor on poverty-reducing spending; domestic tax revenue collection was 0.4 percentage points of GDP below the indicative floor. - Preliminary data at end-March 2022: - All quantitative targets met except ceiling on net domestic borrowing (breached due to pressures on subsidies and rapid execution of domestically financed infrastructure projects for the OIC conference). - Revenue collection efforts counteracted by reduction in fuel revenue collection to mitigate impact of global fuel price increases. - Structural benchmarks (SBs): - Met two end-December 2021 SBs; two others satisfied with delay; end-March 2022 SB not met but good progress made. - (i) Published before end-December 2021 on MoFEA’s website all financial statements of SOEs for audited financial years approved by Parliament. - (ii) Prepared before end-December 2021, with IMF support, an internal framework for stress testing for banks’ balance sheets (in line with 2019 FSSR recommendations). - (iii) End-December 2021 SB on tax expenditure completed in February 2022; Cabinet endorsed memorandum on new tax expenditure policy in 2020; revised GIEPA Regulations signed in February 2022; reinforced control over provision of Special Investment Certificates (SICs). - (iv) Completed in April 2022 the end-December 2021 SB on submission to National Assembly of a revised SOEs bill; delay caused by stalled constitutional reform and coordination challenges. - (v) Good progress on publication of COVID-19 spending audit reports: first phase published; second phase set as SB for end-September 2022. ### Macroeconomic outlook and projections - Risks: heightened due to uncertainties about the pandemic and repercussions of the war in Ukraine. - Real GDP growth projections: - 2022: 5.6 percent. - Medium term average: 5.9 percent per year (as tourism recovers and benefits from road constructions and investment in agriculture). - Inflation: - Expected to remain high in 2022 and 2023 reflecting impact of war in Ukraine on fuel and food prices before declining to 5 percent in the medium term. - Fiscal deficit: - Expected to improve from 4 percent of GDP in 2022 to about 0.4 percent of GDP in the medium term as revenue mobilization efforts bear fruit, pandemic-related spending phased out, and domestically financed infrastructure projects scaled down after completion of major projects related to the OIC conference. - Current account: - Deficit expected to persist in 2022 due to marked increase in imports for public infrastructure projects and higher commodity prices. - Re-export trade expected to remain muted given instability in major destination countries. ### National Development Plan (RF-NDP) and long-term vision - Preparing Green Recovery-Focused National Development Plan (RF-NDP) and Long-Term Development Vision (LTDV) 2050. - NDP 2018-2021 implementation extended to 2022; suffered from COVID-19 pandemic affecting more than half of implementation period. - Inception report of RF-NDP and LTDV validated in early March 2022; consultative process near completion. - Timeline: - Complete RF-NDP by end-June 2022 ahead of preparation of 2023 budget. - Complete 2050 vision and define public investment plan derived from RF-NDP by end-September 2022. - RF-NDP alignment: - To federate cooperation frameworks with development partners and underpin policy priorities of UNSDCF 2023-2027. - Aligns priorities with domestic resources and donor financing commitments, including frameworks with World Bank, AfDB, EU, and US Millennium Challenge Account threshold program. ### Fiscal policy, revenue and expenditure measures - Budget execution January-March 2022: - Tax revenue collection above target by 6½ percent despite lower import volumes and decreasing petroleum product collections. - Good outturns on personal and corporate income taxes, VAT, and excise duties due to pickup in activity, particularly tourism and hospitality. - Near-term non-tax revenue prospects: pickup of traffic on the Senegambia bridge and resumption of asset sales under the Janneh Commission. - Expenditure pressures: - As of end-March, almost one-third of approved budget on subsidies and transfers spent due to large amount paid to GGC for 2021 fertilizer campaign (GMD 524 million). - Close to 50 percent of approved budget for domestically financed infrastructure projects spent due to large down-payment for a road project for the OIC conference. - 2022 budget challenges and shocks: - War in Ukraine impacts global oil prices and expected to adversely affect revenue collection as taxes on oil products reduced to contain pass-through to domestic pump prices. - Budget support from development partners expected to fall significantly below initial projections (EU will no longer disburse expected 2022 budget support; AfDB disbursement subject to uncertainty). - Lingering effects of pandemic to weigh on budget execution with a revenue base still below pandemic levels and ongoing health sector spending needs. - Policy responses and measures: - Adjusted domestic fuel pump prices upwards in early May 2022 to partly reflect global fuel price developments. - Bolster revenue collection by accelerating asset sales under Janneh Commission for an additional GMD 300 million (0.3 percent of GDP) relative to original budget; accelerate sale of identified government financial assets; expect CBG to provide some profits to the budget. - Established committee to assess impact of fuel price increases and war in Ukraine and propose mitigating measures. - Spending rationalization: reduce SOE subsidies, ban non-essential travel, lower subsistence allowances during official travel, limit communication allowances, reduce fuel allowances to senior officials by 20 percent. - Adhere to cash management committee recommendations; shift some domestically financed spending to donor project financing. - Continue pandemic-related spending (vaccination logistics, COVID-19 hospitalization centers, medical supplies, contingency). - Fiscal projections and financing: - Fiscal deficit projected to expand from 3 percent of GDP under third ECF program review to 4.2 percent of GDP under current projections. - Financing: on-lending of two ECF disbursements in 2022 (about 0.6 of GDP) and increase in net domestic borrowing (by about 0.9 percent of GDP); excess to cover some minor pressures on external debt service. - Revised fiscal framework continues to keep public debt on a downward trend despite slight deviation from original path. - Revenue administration reforms: - Continue tax exemption rationalization process, improved collection via electronic payment platform, upgraded taxpayer registry, and other revenue administration measures. - Taxpayer charter adopted and launched (end-June 2022 SB but completed in April 2022). - GRA actions: - Continue to leverage increased tax audit and data matching capacity. - Audit tax-exempted entities under Special Investment Certificates (end-September 2022 SB). - Cleanse and maintain accurate tax ledgers for large taxpayers (end-September 2022 SB). - Use Rented Property Survey results to extend tax base to commercial real estate sector. - Non-tax revenue supports: sales of recovered assets authorized by Janneh Commission, Senegambia Bridge toll receipts, expected one-off receipt of US$30 million from the petroleum sector. ### Debt sustainability and debt management - Public debt profile: - Public debt deemed sustainable but at high risk of distress. - Aim: reduce present value of total public debt below benchmark of 55 percent of GDP around 2025. - Public debt-to-GDP ratio path: 83.8 percent in 2021 to 53 percent in 2027 (steady decline targeted). - Fiscal strategy to support debt objectives: - Primary balance expectations: from deficit of 1.6 percent of GDP at end-2021 to zero percent of GDP in 2023, and average surplus of about 1¼ percent of GDP in the medium term. - Tax-to-GDP ratio projected to increase from 10¼ percent of GDP in 2021 to 12½ in 2027. - Spending rationalization to reduce primary current spending and domestically financed infrastructure spending by 2 percent of GDP between 2022-27 as pandemic-related spending unwinds and major projects complete. - PFM measures: rationalize wage bill via electronic payment and Biometric Time and Attendance Register System; rein in subsidies through improved SOE governance and rationalization of foreign missions and subvented agencies; control government consumption via strict procurement rules (GPPA Act); improve public investment efficiency via project selection criteria through Gambia Strategic Review Board. - Complementary measures: define multi-year Public Investment Program with World Bank support and act on cash management committee recommendations. - Borrowing policy: - Continue to adhere to agreed borrowing plan and rely primarily on grants and highly concessional borrowings for infrastructure financing. - Prudence in contracting new loans: government did not contract any external debt in 2021, including concessional debt out of the US$114 million ceiling for the year. - Weekly consultations with EIB, AfDB and Government to ensure concessional financing of Banjul port extension. - Financing for Bertil-Harding highway in preparation for OIC summit secured; two of three financing agreements ratified but yet to disburse; remaining pending ratification when new National Assembly sits. - Debt data and reconciliation: - Continued reconciliation and cleaning of external debt data and recording domestic debt in Meridian system. - Regular publication of quarterly debt bulletin, revision and publication of annual borrowing plans and monthly bond issuance plans. - TA support from World Bank and Commonwealth Secretariat on validation and reconciliation of public debt data in Meridian; consultant visited Banjul in March 2022 to help clean, reconcile, validate end-2021 debt stock, debt service and disbursements for 2021 Public Debt Bulletin and Medium-term Debt Management Strategy formulation. - Plan to initiate data reconciliation exercises with major creditors failing to provide regular disbursement updates in May and November every year, followed by meetings in June and December. - Coordinate with managers of foreign-financed projects to ensure disbursement requests processed through MoFEA’s Directorate for Loans and Debt Management (DLDM) and communicated to DLDM. - Continued efforts to establish credible contacts with Libyan authorities for thorough reconciliation of outstanding arrears and agreement on repayment plan; readiness to undertake reconciliation and repayment plan with Venezuelan authorities after lifting of international sanctions. *Source: 1gmbea2022001 - 7. The financial sector remains resilient. Risk-weighted capital adequacy ratios at end-* ### 22. We will continue to strengthen governance and financial management in SOEs, to ### 22. We will continue to strengthen governance and financial management in SOEs, to ### SOE governance, transparency, and financial management - SOEs bill was aligned with the existing constitution and submitted to the National Assembly in April 2022. - Measures to improve transparency and accountability of SOEs: - (i) Produced an SOE annual performance report for the year 2020, using the IMF’s SOE health check tool which identified persistent vulnerabilities in the sector. - (ii) Published on MoFEA’s website the audited financial statements of SOEs that have been approved by the National Assembly; this practice will be continued. - (iii) Stepped up efforts in the adoption of IFRS standards by all SOEs leveraging on the ongoing training provided by Afritac West 2. - Efficiency and budget risk mitigation measures: - Analyzing an adjustment of fertilizer prices to reduce subsidies. - Use part of GGC profits on groundnuts sales to reduce the associated subsidies on the groundnuts purchase. - NAWEC is analyzing with World Bank support a more transparent price structure to strengthen its financial footing and clearly determine government subsidies. - Engaging the World Bank for technical support to extend the use of performance contracts to three key SOEs (Gambia Port Authority, Social Security and Housing Finance Corporation, and Gambia National Petroleum Corporation), including target-based key operational and financial indicators (end-September 2022 SB). - Continued monitoring of cross arrears between SOEs. - Continued and increased use of the ITFC facility by NAWEC and GNPC to cope with rising global oil prices. ### Monetary policy and central bank oversight - CBG actions to contain inflationary pressures while keeping monetary policy parameters unchanged to support the fragile economic recovery: - Reduced forex purchases and issued CBG bills in December 2021, which helped reduce excess liquidity and moderate reserve money growth. - At its February 2022 Monetary Policy Committee meeting, the CBG maintained its key instruments unchanged while leaving open the window of possible monetary tightening. - At end-February 2022, inflationary pressures continued, exacerbated by the war in Ukraine, and reserve money and private sector credit accelerated. - The central bank will pursue issuance of CBG bills and will consider complementing this with other instruments, such as forex sales and an increase in the special deposit facility rate. - Regulatory and supervisory capacity building: - National Assembly approved the 2021 Capital Market and Securities Bill in November 2021 to establish a capital market in The Gambia. - Launching of the donors-supported National Financial Inclusion Strategy in early 2022 to address low access to financial services; CBG has engaged a global fintech company to upgrade GAMSWITCH to extend to all financial institutions and mobile money operators. - Stress testing and macroprudential measures: - Prepared a framework for banking sector stress testing in line with recommendations from the 2019 FSSR. - Will leverage support of the new IMF Resident advisor to build in-house expertise for stress testing banks. - Plan to conduct balance sheet stress tests of one large and one medium-sized bank by end-September 2022 (end-September 2022 SB). - In August 2021, the CBG Board passed a resolution to establish a macroprudential unit per the FSSR recommendation of 2019; a multidisciplinary team is being constituted to work with resident technical assistance to conduct stress testing of banks. - Safeguards, governance, and investment policy at the central bank: - Implemented most key outstanding recommendations of the IMF’s 2020 safeguards assessment, including ongoing training of finance and audit staff in IFRS principles and practices and audits of quarterly monetary data by CBG internal audit. - Approved a revised audit committee charter to strengthen independent oversight of the CBG. - Audit of the CBG’s 2021 financial statements is at its final stages. - CBG Board will approve by end-June a revised investment policy and guidelines to align investment objectives with recent IMF technical assistance recommendations. ### External reserves and risk management - Use of SDR allocations and disbursements: - Use of US$20 million of the IMF SDR allocations (of US$85 million) and the utilization of the two 2022 ECF disbursements will slightly reduce external reserves. - Reserve adequacy outlook: - Reserves will remain around 4 months of imports in the medium term. - Objective: safeguard a comfortable level of forex reserves to meet expected higher debt service at the end of the debt deferral period. ### Structural reforms — Domestic Revenue Mobilization (GRA and tax administration) - GRA Corporate Strategic Plan (CSP) 2020–24 is in its third year; a mid-term performance review is planned during the second quarter of 2022. - Planned publications and operational actions: - Preparing the 2021 annual progress report on CSP achievements to publish on the GRA website in June 2022. - New Taxpayer Charter approved, launched and published on the GRA website in April (end-June 2022 SB). - Institutional strengthening: - Internal Affairs Unit (IAU) relocated to new Revenue House Annex; additional staff to be recruited. - IAU developed a Whistle Blower’s Policy, Gift Policy and procedure manual awaiting review and validation by the Reforms and Modernization committee. - With World Bank assistance, TORs published for development of a comprehensive compliance management strategy and design of a bilingual website. - Afritac West 2 provided remote training for Risk Management (RM), Border and Inland Control (BIC), and Post Clearance Audit (PCA) strategy, policy and workplan documentation; WCO provided additional PCA training. - Tax registry and system remediation: - Tax registry cleaning project completed for all tax offices; Headquarters Functional Team (HQF) validating results; national roadshow conducted in April and May. - GAMTAXNET remediation concluded in January 2022; GamTaxNet Version 4 deployed to all offices; training provided. - Taxpayer ledger cleansing (Ledger Reconstruction and Maintenance, LRM) planning commenced in January 2022; project plan approved and launched in April 2022; expected completion by end-September 2022 (end-September 2022 SB). - Digital transformation and ITAS: - Ernst and Young (E&Y) Ghana appointed to assist GRA with procurement of the new Integrated Tax Administration System (ITAS). - Contract and project management training on ITAS conducted; two study tours to Rwanda and Kenya undertaken. - Bid evaluation report forwarded to AfDB to source alternative energy supplies for border offices and potentially the Port. - Migration to ASYCUDA World faces challenges: funding constraints, procurement delays, lack of competent technical and functional staff, insufficient government stakeholder support, and slow pace of network upgrades. - Installation and configuration of servers completed; training provided to customs technical and functional teams including a study tour in Uganda. User acceptance testing ongoing; SIGMAT/ECOWAS customs interconnection business process validated in February 2022. - Tax expenditure policy and exemptions: - New Tax Expenditure Policy (TEP) designed with IMF and WB support. - Preparation initiated for a tax audit campaign on five exempt entities holding EPZL or GEIPA Special Investment Certificates that are close to graduation (end-September 2022 SB). - Disallowance of exemption applications: GMD 0.86 billion in 2021 and GMD 91.8 million so far in 2022. - Will revisit fiscal incentives under the GIEPA act. - Other tax and administrative measures: - Working with GAMTEL to improve network connectivity; all offices fitted with fiber optic cabling. - Reviewing the Income Tax and Value Added Tax (IVAT) 2012, the Customs and Excise Act 2010 and the GRA Act 200. - Part of IVAT Act 2012 review will include improvements to petroleum taxation measures. - Negotiations for access to the Revised Kyoto Convention ongoing. - Will develop and implement a strategy for managing tax arrears and seek to amend tax law to implement tax profit shifting protections for the fiscal regime for petroleum investments. ### Public Financial Management (PFM) reforms and actions - 2021–25 PFM reform strategy continues to guide efforts. - Public procurement: - GPPA Act was not presented at the plenary; will be a priority bill for the new National Assembly elected in April 2022. - Regulations are finalized with European Union support; readiness assessment for e-procurement completed; a study tour conducted in April. - Civil service reforms: - Rollout by 2023 of performance-based management using the Commonwealth commitment for results toolkits; about 200 civil servants trained. - Functional review of MDAs initiated to rationalize roles and minimize duplication; data collection completed and consultancy recruited. - Pension bill approved by the National Assembly in early 2022; could enter into effect by end-2022. New pension system: contributive (5 percent deduction from salary) and enters into effect only after 5-year contribution, calculated on gross salary. - Cabinet approved in late 2021 a new pay scale and grading system collapsing existing structures to 11 grades with 3 fixes (for the President, the Vice-President and the Ministers). - New pay scale will increase the minimum pay grade by 100 percent and cost at least GMD 2.5 billion, about half of current wage bill. - To accommodate cost increases: tighten control of pay systems through attendance controls, use financial system to pay salaries, rationalize foreign services, speed up vehicle policy implementation, and control unessential travel abroad. - IFMIS and systems integration: - IFMIS fully rolled out to all Sub-Treasuries (Regional Governors’ Offices), Embassies and Local Government Councils. - Phased rollout to Subvented Agencies underway; seven agencies (NaNA, GBoS, EFSTH, SDF, GGC, CCM and GPPA) have been set up and staff trained. - Integration of IFMIS with Debt Management System Meridian is at final stage. - IFMIS fully integrated with CBG’s system, allowing direct electronic government payments to beneficiary bank accounts through IFMIS. - Cash management improvements: - Ministry of Finance issuing a circular conditioning cash allocations to MDAs’ timely submission of updated quarterly cash plans starting in 2022Q2. - AGD and Budget Department to identify pilot MDAs to submit monthly cash forecast electronically using IFMIS. - AGD will finalize by end-Q3 the cash forecasting manual. - Strengthen Treasury Single Account by closing remaining accounts of core ministries/departments in commercial banks and shifting from bi-weekly to real-time remittance of government revenues with implementation of new payment platform. - IFMIS rollout in subvented agencies expected to eliminate need to send cash to them and render their commercial bank accounts irrelevant. - Public Finance Bill and related documents: - Contract concluded with consulting firm for amendment of the Public Finance Act, 2014, updating 2016 Regulations and development of a PFM Manual. - First draft of revised Public Finance Bill to be completed by end-June 2022 (revised end-June 2022 SB); the two other documents to be completed by end-September 2022. - COVID-19 spending audits: - National Audit Office (NAO) published the first phase of the ex-post audit of COVID-19 spending after National Assembly review. - NAO preparing a summary report and sensitizing on the need to implement audit recommendations. - Three out of five components of the second phase of the audit completed; remaining two well advanced; will finalize report and present to new National Assembly for review and publication. - Continue transparency requirements for COVID-19 spending to cover entire years 2021 and 2022. - Investment selection and PPPs: - GSRB mandated to assess and select all PPPs and externally, locally, and contractor-financed investment projects. - MDAs applying GSRB criteria to new externally financed projects; GSRB meeting regularly to assess submissions. - Plan to institute a risk-based approach (based on project size) to ensure GSRB assesses GLF projects that carry higher fiscal risk. - MoFEA circular reiterates only new projects with positive GSRB assessment will be considered in the 2023 budget; requirement reiterated in the budget circular. - MTEFF and PIP: - MoFEA produced a draft Medium Term Economic Fiscal Framework for 2023-2026; draft under review to incorporate policies and spending on large infrastructure projects. - Public Investment Plan piloted for priority sectors (health, energy, education, agriculture, infrastructure, environment) is mainstreamed into MTEFF preparatory process. - Aid Policy Action Plan: - Progress on producing new Gambia Aid policy (2021-2026): consultant end-line review validated; draft Policy submitted and reviewed; comments being incorporated; final Policy to be validated by stakeholders before publication. - Principles for implementation include alignment of aid flows reported in budget with strategic plans, and transparency and predictability of flows from development partners. - Fiscal Risk Management: - IMF fiscal risk assessment mission assisting authorities in preparing the first Fiscal Risk Statement (FRS) to be an annex to the 2023 budget. - FRS expected to form part of annual budget appropriation process and strengthen public financial management. - FRS aims to map and give a broad quantification of key fiscal risks, including: - (i) Macroeconomic risks; - (ii) Long-term sustainability risks, comprising those given by long-run growth and unfunded liabilities; - (iii) Specific fiscal risks, including from expenditure surprises, explicit contingent liabilities (guarantees) and implicit financial liabilities (e.g., from SOEs, PPP contracts or linkages with the financial sector). *Source: 1gmbea2022001 - 22. We will continue to strengthen governance and financial management in SOEs, to* ### 30. We will accelerate the adoption of the anti-corruption bill and welcome the IMF ### 1gmbea2022001 - 30. We will accelerate the adoption of the anti-corruption bill and welcome the IMF governance diagnostics mission to strengthen governance ### Governance and Anti-corruption - Accelerate adoption of the new anti-corruption bill and present it, along with the GPPA Act, to new National Assembly members as a top government priority to boost transparency and fight corruption in public finances. - Intend to set up the Anti-corruption Commission by the end of 2022. - Request an IMF Governance diagnostics mission to help define a reform plan to: - consolidate recent gains in the fight against corruption, - enhance fiscal transparency, - respect the rule of law. - Host the regional Governance summit for the Sahel scheduled in late June 2022 as recognition of authorities’ commitment to good governance. ### AML/CFT and Human Trafficking - Human trafficking: - Strengthened collaboration with the US embassy to implement recommendations of the 2021 US State Department report on trafficking in persons. - Strengthened the National Agency Against Trafficking In Persons (NAATIP). - Increased number of prosecutions, conducted sensitization and training, and enhanced the witness protection program. - AML/CFT: - Conducted numerous trainings for banks, non-bank financial institutions, and law enforcement agencies. - Issued guidelines for reporting entities; conducted offsite and onsite examinations of all banks. - Set threshold-based reports for cash transactions and wire transfers for financial institutions. - National Coordinating Committee on AML/CFT approved the Gambia’s first national AML/CTF Risk Assessment report in January 2021; report forwarded to Cabinet and subsequently endorsed. - Revising the AML/CFT Act 2012 along with related regulations for better compliance with FATF standards. - Enhancing effectiveness of AML/CFT framework, including tackling proceeds from corruption and related money laundering, through tighter cooperation with law enforcement agencies. - Financial Intelligence Unit strengthening capacity through mentoring with Ghana and Nigeria aiming to join Egmont Group of FIUs; addressing shortcomings including physical security, equipment and software, and review of AML/CFT Act 2012. - Aim to undertake priority actions recommended by the GIABA Mutual Evaluation Report (once adopted) to correct identified deficiencies. ### Business Environment and Private Sector Development - Private sector development central to post-pandemic recovery to create jobs, reduce poverty, and limit scarring. - Decentralize The Gambia Investment and Export Promotion Agency (GIEPA) by opening regional offices and strengthening support for private sector development. - Ministries of Trade and Justice exploring deployment of the business registration single window to GIEPA. - Engaged development partners to finance US$500,000 to revamp obsolete IT infrastructure of the registration office. - Engage judiciary to accelerate existing commercial cases; revitalized commercial division in the high court until legal and funding requirements for a commercial court are secured. - Secured funding through the West African Competitiveness Project (WACOMP) to establish a food testing laboratory to enhance enforcement of food safety and quality. - Ministry of Trade, Regional Integration and Employment working to establish a Special Economic Zone along the Trans-Gambia Corridor to leverage the Senegambia Bridge and optimize benefits from the AfCFTA. - Launched the Jenoi Agricultural Platform at the designated Special Economic Zone to build a modern market facility and a cold storage facility to support women and youth entrepreneurs. ### Poverty Reduction, Social Registry, and Community Development - Social Registry: - First phase of Social Registry data collection completed in 30 districts in URR, CRR, LRR, NBR and WCR; clean data sets available on 63,439 households across the five regions covered. - Information covers demographic, socio-economic and disability data of the entire populations of the regions. - Complete data cleaning for six additional districts and upload all data in the Registry by end-June 2022. - Plan to use this information for more targeted, efficient response to social needs. - Program for Accelerated Community Development (PACD): - Expanded to cover 80 communities. - Delivers basic services through construction of boreholes, provision of access to electricity in local communities, provision of exotic animal breeds, and development of a GIS to support digital solutions. - Phase I of GIS completed with tracking devices procured and stakeholder mapping concluded. ### Climate Change and Energy Projects - Strengthening policies to build resilience to climate change; The Gambia identified among countries most vulnerable to climate change. - High-level delegation attended COP26 in October-November 2021 and reenforced commitment to the Paris climate agreement. - Gambia's policy and actions deemed compatible with the goals of the 1.5°C Paris climate agreement and internationally supported target almost sufficient according to the Climate Action Tracker latest update. - Mini solar grid project of 120.6 kW started in March 2022, financed by the ECOWAS Renewable Energy Facility (EREF) with support from USAID and Power Africa, aiming at providing electricity access to more than 4,000 residents in Nyamanarr. ### Capacity Development and Technical Assistance - Welcome capacity-enhancing support from partners, including the IMF. - Continue to leverage technical assistance to strengthen: - revenue administration, - public financial management (including cash management, fiscal transparency, project appraisal and selection processes, SOEs accounting framework), - macroeconomic statistics production, - debt management, - monetary policy design, - bank supervision capacity. ### Program Monitoring, Reviews, and Targets - Government will take necessary measures to meet quantitative targets and observe structural benchmarks under the ECF-supported program. - Program subject to semiannual reviews and performance criteria, indicative targets and structural benchmarks as set out in Tables 1–4 and the Technical Memorandum of Understanding. - Fifth and sixth program reviews based on targets and benchmarks through end-June 2022 and end-December 2022, respectively. Key quantitative targets and indicative targets (selected exact figures from Tables 1 and 2): - Table 1 (2021; cumulative from beginning of calendar year to end of month indicated; local currency millions, unless otherwise indicated): - Performance criteria highlights: - Net domestic borrowing of the central government (ceiling): 112; 1,000; 39; Status Met; 500; 1,199; 1,119; Status Met; 1,100; 2,100; 1,387; Status Met; 1,250; 2,250; 2,691; Status Not Met. - Stock of net usable international reserves of the central bank (floor, US$ million): 292; 250; 300; Status Met; 260; 246; 314; Status Met; 270; 249; 424; Status Met; 345; 311; 428; Status Met. - New external payment arrears of the central government (ceiling, US$ million): 2; 0.0; 0.0; 0.0; Status Met ... (all rows show 0.0 and Met). - New nonconcessional external debt contracted or guaranteed by central government (ceiling, US$ million): 2; 0.0; 0.0; 0.0; Status Met ... (all rows show 0.0 and Met). - Outstanding stock of external public debt with original maturity of one year or less (ceiling, US$ million): 2; 0.0; 0.0; 0.0; Status Met ... (all rows show 0.0 and Met). - New concessional external debt contracted or guaranteed by central government (annual ceiling, US$ million): 2, 3,4; 12; 115; 0.0; Status Met ... (rows show 115; ...; 0.0; Met). - Indicative targets highlights: - Total domestic tax revenue (floor): 10,326; 3,000; 2,678; Status Not Met; 6,000; ...; 5,584; Status Not Met; 8,700; ...; 8,316; Status Not Met; 11,400; ...; 10,833; Status Not Met. - Monthly ceiling on central bank credit to the central government at non-market terms (GMD millions): 5; 0.0; 0.0; 0.0; Status Met ... (all rows 0.0 Met). - Stock of net domestic assets of the central bank (ceiling): 6; 4,918; 8,171; 5,119; Status Met; 8,034; ...; 4,680; Status Met; 8,284; ...; 4,685; Status Met; 8,034; ...; 4,268; Status Met. - Poverty-reducing expenditure (floor): 6,975; 1,300; 1,384; Status Met; 2,800; ...; 2,800; Status Met; 4,400; ...; 4,618; Status Met; 6,000; ...; 6,472; Status Met. - Memorandum items highlights: - Budget Support (grants, US$ millions): 7; 81.9; 0.0; 0.0; ...; 20.0; ...; 6.5; ...; 27.1; ...; 6.5; ...; 43.7; ...; 9.7; ... - Base Money (stock, GMD millions): 18,595; 19,628; 19,280; ...; 21,079; ...; 20,166; ...; 20,527; ...; 21,397; ...; 20,544; ...; 21,124; ... - IMF disbursements (SDR millions): 20.6; 20.0; 20.0; ...; 30.0; ...; 30.0; ...; 30.0; ...; 35.0; ...; 35.0; ... - ECF disbursements: 5.0; 20.0; 20.0; ...; 30.0; ...; 30.0; ...; 30.0; ...; 35.0; ...; 35.0; ... - CCRT debt relief (SDR millions): 8; 3.2; 0.0; 0.0; ...; 1.1; ...; 1.1; ...; 1.1; ...; 1.1; ...; 3.0; ...; 3.0; ... - Table 2 (The Gambia: Quantitative Performance Criteria and Indicative Targets, 2022; cumulative from beginning of the calendar year to end of month indicated; local currency millions, unless otherwise indicated): - Performance criteria (Prog./Proj. shown for Mar., Jun., Sep., Dec.): - Net domestic borrowing of the central government (ceiling): 1,462; 1,673; 1,462; 1,839; 759; 1,749; 659; 1,659. - Stock of net usable international reserves of the central bank (floor, US$ million): 359; 359; 349; 349; 367; 367; 361; 361. - New external payment arrears of the central government (ceiling, US$ million): 2; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0. - New nonconcessional external debt contracted or guaranteed by central government (ceiling, US$ million): 2; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0. - Outstanding stock of external public debt with original maturity of one year or less (ceiling, US$ million): 2; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0. - New concessional external debt contracted or guaranteed by central government (annual ceiling, US$ million): 2, 3, 4; 115; 115; 115; 115; 115; 115; 115; 115. - Indicative targets: - Total domestic tax revenue (floor): 2,800; 2,979; 5,750; 5,709; 9,000; 8,512; 12,000; 11,837. - Monthly ceiling on central bank credit to the central government at non-market terms (GMD millions): 5; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0. - Stock of net domestic assets of the central bank (ceiling): 6; 7,868; 5,752; 7,868; 7,530; 7,868; 7,530; 7,868; 6,957. - Poverty-reducing expenditure (floor): 1,400; 1,400; 3,000; 3,000; 4,800; 4,800; 6,500; 6,500. - Memorandum items: - Budget Support (grants, US$ millions): 7; 0.0; 0.0; 26.3; 20.0; 33.4; 20.0; 50.9; 20.0. - Base Money (stock, GMD millions): 19,845; 21,974; 19,204; 21,408; 20,139; 21,844; 20,886; 20,233. - IMF disbursements (SDR millions): 0.0; 0.0; 5.0; 5.0; 5.0; 5.0; 10.0; 10.0. - ECF disbursements: 0.0; 0.0; 5.0; 5.0; 5.0; 5.0; 10.0; 10.0. - CCRT debt relief (SDR millions): 3; 0.0; 0.0; 0.8; 0.8; 0.8; 0.8; 0.8; 0.8. ### Structural Benchmarks, Prior Actions, and Status (selected) - Table 3 (2021) and Table 4 (2022) list prior actions and structural benchmarks across domains: Domestic revenue mobilization, Public financial management, Debt management, Central bank governance and bank supervision, Governance and SOE reforms. - Notable items and status: - Prior action: Submit to the National Assembly a revised SOE bill (aligned with Constitution and IMF staff recommendations) to reduce political interference and strengthen SOEs; status in Table 4: Prior action Met. - Domestic revenue mobilization: Approve and implement a new Tax Expenditure Policy including review of investment tax incentives and a new GIEPA Act; target end-December 2021; status in Table 3: Not Met. - Public financial management: Prepare roadmap for extending IFMIS to all flows to project and subvented agency accounts; end-June 2021; Met. - Prepare and submit a new Public Finance Bill to National Assembly to strengthen budgetary processes; original timing end-December 2021; re-scheduled to end-June 2022 (Table 3). - Debt management: Publish a rolling monthly domestic debt issuance calendar for the ensuing three months; end-March 2021 and quarterly thereafter; Not Met. - Central bank: Sign an MoU with Auditor General for joint audit of FY 2021 financial statements; end-March 2021; Met. - Banking: Prepare stress testing framework by end-December 2021; Met. - Publish financial statements of SOEs for audited years approved by Parliament; end-December 2021; Met. - Selected 2022 structural benchmarks (Table 4) and timings: - Complete and adopt Taxpayer Charter: end-June 2022. - Develop, approve, and use accurate tax ledgers for large taxpayers: end-September 2022. - Conduct a tax audit on at least five companies holding special investment certificates (SIC): end-September 2022. - Publish phases 1 and 2 audit reports of COVID-19-related spending on MOFEA website: end-March 2022 (Not Met). - Expand social registry to cover additional six districts: end-June 2022. - Prepare first draft of new Public Finance Bill in consultation with Fund staff: end-June 2022. - Extend signing of performance contracts between MoFEA and three additional key SOEs: end-September 2022. - Conduct balance sheet stress tests of two banks (one large and one medium sized): end-September 2022. *Source: Excerpt from 1gmbea2022001 - 30. We will accelerate the adoption of the anti-corruption bill and welcome the IMF (PDF).* ### Introduction ### Introduction ### Purpose and scope - Memorandum sets out understandings between The Gambian authorities and IMF staff regarding definitions of quantitative targets and structural benchmarks to monitor performance under the ECF-supported program through end-2022. - Also defines related reporting requirements and adjustors applied to certain quantitative targets. ### Quantitative targets (A–J) - A. Net Domestic Borrowing (NDB) 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; includes change in other net claims 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 target adjusted downward by the amount of any budget support received from the African Development Bank. - Supporting material: Reporting on NDB included in the consolidated budget report (¶32). - B. Net Domestic Assets (NDA) of the Central Bank (CBG) - Definition: NDA = reserve money − net foreign assets of the CBG. Reserve money = currency in circulation + deposits of commercial banks at the CBG. Net foreign assets = foreign assets − foreign liabilities (claims on nonresidents and liabilities to nonresidents). - Program accounting exchange rates (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. - Conversion rule: Foreign assets and liabilities in other currencies converted into U.S. dollars at prevailing end-of-period market exchange rates for end-October 2020, then into dalasi at the rate listed above. - Supporting material: Balance sheet of the CBG (compiled based on the TMU rates) transmitted monthly within four weeks of the end of each month; for analytical purposes, a balance sheet compiled on a current-rate basis also to be submitted. - C. Net Usable International Reserves (NIR) of the CBG - Definition: NIR = usable reserve assets − reserve liabilities. Usable reserve assets include SDRs, foreign currency cash, foreign currency securities, deposits abroad, and reserve position at the IMF. Exclusions: pledged/collateralized/encumbered assets, claims on residents, claims from FX derivatives vis-à-vis domestic currency, precious metals, assets in nonconvertible currencies, illiquid assets (including capital shares in international organizations). Reserve liabilities include all foreign exchange liabilities to residents and nonresidents, including commitments arising from derivatives and all credit outstanding from the IMF, but excluding liabilities to the IMF’s SDR Department. - Conversion: Foreign assets and liabilities converted at exchange rates listed in ¶5 above. - Adjuster: In case of an allocation of SDRs by the IMF, NIR of the CBG adjusted upward by the full amount of the SDR allocation. - Supporting material: Detailed reserve statement with end-month data on NIR transmitted within seven days of the end of each month. - D. New External Debt Payment Arrears of the Central Government - Definition: External debt 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 where creditor accepted in writing to negotiate alternative payment schedules before the relevant payment; (ii) arrears on claims government has represented as disputed; (iii) arrears that cannot be settled due to international sanctions; (iv) arrears on trade credits, except arrears on payments due to the International Islamic Trade Finance Corporation (ITFC). - Performance criterion: Non-accumulation of new external debt payment arrears by the central government observed continuously. - Supporting material: Monthly accounting of non-reschedulable external arrears (if any) by creditor countries, transmitted within four weeks of the end of each month, with separate breakdowns 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; applies to debt as defined in ¶8(a) of the Guidelines on Public Debt Conditionality and to commitments contracted or guaranteed for which value has not been received. Guarantees arise from explicit legal or contractual obligation of the central government to service a debt owed by a third-party debtor. Debt considered contracted when conditions for entrance into effect have been met, including National Assembly approval. Exclusions: loans/purchases from the IMF, concessional debts, and any debt with maturity of one year or less. - Assessment: Performance criterion assessed continuously. - Concessionality rule (¶16): A debt is concessional if grant element ≥ 35 percent, where grant element = (nominal value − PV of debt) / nominal value. PV computed by discounting future debt service; for variable-rate debts (benchmark + fixed spread), PV uses program reference rate plus fixed spread. Program reference rate: six-month USD LIBOR = 2.42 percent (fixed for 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 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 accounting 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. - Reporting requirement: MoFEA to forward, within four weeks of contracting/guaranteeing any new external loan, the loan’s terms and conditions (interest rate, grace period, maturity, interest, fees, principal payment schedule with all annexes). - F. New Concessional External Debt Contracted or Guaranteed by the Central Government - Definition: New concessional external debt contracted or guaranteed by the Central Government denominated in any currency other than the Gambian dalasi; concessionality per ¶16. - For borrowing packages with loan and grant components, only loan components count toward the borrowing limit to meet the 35 percent grant element requirement. - Supporting material and data provision: Refer to ¶17 and ¶18. - G. Outstanding Stock of External Public Debt with Original Maturity of One Year or Less - Definition: Stock of outstanding external public debt with original maturity of one year or less, owed or guaranteed by the public sector (Central Government, regional governments and other public agencies, including central bank). Trade credits excluded, including ITFC credits. - Supporting material: Comprehensive record of all external debt with original maturity of less than one year owed or contracted by the public sector transmitted quarterly within four weeks of the end of each 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 the tax codes outlined in Text Table 1. Exclusions: nontax revenue (licensing fees, fines, levies collected by the GRA), levies collected by the GRA on behalf of other organizations (National Education & Technology Training Levy, AU Levy, ECOWAS Levy). - Supporting material: Monthly report on revenue collected by the GRA transmitted within four weeks of the end of each month. - I. Central Bank Credit to the Central Government at Non-Market Terms - Definition: Consolidated balance on the Treasury Main Account, the Consolidated Revenue Fund, and other revenue accounts; covers all gross claims on the Central Government on the CBG balance sheet with terms materially different from market terms for Treasury bills and bonds around acquisition time; covers overdue principal and interest payments on Central Government securities held by the CBG. - Assessment: Performance criterion assessed at the end of each month. - Supporting material: Reporting on new central bank credit to the government at nonmarket terms included in monetary sector data (¶34–¶35). - J. Poverty-Reducing Expenditures - Definition: Expenditures financed out of The Gambia Local Fund (GLF) covering: 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 Cross-Cutting Programs; ICT Research and Development; Decentralization and Local Government Capacity Building; Governance and Civil Service Reform Program. Includes COVID-19 spending including those implemented through the COVID-19 project accounts. - Supporting material: Monthly report on poverty-reducing expenditures transmitted within four weeks of the end of each month. ### Other data requirements and reporting standards (K–O) - K. Prices - Monthly disaggregated consumer price index, including weights for each major category, with January 2020 = 100, transmitted within four weeks of the end of each month. - L. Government Accounts Data - Monthly consolidated Central Government budget report (analytical table) on budget execution for the month and cumulatively from the beginning of the year transmitted within four weeks of the end of each month. - Report to cover: (i) revenue data by major items; (ii) external grants by type; (iii) details of recurrent expenditure (goods and services, interest payments, subsidies and other current transfers); (iv) details of capital expenditure and net lending (including externally financed capital expenditure, expenditure from the Gambia Local Fund, and net lending); (v) the overall balance, the primary and the basic balance; (vi) details of budget financing (including net domestic and net external borrowing and their components). - End-week data on net domestic borrowing (including project accounts in Table 1) transmitted weekly within five business days of the end of each week. - M. Monetary Sector Data - Balance sheet of the CBG, prepared on the basis of current and program exchange rates, transmitted monthly within four weeks of the end of each month; must explicitly identify all claims on, and liabilities to, the government, and include individual balances on government accounts listed in Table 1. - Consolidated balance sheet of commercial banks and monetary survey (consolidation of CBG and commercial banks), including foreign currency deposits held by residents with commercial banks, transmitted within four weeks of the end of each month. - Daily data on reserve money transmitted weekly within five business days of the end of each week. - N. Treasury Bill Market and Interbank Money Market - Weekly data on amounts offered and issued, net issuance, over/under subscription, and yields (interest rates) transmitted weekly within five business days of the end of each week. - Data on treasury bills and CBG bills outstanding (face value and discounted value, including distribution by bank and non-bank holders) transmitted monthly within six weeks of the end of each month. - Daily data on interbank money market (interest rates, maturities, volumes) transmitted weekly within five business days of the end of each week. - O. External Sector Data - CBG to forward data on transactions in official reserves within four weeks of the end of each month. - Daily interbank market exchange rates (simple average of daily weighted average buying and selling rates) transmitted weekly within five business days of the end of the week. - Weekly interbank market exchange rates (simple average of weekly weighted average buying and selling rates) transmitted monthly within seven days of the end of the month. - CBG’s monthly average and end-month exchange rates, including for all currencies in which foreign assets and liabilities are denominated, transmitted within seven days after the end of each month. - Daily data on foreign exchange intervention by the central bank transmitted weekly within five business days of the end of each week. - Detailed reserve statement with end-week data on net usable international reserves transmitted weekly within five business days of the end of each week. *Source: Introduction (1gmbea2022001).* ### 43. The CBG will also forward monthly data on the volume of transactions (purchases, ### 1gmbea2022001 - 43. ### Data reporting on foreign exchange transactions - 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. ### Public enterprises’ data reporting requirements - MoFEA will forward within eight weeks of the end of each quarter, data on monthly cash flow of NAWEC, GNPC, GAMTEL, GAMCEL, GCAA, SSHFC, and NFSPMC. - MoFEA will forward within eight weeks of the end of each quarter, data on the stock of consolidated Central Government’s stock of payment arrears to NAWEC at the end of each month. ### Projects accounts excluded from NDB calculation (selected project account names and account numbers) - 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 - (Additional project accounts listed in source.) ### Data reporting requirements (selected entries and deadlines) - T-bills auction data, Inter-banks rates & other accompanying data & tables: Weekly — 7 days after week-end - Project accounts data: Weekly — 7 days after week-end - International reserves and Foreign & Domestic Assets data (NIR, NFA & NDA): Weekly — 7 days after week-end - Foreign exchange liquidity forecasts statement/report: Weekly — 7 days after week-end - Commercial banks' balance sheets: Monthly — 30 days after month-end - Commercial banks' Forex net open position statement/report: Monthly — 30 days after month-end - CBG balance sheet (including NDA): Monthly — 30 days after month-end - CBG reserves statement/report: Monthly — 30 days after month-end - Statement/report on CBG credit to Gov. at non-market interest rates; and Gov.'s overdue payments to CBG: Monthly — 30 days after month-end - Statement/report of transactions in official reserves: Monthly — 30 days after month-end - Financial Soundness Indicators: Monthly — 30 days after month-end - Commercial banks' income statements: Quarterly — 30 days after quarter-end - Balance of payments (BOP): Quarterly — 30 days after quarter-end - Stock of outstanding public debt of maturity not exceeding 1 year: Quarterly — 30 days after quarter-end - Statement/report on concessional & non-concessional debts contracted or guaranteed by government: Quarterly — 30 days after quarter-end - Statement of Government Operations (SGO): Monthly — 30 days after month-end - Poverty-reducing expenditure data: Monthly — 30 days after month-end - Consolidated Central Gov. budget execution: Monthly — 30 days after month-end - SOE cash flow statements (i.e. 13 SOEs): Monthly — 30 days after month-end - External debt reports: Monthly — 30 days after month-end - Statement of external payment arrears by Central Government & SOEs: Monthly — 30 days after month-end - Staff Monitored Program (SMP) implementation matrix: Monthly — 30 days after month-end - Monthly Revenue Report: Monthly — 30 days after month-end - Oil volumes and tax collected on oil imports: Monthly — 30 days after month-end - Revenue collection by tax type: Monthly — 30 days after month-end - Tax exceptions\duty waivers: Monthly — 30 days after month-end - Consumer price index (CPI): Monthly — 30 days after month-end - Producer price index (PPI): Monthly — 30 days after month-end - Data on exports (by product type, quantity, country, etc.): Monthly — 30 days after month-end - Data on imports (by product type, quantity, country, etc.): Monthly — 30 days after month-end - Gross domestic product (GDP): Annually — 90 days after year-end - Crop field cultivation per hectare: Quarterly — 90 days after year-end - Crop yield: Quarterly — 90 days after year-end - Livestock population by region: Quarterly — 90 days after year-end - Tourists arrivals by nationality: Monthly — 30 days after month-end - Out-of-pocket tourists expenditures: Monthly — 30 days after month-end Responsible institutions listed: Gambia Tourism Board (GTB); 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). ### Debt sustainability analysis — risk ratings and key findings - Risk of external debt distress: High - Overall risk of debt distress: High - Granularity in the risk rating: Sustainable - Application of judgment: No - 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 prepared in the context of the third ECF review in November 2021. - Under the updated macro framework (which incorporates potential spillovers from the war in Ukraine), there are temporary breaches of the indicative thresholds for: - PV of external debt-to-exports, - external debt service-to-exports, - external debt service-to-revenue ratios. - These breaches primarily reflect weak export projections in the early years and rising debt service commitments in the medium term. - The PV of overall debt-to-GDP ratio remains on a downward sloping path and drops below its benchmark of 55 percent of GDP by 2025, underpinned by fiscal consolidation and support from development partners — indicating that the public debt outlook remains sustainable. - Downside risks include: - potential resurgence of the pandemic that could trigger a prolonged economic recession, - uncertainty over donor support disbursements, - associated fiscal pressures that could adversely affect the debt profile. ### Key debt statistics and projections - The Gambia’s Composite Index: 2.95 (based on April 2022 WEO update and 2020 WB CPIA published in July 2021); debt carrying capacity remains medium. - Total public debt-to-GDP ratio at end-2021: 83.8 percent (marginally lower than 85.9 percent in the previous year). - External debt-to-GDP ratio at end-2021: 48.4 percent (down from 49.5 in 2020). - The outstanding external loans contracted by the Government for SOEs amounted to 14.7 percent of GDP at end-2021. - The outstanding debt to ITFC amounted to 1.6 percent of GDP at end-2021. - The outstanding government-guaranteed SOE debt owed to ITFC at end-2021: US$14 million (external liabilities of SOE NAWEC). - Total public debt profile is on a downward trajectory and broadly in line with the previous DSA. - Creditor composition of PPG external debt: - Around 66 percent owed to multilateral creditors, - 30 percent to bilateral creditors, - 4 percent to commercial creditors. - 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: The Gambia has arrears on external debt owed to Libya and Venezuela; discussions on debt reconciliation with Libya are ongoing, with the most recent correspondence in March 2022. - Debt service projections (existing debt) — cumulative 2022–2030: - Overall debt service: US$627 million (compared to US$610 million during the third review) - Amortization: US$564 million - Interest charges: US$63 million - Total undisbursed loans at end-2021: US$297.9 million (compared to US$162 million as of end-2020); upward revision attributed to debt data reconciliation. - The Gambia benefited from: - debt service suspension from creditors under the DSSI worth US$4 million, - total debt service relief from the 2019 negotiations with bilateral creditors of around US$129 million (7 percent of GDP), - debt service relief under the Catastrophe Containment and Relief Trust (CCRT) expected to total SDR 7.9 million. ### Background and macro context (selected points) - The COVID pandemic surge has abated, but the economic recovery remains soft and faces several challenges, in particular spillovers from the war in Ukraine. - The Gambia’s vaccination rate remains low at about 20 percent of the adult population. - Inflationary pressures have risen in the wake of the Ukraine war, with upward revisions to fuel and food prices expected to have a significant impact on growth and inflation projections for 2022 and 2023. - Fiscal outturns were weaker than expected in 2021, reflecting a shortfall in donor budget support and some slippage in spending. - The current account deficit widened by less than anticipated in 2021, supported by improving tourist activity towards the end of the year and lower-than-anticipated imports linked to infrastructure projects. *Prepared by the staffs of the International Monetary Fund and the International Development Association — May 24, 2022.* ### 6. The DSA is consistent with the macroeconomic framework outlined in the staff report. The ### 1gmbea2022001 - 6. The DSA is consistent with the macroeconomic framework outlined in the staff report. The ### Macroeconomic framework and baseline assumptions - Baseline assumes implementation of sound macroeconomic policies, structural reforms, and an ambitious infrastructure investment plan. - Ukraine war shock: global fuel and food prices estimated to rise by 55 percent and 14 percent in 2022 compared to the previous year, according to the latest WEO projections. - Global fuel prices expected to gradually decrease by 2027 but remain well above their 2021 average. - Key macroeconomic assumptions (Text Table 4) and related aggregates: - Nominal GDP: 2,034.4 (US$ millions) - Real GDP growth revisions: - 2021 estimate revised down to 4.3 percent (from 4.9 percent in previous DSA) - Projections for 2022 and 2023 revised down to incorporate shocks from the war in Ukraine - Inflation: - 2022: 8.5 percent (y/y) - 2023: 7.5 y/y - Central bank target: 5 percent in the medium term ### Debt stock, composition, and domestic financing - Total debt (US$ millions): 1,671.5 - External debt (US$ millions): 965.9 (57.8 percent of total) - Domestic debt (US$ millions): 705.6 (42.2 percent of total) - External creditors (selected): - Multilateral creditors: 651.3 (39.0 percent of total) - IMF: 104.4 - World Bank: 132.1 - ADB/AfDB/IADB: 56.2 - Other Multilaterals: 358.6 - o/w: IsDB and OFID: 222.2 - Bilateral creditors: 284.4 (17.0 percent of total) - Paris Club: 0.5 - o/w: ING Bank N.V. and Govt. of Belgium: 0.5 - Non-Paris Club: 283.9 - o/w: Saudi and Kuwait Fund: 146.9 - Commercial creditors: 30.2 (1.8 percent of total) - o/w: M.A. Kharafi and Sons: 30.2 - Domestic instruments (US$ millions / percent of total): - T-Bills: 368.3 (22.0 percent of total) - Bonds: 337.3 (20.2 percent of total) - Memo items: - Collateralized debt: n/a - Contingent liabilities: n/a - Debt collateralization note: definition and implications provided (no numeric value). ### Fiscal framework, financing, and public investment - Overall fiscal deficit: - 2022 estimated to widen by about 1.2 percentage points of GDP relative to the previous DSA. - Current DSA overall fiscal deficit path (Text Table 4): 4.6, 4.2, 2.2, 1.5, 0.8, 0.6, 0.5, 1.3 (for 2021–2027 respectively; percent of GDP). - Financing adjustments in 2022: - Widening financed by on-lending of two ECF disbursements in 2022 and an increase in net domestic borrowing. - Net domestic borrowing expected to increase by 0.7 percent of GDP in 2022 compared to the previous DSA. - Domestic issuance assumption over next five years: 80 percent T-bills, 15 percent 3-year bonds, remaining via 5-year bonds; projected gradual shift to longer-term maturities. - Revenue mobilization measures: - Implement GRA’s Corporate Strategic Plan. - Rationalize tax expenditures via tax expenditure policy and revision of fiscal provisions of the GIEPA act. - Digitalize tax administration. - Broaden tax base to hospitality, cable television, and real estate sectors. - Spending rationalization measures: - Rationalize wage bill using electronic payment and Biometric Time and Attendance Register System. - Reign in subsidies and rationalize foreign missions. - Control government consumption through strict procurement rules in line with the GPPA Act. - Improve public investment efficiency via project selection criteria through the Gambia Strategic Review Board. - Public investment and project execution: - Delays in execution of key infrastructure projects (including Banjul port and Bertil-Harding highway) noted; loan agreements and disbursements are materializing at a slower pace than anticipated. - Public investment (percent of GDP) — Current DSA: 6.2, 9.3, 9.0, 8.4, 8.9, 8.9, 9.0, 8.5 (for 2021–2027 respectively). ### Grants, budget support, and external borrowing plan - Budget support and grants revisions: - Budget support grants for 2022 estimated at US$ 20.0 million (vs US$50 million estimated in the third ECF review). - Project grants for 2022 conservatively estimated at US$85.8 million (compared to US$179 million estimated during the third review); donors indicated project grants could be up to US$150 million contingent on conditions. - External financing mix: - DSA assumes prudent borrowing: gradually increase share of domestic debt and seek new external financing only on concessional terms. - Under program agreement, aggregate US$192 million in concessional external debt can potentially be contracted or guaranteed between 2020-23. - No new external debt contracted in 2021; remaining concessional amount available in 2022–2023 per external borrowing plan (Text Table 3). - Revised External Borrowing Plan (Text Table 3, US$ millions, 2020–23): - Total debt contracted: 121, 150, 40, 115, 408, 0, 207, 207 (year-by-year entries shown in table layout) - Concessional debt: 121, 100, 40, 100, 408, 0, 192, 192 - Multilateral debt: 0, 800, 206, 520, 401, 20, 120, 105 - Bilateral debt: 122, 200, 203, 520, 407, 2, 87, 87 - Nonconcessional debt: 1, 0, 1500, 1500, 1515 (note: nonconcessional debt part of concessional financing package for port expansion) - Use of debt financing: Infrastructure entries and port expansion figures appear in table (port expansion: 0,6500,650,65 in table layout) ### External sector and reserves - Exports and imports: - Exports of goods and services growth (Current DSA): 16.9, 6.9, 4.7, 24.9, 18.7, 7.9, 7.0, 7.0, 9.5 (period entries as in Text Table 4) - Imports of goods and services growth (Current DSA): 19.3, 3.6, 12.4, 5.7, 6.1, 4.1, 6.1, 6.1, 6.2 (period entries as in Text Table 4) - Current account deficit: - 2021 estimated at 8.0 percent of GDP (narrowed from 12.5 percent projected in previous DSA). - Projected to widen to 13.3 percent of GDP in 2022. - Medium-term average projected around 10.7 percent of GDP. - Gross financing needs: - Average gross financing needs projected at around US$42.8 million over the next two years. - FX reserves: - Gross foreign exchange reserves rose to US$530 million in 2021 (equivalent to 6 months of imports). - Projected to moderate to US$465 million in 2022 (about 4.7 months of imports). - Projected to average around US$475 million in the medium term. ### Realism checks, growth drivers, and risks - Realism of macro framework confirmed by several metrics (Figure 4 referenced). - Projected fiscal adjustment for next three years is in the top quartile of distribution of approved Fund-supported programs for LICs since 1990. - Key factors underpinning fiscal adjustment: - Expected increase in development partners’ disbursements as partners enter new financing cycle from 2022-23 to 2024-25. - Projected phasing out of COVID-19 spending. - Completion of large infrastructure projects related to OIC conference in 2022. - Growth dampeners relative to previous DSA: - (i) delays in execution of key infrastructure projects (including Banjul port) due to capacity constraints and debt sustainability concerns; - (ii) projected tapering of remittance inflows partly due to war in Ukraine spillovers; - (iii) anticipated monetary tightening to contain residual inflationary pressures and maintain inflation at central bank’s target. - Downside risks: - Underperformance by authorities in meeting support triggers between 2022-2024 could reduce donor disbursements and increase fiscal pressure. - Outlook subject to high uncertainty and downside risks and dependent on course of pandemic. ### Debt carrying capacity and stress tests - Debt carrying capacity classification: “medium”. - CI score: 2.95 (previous DSA: 2.90; earlier vintages: 2.78). - Import coverage of reserves is the most significant contributor to CI score, followed by CPIA value. - CI score updated with April 2022 WEO. - Standardized stress test settings applied; none of the individual tailored stress tests applicable. - Combined contingent liabilities test assumes shock of 7.0 percent of GDP (5 percent of GDP for financing sector shock and 2.0 percent of GDP for non-guaranteed SOEs debt). - External DSA outcomes: - Baseline: three of four external debt indicators temporarily breach thresholds for varying periods: - PV of external debt-to-exports breaches threshold level of 180 in 2022 and 2023 before falling below threshold thereafter. - Debt-service-to-exports breaches threshold level of 15 in 2022 and again between 2025-29. - External debt service-to-revenue breaches threshold level of 18 in 2022 and again between 2025–28 before falling below threshold later. - PV of external debt-to-GDP remains within threshold level of 40 for entire forecast horizon. - Stress scenarios: - All indicators breach thresholds for varying periods. - PV of debt-to-GDP breaches threshold level of 40 in 2023 and falls below threshold in 2031. - PV of debt-to-exports breaches 180 in 2022 and remains above for remainder of forecast horizon. - Debt-service-to-exports breaches 15 in 2022 and remains above for remainder. - Debt-service-to-revenue breaches 18 in 2024 and remains above for duration. - Exports shock most severe for PV of debt-to-exports and debt-service-to-exports; combination shock most severe for PV of debt-to-GDP and debt-service-to-revenue. - Debt distress assessment: - Risk of external debt distress remains “high”, but sustainable. - Breaches reflect weak exports (tourism-driven) in near term and anticipated expiration of debt-service deferrals in medium term, increasing debt-service payments. - Implication: limited space for additional borrowing in near term and need to build ample buffers for increased future debt-service burden. *Italic: IMF staff report excerpt as provided in content unit 1gmbea2022001.* ### 13. Under the baseline scenario, the PV of total public debt-to-GDP ratio is temporarily in ### 1gmbea2022001 - 13. Under the baseline scenario, the PV of total public debt-to-GDP ratio is temporarily in ### Baseline and stress scenario debt dynamics - PV of total public debt-to-GDP breaches the benchmark level of 55 between 2022–24 but falls within the benchmark level in 2025 and continues to decline thereafter throughout the forecast horizon. - Under the stress scenario, the PV of total public debt-to-GDP remains above the benchmark until 2029. - The non-debt flows shock is the most extreme for the PV of total public debt-to-GDP ratio under the stress scenario. - Two other indicators of public debt (PV of debt-to-revenue and debt service-to-revenue) are on a declining trend for the entire duration of the forecast horizon in the baseline scenario. - Breaches in the PV of debt-to-exports ratio and higher values in later years compared to the previous DSA are attributed to the data reconciliation process, which resulted in upward revisions to the PV of external debt profile. ### Debt sustainability assessment and risk rating - The Gambia’s overall public debt position is assessed at high risk of debt distress but remains sustainable. - The PV of total public debt-to-GDP follows a firmly downward sloping path, remains within the benchmark from 2025 onwards, and continues to decline thereafter. - Because the indicator falls below the benchmark within 3 years of the projection horizon and remains under benchmark thereafter, the overall debt position is deemed sustainable. - Assessment caveats and downside risks: - Resurgence of the pandemic causing a prolonged economic recession. - Uncertainty over donor support disbursements and associated fiscal pressures. - Recent strong capital inflows from remittances and donor support might not persist and could add pressures on debt servicing. - Upcoming increase in debt service in the medium term. - In a downside scenario (resurgence of the pandemic and continued global travel restrictions), tourism could be subdued until end-2025. Under such a scenario: - Growth could fall to 4.0 percent (2.0 p ercent b elo w the baseline). - The fiscal deficit would widen due to higher health-related spending and lower revenues. - Financing needs would increase and push the PV of total public debt to fall below the benchmark level of 55 two years later than under the baseline. ### Data, reconciliation, and debt management issues - Factors affecting future assessments: - Data revisions. - Availability of concessional financing for infrastructure projects. - Potential decline in donor support. - Need for strengthened data collection and reconciliation for debt and external sector statistics; uncertainty over data quality and delivery could hamper timely assessments. - World Bank TA supported finalization of a validated, reconciled end-2021 public debt stock and better understanding/use of the Commonwealth Meridien (CM) system through an on-ground Commonwealth Secretariat specialist in March 2022. - Mission recommendations related to CM: - Enhance capacity building in the use of CM. - Upgrade IT infrastructure around CM. - Expand coverage to all debts in a phased manner. - Undertake data validation and reconciliation at least once every year. - Last year, TA supported formulation of the annual borrowing plan for 2021; implementation has been within the parameters, and deviation between domestic debt issuance and annual borrowing plan in 2021 was 4 percent. This practice is ongoing for 2022 with the ABP for 2022 and monthly issuance calendars published up till April 2022. - Execution of several large public investment projects underway (extension of the Port of Banjul and the Bertil Harding highway); financing plans for these projects should remain within the ceilings on the external borrowing plan. Any deviation could pose risks to the debt outlook. - Any significant change in future disbursements of donor grants towards budget support or key infrastructure project financing will have ramifications for The Gambia’s debt profile. - The World Bank will continue to support debt management, SOEs, and public investment management under the planned WB Public Administration Modernization Project (PAMP, P176924) with reform actions complemented through the pipeline Development Policy Financing operations and SDFP. ### Debt service and debt management policy - While the public debt service-to-revenue ratio exceeds 100 percent in the near term, the authorities are addressing this by implementing a debt management policy that reduces roll-over risks, including substitution of costly borrowing with loans that have lower interest rates and longer maturity (given the recent decline in T-bills and bonds interest rates). ### Authorities’ views - Authorities acknowledged challenges in reducing the overall debt burden and addressing the sustained high risk of debt distress. - Drivers of upward pressure on the debt stock include the COVID pandemic and mounting infrastructure investment needs. - Expiry of the DSSI and CCRT increases challenges, given the upcoming wall of debt service commitments beyond 2025. - Authorities remain committed to reducing debt vulnerabilities through sustained restraint in new borrowing and a strong medium-term fiscal framework. - Authorities acknowledged ongoing data challenges and the sharp upward revision in recent debt stock and disbursement data due to the debt data reconciliation process, but expressed confidence that the most recent reconciliation process, with World Bank TA, will ensure stable debt projections going forward. - Data reconciliation meeting with donors on budget support and project grants was useful in reconciling grant projections for 2022 and 2023. - On external arrears, progress is being made in discussions with Libyan authorities on reconciling the debt owed to Libya; Venezuelan authorities have recently approached to re-engage on arrears discussions. *THE GAMBIA — INTERNATIONAL MONETARY FUND.* ### 2.5 percentage points of GDP in ### 1gmbea2022001 - 2.5 percentage points of GDP in ### External debt sustainability — baseline scenario (selected indicators and projections) - External debt (nominal) (In percent of GDP) - 2019: 47.3 - 2020: 50.2 - 2021: 49.8 - 2022: 48.1 - 2023: 45.6 - 2024: 42.5 - 2025: 39.3 - 2026: 36.4 - 2027: 33.9 - 2032: 27.5 - 2042: 18.4 - Of which: public and publicly guaranteed (PPG) - 2019: 47.2; 2022: 46.5; 2024: 41.8; 2027: 33.6; 2042: 18.3 - Change in external debt - 2019: -0.9; 2020: 2.9; 2021: -0.4; 2022: -1.7; 2023: -2.5; 2024: -3.1 - Identified net debt-creating flows (In percent of GDP) - 2019: -2.9; 2020: -1.0; 2021: -2.4; 2022: 6.1; 2023: 4.4; 2024: 2.4; 2025: 3.6; 2026: 3.3; 2027: 3.4 - Non-interest current account deficit - 2019: 5.4; 2020: 2.8; 2021: 7.5; 2022: 12.8; 2023: 11.4; 2024: 9.3; 2025: 9.9; 2026: 9.1; 2027: 9.1 - Deficit in balance of goods and services - 2019: 18.6; 2020: 28.6; 2021: 30.5; 2022: 35.5; 2023: 35.4; 2024: 32.7; 2025: 31.9; 2026: 30.6; 2027: 30.2 - Exports and imports (In percent of GDP) - Exports: 2019: 20.4; 2020: 8.4; 2021: 8.7; 2022: 13.4; 2023: 15.5; 2024: 17.0; 2025–2027: 17.0 - Imports: 2019: 39.1; 2020: 37.0; 2021: 39.2; 2022: 49.0; 2023: 50.9; 2024: 49.7; 2025: 48.9; 2026: 47.6; 2027: 47.2 - Net current transfers (negative = inflow) - 2019: -14.2; 2020: -27.4; 2021: -24.0; 2022: -23.7; 2023: -24.9; 2024: -24.3; 2025: -22.8; 2026: -22.3; 2027: -21.9 - Of which: official transfers: 2019: -3.1; 2020: -4.6; 2021: -0.8; 2022: -0.9; 2023: -2.4; 2024: -2.2 - Net FDI (negative = inflow) - 2019: -5.2; 2020: -3.8; 2021: -4.9; 2022: -4.6; 2023: -4.6; 2024: -4.5; 2025: -4.4; 2026: -4.3; 2027: -4.3 - Endogenous debt dynamics (contribution, In percent of GDP) - 2019: -3.1; 2020: 0.0; 2021: -5.1; 2022: -2.1; 2023: -2.4; 2024: -2.4 - Contribution from nominal interest rate: 2019: 0.7; 2020: 0.1; 2021: 0.5; 2022: 0.5 - Contribution from real GDP growth: 2019: -2.8; 2020: -0.3; 2021: -1.9; 2022: -2.6 - Contribution from price and exchange rate changes: 2019: -1.1; 2020: 0.2; 2021: -3.6 - Residual (includes exceptional financing, valuation adjustments) - 2019: 2.0; 2020: 3.9; 2021: 2.0; 2022: -7.8; 2023: -6.9; 2024: -5.5 - Of which: exceptional financing: 2019: 0.0; 2020: -0.5; 2021: -0.3; 2022: -0.1 - Sustainability indicators (selected) - PV of PPG external debt-to-GDP ratio (projection years shown) - 2023: 34.6; 2024: 32.8; 2025: 31.9; 2026: 30.6; 2027: 28.6; 2032: 19.2; 2042: 11.9 - PV of PPG external debt-to-exports ratio - 2023: 395.7; 2024: 244.3; 2025: 205.1; 2026: 179.6; 2027: 168.2; 2032: 103.5; 2042: 47.4 - PPG debt service-to-exports ratio - 2019: 22.3; 2020: 3.8; 2021: 33.5; 2022: 22.6; 2023: 13.0; 2024: 11.8; 2025: 16.0; 2026: 17.3; 2027: 17.3; 2032: 10.0; 2042: 4.4 - PPG debt service-to-revenue ratio - 2019: 32.5; 2020: 2.2; 2021: 20.5; 2022: 20.6; 2023: 14.9; 2024: 14.3; 2025: 18.7; 2026: 19.8; 2027: 19.1; 2032: 12.2; 2042: 7.4 - Gross external financing need (Million of U.S. dollars) - 2019: 86.9; 2020: -12.1; 2021: 126.9; 2022: 272.5; 2023: 242.4; 2024: 200.2; 2025: 247.2; 2026: 242.7; 2027: 254.8; 2032: 264.2; 2042: 57.1 ### Key macroeconomic assumptions used in external DSA - Real GDP growth (in percent) - 2019: 6.2; 2020: 0.6; 2021: 4.3; 2022: 5.6; 2023: 6.2; 2024: 6.5; 2025: 5.8; 2026: 5.0; 2027: 5.0; 2032: 5.0; 2042: 3.6 - Average (Actual/Projections) noted as 5.4 in one cell - GDP deflator in US dollar terms (change in percent) - 2019: 2.3; 2020: -0.4; 2021: 7.8; 2022: 1.3; 2023: 1.8; 2024: 1.6 - Effective interest rate (percent) - 2019: 1.6; 2020: 0.3; 2021: 1.1; 2022: 1.2; 2023: 0.9; 2024: 0.9; projection range through 2042 showing values around 0.9–1.3; staff figure 1.0 in one cell - Growth of exports of G&S (US dollar terms, in percent) - 2019: 17.7; 2020: -58.8; 2021: 16.9; 2022: 64.7; 2023: 24.9; 2024: 18.7 - Growth of imports of G&S (US dollar terms, in percent) - 2019: 13.6; 2020: -5.2; 2021: 19.3; 2022: 33.6; 2023: 12.4; 2024: 5.7 - Grant element of new public sector borrowing (in percent) (selected years) - 2022: 42.4; 2023: 40.0; 2024: 38.9; 2025: 33.2; 2026: 36.9; 2027: 37.2; 2028: 44.1; 2029: 43.8 - Government revenues (excluding grants, in percent of GDP) - 2019: 14.0; 2020: 14.5; 2021: 14.3; 2022: 14.7; 2023: 13.5; 2024: 14.0; 2025: 14.5; 2026: 14.9; 2027: 15.4 - Aid flows (Million of US dollars) - 2019: 129.0; 2020: 153.3; 2021: 51.3; 2022: 153.2; 2023: 202.3; 2024: 188.9; 2025: 181.4; 2026: 188.6; 2027: 193.9; 2032: 216.7; 2042: 257.0 - Grant-equivalent financing (in percent of GDP) - 2022: 6.4; 2023: 8.1; 2024: 7.2; 2025: 7.1; 2026: 6.6; 2027: 6.4; 2028: 4.9; 2032: 3.1 - Nominal GDP (Million of US dollars) - 2019: 1,806; 2020: 1,809; 2021: 2,034; 2022: 2,177; 2023: 2,353; 2024: 2,547; 2025: 2,751; 2026: 2,938; 2027: 3,150; 2032: 4,416; 2042: 8,352 - Nominal dollar GDP growth - 2019: 8.6; 2020: 0.2; 2021: 12.4; 2022: 7.0; 2023: 8.1; 2024: 8.3; 2025: 8.0; 2026: 6.8; 2027: 7.2; 2032: 6.6; 2042: 6.6 ### Public sector debt sustainability — baseline scenario (selected indicators and projections) - Public sector debt (In percent of GDP) - 2019: 83.0; 2020: 85.9; 2021: 83.8; 2022: 79.5; 2023: 74.6; 2024: 69.4; 2025: 63.7; 2026: 58.0; 2027: 52.9; 2032: 38.3; 2042: 30.8 - Of which: external debt (public) - 2019: 47.2; 2020: 49.5; 2021: 48.4; 2022: 46.5; 2023: 44.5; 2024: 41.8; 2025: 38.8; 2026: 36.0; 2027: 33.6; 2032: 27.4; 2042: 18.3 - Change in public sector debt - 2019: -0.6; 2020: 2.9; 2021: -2.1; 2022: -4.3; 2023: -4.9; 2024: -5.2 - Identified debt-creating flows (In percent of GDP) - 2019: -5.1; 2020: -0.2; 2021: -4.3; 2022: -4.1; 2023: -4.8; 2024: -5.1; 2025: -5.7; 2026: -5.7; 2027: -5.1 - Primary deficit (In percent of GDP) - 2019: -0.6; 2020: -1.0; 2021: 1.6; 2022: 1.5; 2023: 0.0; 2024: -0.7; 2025: -1.4; 2026: -1.3; 2027: -1.3 - Revenue and grants (In percent of GDP) - 2019: 21.2; 2020: 23.0; 2021: 16.8; 2022: 19.6; 2023: 20.3; 2024: 20.2; 2025: 20.8; 2026: 20.6; 2027: 20.8 - Of which: grants: 2019: 7.1; 2020: 8.5; 2021: 2.5; 2022: 4.9; 2023: 6.8; 2024: 6.2 - Primary (noninterest) expenditure (In percent of GDP) - 2019: 20.6; 2020: 22.0; 2021: 18.4; 2022: 21.2; 2023: 20.3; 2024: 19.5 - Automatic debt dynamics (In percent of GDP) - 2019: -4.6; 2020: 0.8; 2021: -5.9; 2022: -4.4; 2023: -4.9; 2024: -3.6 - Contribution from interest rate/growth differential: 2019: -4.0; 2020: 0.8; 2021: -4.1; 2022: -5.2 - Contribution from average real interest rate (selected): 2019: 0.9; 2020: 1.3; 2021: -0.6; 2022: -0.8; 2025 onward shows higher positive contributions in projections - Contribution from real GDP growth: 2019: -4.9; 2020: -0.5; 2021: -3.5; 2022: -4.4 - Other identified debt-creating flows and residual - Other identified flows include a -1.2 entry in 2022 and subsequent negative contributions; residual values: 2019: 4.5; 2020: 3.1; 2021: 2.2; 2022: 0.5; 2023: -0.2; 2024: -0.5 - Sustainability indicators (selected) - PV of public debt-to-GDP ratio (projections) - 2023: 70.6; 2024: 66.7; 2025: 62.6; 2027: 53.8; 2032: 30.4; 2042: 24.6 - PV of public debt-to-revenue and grants ratio - 2023: 419.8; 2024: 339.8; 2025: 308.4; 2027: 258.8; 2032: 159.0; 2042: 141.3 - Debt service-to-revenue and grants ratio (selected) - 2019: 113.6; 2020: 108.1; 2021: 147.6; 2022: 111.8; 2023: 100.3; 2024: 95.4; 2025: 96.0; 2026: 103.0; 2027: 96.7; 2032: 76.7; 2042: 69.9 - Gross financing need (In percent of GDP) - 2019: 23.5; 2020: 23.8; 2021: 26.4; 2022: 22.3; 2023: 20.5; 2024: 17.7; 2025: 16.3; 2026: 16.6; 2027: 15.9; 2032: 13.0; 2042: 12.2 ### Sensitivity analysis — public and publicly guaranteed external debt (selected results) - PV of debt-to-GDP ratio (baseline and scenarios, In percent) - Baseline: 2022: 32.8; 2023: 31.9; 2024: 30.6; 2025: 28.6; 2026: 26.7; 2027: 24.8; 2028: 23.6; 2032: 19.2 - A1 (historical averages): 2022: 32.8; 2023: 29.6; 2024: 27.3; 2025: 23.6; 2026: 20.0; 2027: 16.5; 2028: 13.9; 2032: 8.9 - B5 (one-time 30 percent nominal depreciation): 2022: 32.8; 2023: 40.1; 2024: 31.8; 2025: 29.5; 2026: 27.2; 2027: 25.0; 2028: 23.6; 2032: 20.0 - PV of debt-to-exports ratio (baseline and scenarios, In percent) - Baseline: 2022: 244.3; 2023: 205.1; 2024: 179.6; 2025: 168.2; 2026: 156.4; 2027: 145.8; 2032: 103.5 - A1: 2022: 244.3; 2023: 190.4; 2024: 160.0; 2025: 138.8; 2026: 117.3; 2027: 96.9; 2028: 82.1; 2032: 51.3 - B6 (combination): 2022: 244.3; 2023: 418.2; 2024: 306.3; 2025: 547.1; 2026: 519.1; 2027: 493.5; 2028: 463.4; 2032: 237.5 - Debt service-to-exports ratio (baseline and scenarios, In percent) - Baseline: 2022: 22.6; 2023: 13.0; 2024: 11.8; 2025: 16.0; 2026: 17.3; 2027: 17.3; 2032: 10.0 - A1: 2022: 22.6; 2023: 13.5; 2024: 12.3; 2025: 17.3; 2026: 19.4; 2027: 17.7; 2028: 16.7; 2032: 10.3 - B4 (other flows): 2022: 22.6; 2023: 45.4; 2024: 56.8; 2025: 53.9; 2026: 51.3; 2027: 48.8; 2028: 46.2; 2032: 34.8 ### Sensitivity analysis — public debt (selected results) - PV of public debt-to-GDP ratio (baseline and scenarios, In percent) - Baseline: 2022: 66.7; 2023: 62.6; 2024: 58.5; 2025: 53.8; 2026: 48.9; 2027: 44.3; 2032: 30.4 - A1 (historical averages): 2022: 67; 2023: 65; 2024: 64; 2025: 61; 2026: 57; 2027: 54; 2032: 42 - B1 (real GDP growth): 2022: 67; 2023: 69; 2024: 73; 2025: 69; 2026: 66; 2027: 62; 2032: 55 - PV of debt-to-revenue ratio (baseline and scenarios) - Baseline (selected years): 2022: 339.8; 2023: 308.4; 2024: 289.6; 2025: 258.8; 2026: 237.0; 2027: 212.9; 2032: 159.0 - B4 (other flows) shows higher stressed outcomes (e.g., 2022: 340.4; 2023: 376.4; 2024: 421.3) - Debt service-to-revenue ratio (baseline and scenarios) - Baseline (selected years): 2022: 111.8; 2023: 100.3; 2024: 95.4; 2025: 96.0; 2026: 103.0; 2027: 96.7; 2032: 76.7 - Scenario outcomes vary; a bold value in table would indicate breach of threshold ### Recent economic developments and authorities' statement (selected excerpts) - Context and program status - Authorities appreciate candid engagement with staff during fourth review of the Extended Credit Facility (ECF). - The new administration (post-December 2021 elections) remains committed to the agreed ECF reform agenda. - Authorities seek Executive Directors’ support for completion of the fourth review under the ECF arrangement and the financing assurances review, and for modification of performance criteria. - Transparency and accountability - Authorities continue to adhere to IMF transparency and accountability for COVID-19 related spending. - All procurement contracts, including COVID-19 contracts approved by the Gambia Public Procurement Agency since 2021, are published on its website, together with beneficial owners for the COVID-19 contracts. - The report of the first phase audit of COVID-19 spending is published on the National Audit Office (NAO) website; three out of five components of the second phase audit were completed with the full report expected after review by the National Assembly. - Role of external support - Donor and external support considered important to restore macroeconomic stability and minimize scarring from the pandemic and adverse spillovers from the war in Ukraine. - Authorities appreciate Fund technical assistance and support from development partners. - Recent economic performance and outlook - Real GDP growth projected at 5.6 percent in 2022, up from 4.3 percent in 2021, backed by construction, remittance inflows, and recovery in tourism. - Medium-term growth expected to average 5.7 percent. - Downside risks identified: possibility of new COVID variants, prolonged war in Ukraine, and financial tightening in advanced economies. - Vaccination status and plans: about 20 percent of the adult population is vaccinated; authorities plan to ramp up vaccination with increased supply from an ultracold facility, COVAX donations, and World Bank COVID-19 support. *Sources: Country authorities; and staff estimates and projections.* ### 6. Inflation accelerated to 11.7 percent at end-April 2022 from 7.6 percent at end-December ### 6. Inflation accelerated to 11.7 percent at end-April 2022 from 7.6 percent at end-December ### Inflation and External Sector - Inflation accelerated to 11.7 percent at end-April 2022 from 7.6 percent at end-December 2021, driven by rising global oil and food prices following the war in Ukraine and amplified by a weak domestic currency. - Inflation projection: moderate to 8.2 percent at end-2022. - Current account: - Deficit widened to 13.3 percent of GDP in 2022 from 8.8 percent of GDP in 2021. - Drivers: weak tourism receipts, higher import bill from rising commodity prices and infrastructure-related imports, and some decline in budget support grants. - Offsets: increasing remittances, strong capital transfers, and the general SDR allocation. - International reserves: - Reached 6 months of import cover in 2021. - Projected to decline to 4.7 months in 2022. ### Program Performance - Overall assessment: program performance remains broadly satisfactory. - Quantitative performance criteria (QPCs) at end-December 2021: - Five out of six QPCs were met. - Missed QPC: ceiling on net domestic borrowing (NDB). - Causes: lower-than-anticipated tax collection and budget support; unforeseen spending related to election security and pandemic mitigation; acceleration of key road construction projects. - End-March 2022 NDB indicative target also breached due to accelerated infrastructure projects with a large down payment on an Organization of Islamic Cooperation (OIC) project and the need for fertilizer subsidies. - Authorities’ corrective measures: - Strengthen cash management from 2022Q2. - Continuously align rolling quarterly spending plans with the treasury and borrowing plans. - New public finance bill provision: any additional spending must be matched with additional revenue or spending reallocations in a supplementary budget. - Indicative targets (IT) for end-December 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. - Missed IT: floor on domestic tax revenue due to slower recovery and declines in trade volumes post-pandemic. - Structural benchmarks (SBs) for end-December 2021: - All four SBs satisfied, two met with delays. - Completed by December 2021: online publication of audited SOE financial statements; signing of new tax expenditure regulations; preparation of a framework for stress testing banks’ balance sheets. - Revised SOEs bill submitted to the National Assembly in early April 2022. - Publication of the first phase report of the COVID-19 spending audit completed in 2022. - Publication of the audit report for the second phase reset as a Structural Benchmark for end-September 2022. ### Fiscal Policy and Debt Sustainability - Fiscal stance and targets: - Authorities committed to fiscal prudence and a sustainable path. - Target: turn primary balance from a deficit of 1.6 percent of GDP at end-2021 to zero percent of GDP in 2023. - Medium-term target: average surplus of about 1¼ percent of GDP. - Strategy: combination of strong revenue and expenditure policies and support from development partners. - Revenue measures and performance: - 2022 Q1: tax revenue collection above target by 6.5 percent, reflecting higher-than-expected outturns on personal and corporate income taxes, value added tax and excise duties as economic activity resumes, including tourism and hospitality. - Assets sales following the Janneh Commission: add 0.3 percent of GDP in revenues relative to the original budget. - One-off petroleum sector receipt expected: US$30 million. - Revenue reforms and administration: - Launch of a taxpayer charter to improve compliance. - Rationalize tax exemptions, use an electronic payment platform, increase tax audit and data matching capacity, extend tax base to commercial real estate sector. - Continue implementation of the Gambia Revenue Authority (GRA)’s Corporate Strategic Plan, including digitalizing tax administration. - Revenue reform projection: increase tax-to-GDP ratio from 10.25 percent of GDP in 2021 to 12.5 percent in 2027. - Tax exemption and administration reforms: - Initiated tax exemption rationalization process. - Improve collection via electronic payment platform, upgrade taxpayer registry, audit tax-exempted entities under Special Investment Certificates (SIC). - Draft, approve and commence implementation of the ITAS roadmap. - Develop and implement a strategy for managing tax arrears. - Set up a fully functional Internal Affairs Unit at the GRA. - Develop and implement a national policy for customs control and risk management. - Expenditure rationalization: - Expectation to reduce primary current spending and domestically financed infrastructure spending by 2 percent of GDP between 2022-27. - Pandemic-related spending to unwind and capital spending pressures to ease as major projects complete. - Administrative measures: ban non-essential government travel; reduce official allowances related to travel, communication and fuel. - PFM measures: rationalize wage bill using electronic payroll controls; rein in subsidies to and improve governance of SOEs; rationalize foreign missions and subvented agencies. - Strengthen Treasury Single Account, implement strict cash management, enact civil service reforms, introduce a new pay and grading system. - Expand the social registry to improve targeting of social safety net programs. - Debt outlook and transparency: - Commitment to reduce debt vulnerabilities and adhere to agreed borrowing plan, relying primarily on grants and highly concessional borrowing. - Target: reduce present value of total public debt from 83 percent of GDP in 2021 to below the benchmark of 55 percent of GDP around 2025. - Support: strong medium term fiscal framework. - Ongoing work: regular publication of a quarterly debt bulletin; publication of annual borrowing plans and monthly bond issuance plans; validation and reconciliation of public debt data in the electronic Meridien system. - Plans to initiate data reconciliation with major creditors that fail to provide regular disbursement updates and coordinate with managers of foreign-financed projects to ensure disbursement requests are processed through the ministry of finance’s Directorate for Loans. ### Monetary and Financial Sector Policies - Central Bank actions to contain inflationary pressures: - Reduced forex purchases and issued CBG bills in December 2021 to reduce excess liquidity and monetary pressures. - Will pursue issuance of CBG bills and consider other instruments such as forex sales and an increase in the special deposit facility rate. - Marginal increase in the policy rate in May 2022. - Monetary Policy Committee remains open to more direct tightening but seeks to avoid undermining the fragile recovery. - Financial sector soundness and reforms: - Financial sector remains sound, well capitalized, with ample liquidity. - Ongoing technical assistance to strengthen regulation and supervision and safeguard financial sector stability. - Plans, with IMF help, to build in-house expertise to stress test banks and conduct balance sheet stress tests on two sizable banks by end-September 2022. - Strengthening risk-based supervision, supervisory capacity, and implementing recommendations from the 2020 safeguards assessment. - Capital Market and Securities Bill approved by the National Assembly in November 2021 to help develop capital markets and mobilize long-term financing. - Implementation of the donor-supported National Financial Inclusion Strategy launched early 2022 to improve access to financial services leveraging fintech and mobile money. - AML/CFT framework strengthening: - Issued guidelines for reporting entities and conducted off-site and onsite examinations of all banks. - Revising the AML/CFT Act 2012 and related regulations to better comply with FATF standards. - Measures include pursuing proceeds from corruption and related money laundering through tighter cooperation with law enforcement agencies. ### Structural Reforms - Development planning and climate resilience: - NDP 2018-2021 (extended into 2022) ending; preparation of a Green Recovery-Focused National Development Plan (RF-NDP) and Long-Term Development Vision (LTDV) 2050 at an advanced stage with support from development partners. - New plan expected to set the country back on track toward achieving the Sustainable Development Goals (SDGs) by 2030. - Policies to build resilience to climate change and pursue green investments. - Private sector and investment climate: - Focus on improving business climate and private sector development as central to post-pandemic recovery to create jobs, reduce poverty, and limit scarring. - Expanded and strengthened role for The Gambia Investment and Export Promotion Agency (GIEPA). - Addressing weaknesses: efficacy of business registration single window, replacement of obsolete IT infrastructure, acceleration of commercial cases pending in court. - Revision of fiscal provisions in the GIEPA Act to address growing investment environment concerns. - SOE governance and contingent liabilities: - SOEs bill submitted to the National Assembly in April 2022. - Measures to improve transparency and accountability: 2020 SOE annual performance report using IMF’s SOE health check tool; online publication of audited financial statements of SOEs. - Adoption of IFRS standards by all SOEs being pursued with IMF training support. - Institutional framework completed and performance contracts signed between government and SOEs to strengthen governance and efficiency. - Governance and anti-corruption: - Progress on systems to fight corruption and enhance governance; strengthening legislative framework and constituting committee to advance the anti-corruption bill. - Anti-corruption bill has passed all required stages at the National Assembly; government to engage the new National Assembly to expedite approval and re-open discussions on the new constitution. - Plan to request a governance diagnostic mission from the IMF. - White paper published on final TRRC report to inform national reconciliation and justice for victims of the Jammeh regime. - Counter-trafficking measures: - Strengthened collaboration with the US embassy to implement recommendations of the 2021 US State Department report on countering trafficking of persons. - Strengthened National Agency Against Trafficking in Persons (NAATIP), increased prosecutions, conducted sensitization and training, and enhanced witness protection program. ### Conclusion and Authorities’ Commitment - Authorities remain committed to reforms agreed under the ECF program despite shocks from the COVID-19 pandemic and the war in Ukraine. - Fund support considered an important complement to the authorities’ reform agenda and national economic objectives articulated in the NDP; Fund support has helped stabilize the economy and contributed to capacity development and policy implementation. *Source: 1gmbea2022001 - 6. Inflation accelerated to 11.7 percent at end-April 2022 from 7.6 percent at end-December* --- _Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1gmbea2022001.pdf_