## 1gmbea2022002 ## Source details **Canonical URL:** [1gmbea2022002](https://www.imf.org/-/media/files/publications/cr/2022/english/1gmbea2022002.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2022/english/1gmbea2022002.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2022/english/1gmbea2022002.pdf.json) --- ### EXECUTIVE SUMMARY — Context and Key Shocks - Repercussions of the war in Ukraine threatening economic and social stability. - COVID-19 cases declined to almost nil recently after a slight uptick in July-August; vaccination rate remains low at around 22 percent of the population. - More frequent climatic shocks, including a major flooding in July 2022. - Political developments: Parliamentary election in April 2022 and Cabinet reshuffle in May 2022 with no expected change in overall economic policy direction. - Progress on reforms: improvements noted on Reporters Without Borders 2022 World Press Freedom, 2022 Global Peace Index, movement to Tier 2 in the 2022 U.S. Trafficking in Persons Report, and publication in May 2022 of a white paper accepting TRRC recommendations. ### Macroeconomic developments and outlook - Growth and inflation: - GDP growth projection for 2022 revised down from 5.6 to 4.5 percent. - Headline inflation reached 13.3 percent (y-o-y) at end-September 2022. - Food inflation reached 16.5 percent (y-o-y) at end-September 2022. - Core inflation (excluding food and energy) rose to 11 percent (y-o-y) in September 2022, compared to 4.6 percent (y-o-y) in December 2021. - External sector and reserves: - Remittance inflows declined by 11 percent during January-September 2022. - Exports of timber and cashew face suspension at borders for politico-security reasons. - Tourist arrivals almost doubled January-September 2022 versus the same period in 2021 but remain below pre-pandemic levels. - Current account deficit in 2022 expected to be wider than previously anticipated by about 1 percent of GDP. - Gross international reserves declined from US$520 million at end-December 2021 to US$420 million at end-October 2022. - Central bank drew down US$75 million during January-August 2022 to support imports of essential commodities. - Fiscal and policy adjustments: - Fuel-related revenue losses amounted to 1.1 percent of GDP during January-September 2022. - One-off revenue of US$30 million (1.5 percent of GDP) expected from a petroleum-sector dispute settlement did not materialize. - Parliament approved a 30-percent basic salary increase for the civil service; cost about 0.5 percent of GDP in 2022 and about 1 percent of GDP annually thereafter. - Authorities request augmentation of access under the ECF arrangement: SDR 15.55 million (25 percent of quota). ### Monetary policy, exchange rate, and liquidity - CBG policy rate increases: from 10 percent to 12 percent in May and September 2022. - Reserve money and banks’ reserves contracted by 6 and 16 percent (y-o-y), respectively, at end-September 2022. - Exchange rate and FX market: - CBG rescinded at end-August 2022 a temporary ban on withdrawals from forex accounts. - Exchange rate wedge narrowed from about 15-20 percent in mid-September to 5-11 percent at end-October. - CBG published exchange rate depreciated by about 7 percent (Text Figure 4). - BoP financing gap in 2022: US$88 million; coverage plan includes: - Additional budget support from development partners: US$23.8 - Drawdown on international reserves: US$43 million - Requested augmentation under ECF: about US$21 million (25 percent of quota) ### Fiscal position, pressures, and measures - 2022 fiscal pressures and outcomes: - Budget execution weakened by fuel revenue losses, delays in collection of non-tax revenue, and the 30-percent salary increase. - Net domestic borrowing (NDB) at end-September overshot the program ceiling by 0.4 percent of GDP (GMD 483.9 million). - Fiscal deficit expected to widen, enlarging budget deficit by 0.7 percent of GDP and fiscal financing gap by 0.5 percent of GDP relative to 4th ECF review. - Authorities’ 2022 measures: - Increased domestic fuel prices by 30-50 percent during January-October 2022. - Reduced or eliminated non-payroll-related allowances; reduced subsidies to SOEs; banned non-essential travel and training abroad; reduced per-diems; streamlined mobile phone and fuel allowances. - Stepped up collection of non-tax revenue (bridge tolls, frontloading airport concession fees, collecting more dividends from SOEs). - Task force set up to analyze NAWEC finances and recommend corrective measures. - 2023 budget framework: - 2023 overall fiscal deficit anchored at 2.7 percent of GDP (relaxation of 0.5 percentage point relative to 4th ECF review; consolidation of 2.2 percentage points relative to 2022). - Development partners’ budget support commitments in 2023 amount to 2.1 percent of GDP. - Full-year cost of 30-percent salary increase in 2023: 1.1 percent of GDP. - Continuing 2022 spending measures expected to yield savings of 0.4 percent of GDP. ### Program performance, requests, and IMF staff views - Program performance: - At end-June 2022: all quantitative performance criteria (QPCs) met; three out of four indicative targets (ITs) met; all three structural benchmarks (SBs) met. - At end-September 2022: six out of nine indicative quantitative targets met; three out of five structural benchmarks met; continuous QPC on external arrears temporarily breached due to delayed payment by a utility company. - Authorities’ requests and staff recommendations: - Completion of the fifth ECF review and financing assurances review. - Approval requested for modification of a performance criterion and indicative targets, waiver for non-observance of a performance criterion, and augmentation of access. - Augmentation requested: SDR 15.55 million (25 percent of quota); proposed on-lending by CBG to government of SDR 7.78 million (half of augmentation) through agreed MoU to help address budgetary pressures. - Staff recommends completion of fifth review and approval of augmentation and waiver given broadly satisfactory program performance and strong policy commitments. ### External sector, balance of payments, and reserves (selected data) - Current account and reserves (selected projections and figures): - Current account balance (percent of GDP): 2022: -14.7; 2023: -12.6; 2024: -8.7. - Gross international reserves (months of prospective imports): 2021: 7.0; 2022: 4.8; 2023: 4.4; projected to decline to 3.9 by 2027. - Gross international reserves (US$ millions, memorandum): 352.1 (2018?), 530.4, 467.7, 424.6, 459.5, 416.4, 429.6, 441.2, 447.7, 448.0 (table series). - From January through August 2022, the CBG sold US$74.9 million to facilitate importation of essential basic commodities. - Annex I — average monthly stock of essential commodities, 2018-22 (Jan-Sep): - Rice: 36,743 (2018-21), 33,303 (2022), Difference: -9.4 (percent). - Sugar: 18,215 (2018-21), 12,130 (2022), Difference: -33.4 (percent). - Flour: 2,599 (2018-21), 1,552 (2022), Difference: -40.3 (percent). - Edible oil: 1,730,480 (2018-21), 453,296 (2022), Difference: -73.8 (percent). - Onion: 427 (2018-21), 473 (2022), Difference: 10.7 (percent). - Potato: 1,177 (2018-21), 271 (2022), Difference: -77.0 (percent). - Whole chicken: 462 (2018-21), 346 (2022), Difference: -25.0 (percent). - Chicken legs: 1,251 (2018-21), 940 (2022), Difference: -24.9 (percent). ### Financial sector soundness and risks - Banking system: - Risk-weighted capital adequacy ratios: 26.9 percent at end-June 2022 (statutory ratio 10 percent). - Commercial banks’ NPLs: 4.1 percent of gross loans at end-June 2022. - Private sector credit grew 32.5 percent (y-o-y) in September 2022, compared to 20.7 percent (y-o-y) in December 2021. - Microfinance companies (MFCs): - NPLs increased from 7.0 percent of gross loans to 9 percent (end-June 2022). - Stress testing: - Stress-testing exercise based on banks’ balance sheets at end-December 2021 shows banking sector remains solvent even with a 400 percent shock to NPLs, though credit risks remain. - AML/CFT: - FIU improving capacities; GIABA Plenary adopted a Mutual Evaluation Report in May 2022; draft AML/CTF Act review under KOICA/UNODC support. ### Debt outlook, DSA findings, and risks - Public debt levels and projections: - PV of public debt (percent of GDP, baseline projections): 2021: 71.0; 2022: 67.9; 2023: 63.2; 2024: 59.0; 2025: 53.4; 2026: 48.2; 2027: 43.4. - Total public debt-to-GDP (baseline table): 2021: 83.8 percent; 2022: 80.8 percent; 2023: 75.4 percent; 2024: 70.2 percent; 2025: 63.6 percent; 2026: 57.9 percent; 2027: 52.7 percent. - External debt-to-GDP: 2021: 48.4 percent. - DSA key outcomes: - Risk of external debt distress: High. - Overall risk of debt distress: High. - Several external-debt indicators breach thresholds in early years (e.g., PV of external debt-to-exports breach 180 between 2022-2024). - Under baseline, PV of total public debt-to-GDP breaches benchmark 55 between 2022–24, falls below in 2025 and declines thereafter. - Debt service and financing: - Overall debt service between 2022-2030: cumulative US$620 million (Amortization: $557 million; Interest: US$63 million). - With proposed ECF augmentation, repayments to the Fund projected to rise, peaking at around SDR 17.7 million per year in 2028-29 (about 26 percent of exports of goods and services). - Policy imperatives to limit debt risks: - Contain domestic borrowing including by SOEs. - Ensure PPPs do not give rise to contingent liabilities. - Adhere strictly to agreed external borrowing plan. - Strengthen liquidity and debt management; build external buffers. ### Structural reforms, PFM, and SOE governance - Revenue administration measures: - Expansion of tax ledgers cleansing; LRM project: 314 large taxpayer files fully captured in GamTaxNet (end-September 2022 SB). - Acceleration of digitalization: ASYCUDA WORLD launched June 2022; ITAS implementation roadmap planned. - Stronger management of tax arrears; setting up fully functional GRA Internal Affairs Unit (proposed SB end-Feb 2023). - Public Financial Management: - First draft of revised Public Finance Bill completed (end-June 2022 SB); Cabinet approval proposed end-Feb 2023. - GPPA Act approved by National Assembly; procurement reforms underway; IFMIS rolled out to all Local Government Authorities and seven subvented agencies. - SOEs: - Need to strengthen governance; new SOEs directorate established. - Three SOEs to be covered by extended performance contracts: Gambia Port Authority, Social Security and Housing Finance Corporation, and Gambia National Petroleum Corporation. - NAWEC facing treasury challenges; total of GMD 163 million of SOE cross arrears settled by end-August. - Anti-corruption and governance: - Draft anti-corruption bill resubmitted to IMF for review; governance diagnostic mission requested and slated for January 2023. ### Climate policy, renewable energy, and social protection - Climate commitments: - Rapid increase in renewable energy capacity with a total of 170 MW in solar PV projects in the pipeline for 2021-2025. - Approved US$4 billion Long-Term Climate-Neutral Development Strategy in September 2022 to enable net zero by 2050. - Social protection: - Social Registry expanded to six additional districts; registry covers 36 out of 43 districts (~40 percent of population). - Poverty-reducing expenditure reporting: monthly report to be transmitted within four weeks of month-end. ### Capacity development, technical assistance, and reporting - Capacity development priorities: - Focus on governance, revenue administration, PFM and debt management, financial sector supervision, and statistics. - Governance diagnostic mission requested for January 2023. - Reporting and data requirements (selected): - Monthly consolidated Central Government budget report within four weeks of month-end. - Monthly CBG balance sheet within four weeks of month-end. - Weekly end-week data on net domestic borrowing within five business days of week-end. - Daily reserve money transmitted weekly within five business days of week-end. - Monthly CPI (January 2020 = 100) transmitted within four weeks of month-end. - Monthly data on transactions in official reserves transmitted within four weeks of month-end. ### Key macroeconomic projections — Baseline and Downside scenario (selected rows) - Baseline projections (percent unless indicated): - Real GDP growth: 2021: 4.3; 2022: 4.5; 2023: 6.0; 2024: 6.5; 2025: 5.8; 2026: 5.0; 2027: 5.0 - Consumer price inflation (average, percent change): 2021: 7.4; 2022: 11.3; 2023: 11.1; 2024: 8.4; 2025: 6.1; 2026: 5.0; 2027: 5.0 - Tax revenue (percent of GDP): 2021: 10.3; 2022: 9.3; 2023: 9.8; 2024: 10.6; 2025: 11.4; 2026: 12.0; 2027: 12.3 - Primary balance (percent of GDP): 2021: -1.6; 2022: -2.3; 2023: -0.6; 2024: 0.9; 2025: 1.6; 2026: 1.6; 2027: 0.9 - Current account balance (percent of GDP): 2021: -3.8; 2022: -14.7; 2023: -12.6; 2024: -8.7; 2025: -9.0; 2026: -8.3; 2027: -7.9 - PV of public debt (percent of GDP): 2021: 71.0; 2022: 67.9; 2023: 63.2; 2024: 59.0; 2025: 53.4; 2026: 48.2; 2027: 43.4 - Gross official reserves (months of prospective imports): 2021: 7.0; 2022: 4.8; 2023: 4.4; 2024: 4.3; 2025: 4.3; 2026: 4.1; 2027: 3.9 - Downside scenario (selected): - Real GDP growth: 2022: 3.4; 2023: 4.8; 2024: 5.8; 2025: 5.3; 2026: 5.0; 2027: 5.0 - Consumer price inflation (average): 2022: 11.5; 2023: 11.9; 2024: 9.1; 2025: 6.3; 2026: 5.0; 2027: 5.0 - Current account balance (percent of GDP): 2022: -16.8; 2023: -16.0; 2024: -12.1; 2025: -12.3; 2026: -11.6; 2027: -11.2 - PV of public debt (percent of GDP): 2022: 69.8; 2023: 66.2; 2024: 62.9; 2025: 58.0; 2026: 53.1; 2027: 48.2 - Gross official reserves (months): 2022: 4.6; 2023: 4.2; 2024: 4.1; 2025: 4.1; 2026: 3.9; 2027: 3.7 ### Program risks and mitigation - Major risks: - Protracted war in Ukraine. - Resurgence of COVID-19 amid low vaccination rates. - These risks could weaken growth, amplify inflationary and forex pressures, and widen financing gaps. - Mitigation measures: - Strengthen program monitoring, including high-level participation in the reform monitoring committee. - Maintain adequate policy buffers and calibrate fiscal/monetary policy to preserve social spending while containing debt vulnerabilities. *Source: 1gmbea2022002* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Context - Repercussions of the war in Ukraine are threatening economic and social stability. - COVID-19 cases declined to almost nil recently after a slight uptick in July-August; vaccination rate remains low at around 22 percent of the population. - The Gambia is experiencing more frequent climatic shocks, including a major flooding in July 2022. - Political developments: Parliamentary election in April 2022 and a Cabinet reshuffle in May 2022 with no expected change in overall economic policy direction. - Progress on reforms: improvements noted on the Reporters Without Borders 2022 World Press Freedom, the 2022 Global Peace Index, movement to Tier 2 in the 2022 U.S. Trafficking in Persons Report, and publication in May 2022 of a white paper accepting TRRC recommendations. ### Macroeconomic developments and outlook - GDP growth projection for 2022 revised down from 5.6 to 4.5 percent. - Inflation and price pressures: - Headline inflation reached 13.3 percent (y-o-y) at end-September 2022. - Food inflation reached 16.5 percent (y-o-y) at end-September 2022. - Core inflation (excluding food and energy) rose to 11 percent (y-o-y) in September 2022, compared to 4.6 percent (y-o-y) in December 2021. - External sector and balance of payments: - Remittance inflows declined by 11 percent during January-September 2022. - Exports of timber and cashew face suspension at borders for politico-security reasons. - Tourist arrivals almost doubled January-September 2022 versus the same period in 2021 but remain below pre-pandemic levels. - The current account deficit in 2022 is expected to be wider than previously anticipated by about 1 percent of GDP. - Gross international reserves declined from US$520 million at end-December 2021 to US$420 million at end-October 2022. - Forex supply has mostly fallen below demand in recent months, causing low food and fuel stocks. - Fiscal developments: - Budget execution weakened by fuel revenue losses, delays in collection of non-tax revenue, and a 30-percent increase in civil servants’ basic salaries. - Fuel-related revenue losses amounted to 1.1 percent of GDP during January-September 2022. - A one-off revenue of US$30 million (1.5 percent of GDP) expected from a dispute settlement in the petroleum sector did not materialize. - The 30-percent basic salary increase costs about 0.5 percent of GDP in 2022 and about 1 percent of GDP annually thereafter. - Net domestic borrowing (NDB) at end-September overshot the program ceiling by 0.4 percent of GDP. - Monetary policy and financial sector: - The Central Bank of The Gambia (CBG) increased the policy rate from 10 percent to 12 percent in May and September 2022 (returning to pre-pandemic level). - Reserve money and banks’ reserves contracted by 6 and 16 percent (y-o-y), respectively, at end-September 2022. - Excess liquidity is diminishing but remains relatively significant; broad money remained relatively stable during 2022H1. - The overall financial sector remains resilient with some heterogeneity; risk-weighted capital adequacy ratios were 26.9 percent at end-June 2022 (statutory ratio 10 percent). Commercial banks’ NPLs stood at 4.1 percent of gross loans at end-June 2022. ### Program performance - At end-June 2022: - All quantitative performance criteria (QPCs) were met. - Three out of four indicative targets (ITs) were met. - All three structural benchmarks (SBs) were met. - At end-September 2022: - Six out of nine indicative quantitative targets were met. - Three out of five structural benchmarks were met. - The continuous QPC on external arrears was temporarily breached due to a delayed payment related to a utility company; authorities established a committee to analyze the company’s financial situation and propose measures to prevent recurrence. - Structural reforms progress: - Prior action: submission to the National Assembly of the second phase audit report on Covid-19-related spending completed. - New Taxpayer Charter approved, launched and published on the GRA website. - Social Registry expanded to six additional districts. - First draft of the revised Public Finance Bill completed. ### Program objectives and policy measures - Program aims to address immediate pressures from multiple exogenous shocks while improving macroeconomic sustainability through: - Exchange rate and foreign exchange management: - CBG will allow smooth functioning of the forex market and ensure the exchange rate reflects market forces. - Authorities request augmentation of access under the ECF arrangement to help address the widening external financing gap. - Monetary policy: - CBG intends to tighten further the monetary policy stance, including additional policy rate hikes and absorption of excess liquidity. - Fiscal policy: - Authorities are taking revenue and spending measures while slightly loosening targets relative to previous plans to mitigate shocks’ impact on the population. - Fiscal framework will broadly keep public debt on the previously programmed downward path. - Structural reforms to support fiscal efforts and the business environment focused on: - Revenue administration, public financial management, governance, digitalization, public procurement, prioritization of public investment, state-owned enterprises, and the fight against corruption. ### Staff views and Fund actions requested - Considering broadly satisfactory program performance and strong policy commitments, staff recommends: - Completion of the fifth ECF review and the financing assurances review. - Approval of authorities’ requests for modification of a performance criterion and indicative targets, a waiver for non-observance of a performance criterion, and augmentation of access. - Augmentation requested: SDR 15.55 million (25 percent of quota) under the ECF arrangement to address urgent balance of payments financing needs stemming from lower exports and remittances, and higher global food and fuel prices. *Source: EXECUTIVE SUMMARY, 1gmbea2022002* ### 2022. Microfinance companies’ (MFCs) NPLs increased from 7.0 percent of gross loans to 9 percent. Banks and MFCs ### 1gmbea2022002 - 2022. Microfinance companies’ (MFCs) NPLs increased from 7.0 percent of gross loans to 9 percent. Banks and MFCs ### Financial sector health and risks - Microfinance companies’ (MFCs) NPLs increased from 7.0 percent of gross loans to 9 percent. - Banks and MFCs remain liquid and profitable. - A stress-testing exercise of the commercial banking industry based on banks’ balance sheets at end-December 2021 shows the banking sector remains solvent even with a 400 percent shock to NPLs, but credit risks remain. ### Monetary policy, exchange rate, and liquidity - The CBG rescinded at end-August 2022 a temporary ban on withdrawals from forex accounts. - The CBG clarified that banks and forex bureaus can transact officially at a market-based exchange rate. - The exchange rate wedge narrowed from about 15-20 percent in mid-September to 5- 11 percent at end-October. - The CBG’s published exchange rate has depreciated by about 7 percent (Text Figure 4). - As of 2022, the CBG will further tighten the monetary policy stance, plan to further increase the policy rate and bring it rapidly into positive territory in real terms, continue CBG bill issuances to absorb excess liquidity, and roll out an effective communication strategy to anchor inflation expectations. - External shocks created a BoP financing gap of US$88 million in 2022; coverage plan includes: - Additional budget support from development partners: US$23.8 - Drawdown on international reserves: US$43 million - Requested augmentation of access under the ECF arrangement: about US$21 million (25 percent of quota) ### Economic outlook and downside risks - GDP growth projections: - 2022: 4.5 percent - 2023: 6.0 percent - Medium term: stabilize around 5 percent - Inflation expectations: - High in 2022 and 2023; return to 5 percent in the medium term - Downside risk drivers: protracted war in Ukraine, lingering effects of COVID-19, elevated commodity prices, abrupt global slowdown or recession, climate change (e.g., major flooding in July 2022), and uncertain pandemic path. - BoP and FX pressures may persist if spillovers from the war in Ukraine intensify, commodity prices remain elevated, or a global slowdown occurs. ### Key macroeconomic indicators (selected projections and scenarios) - Baseline projections (percent of GDP or percent where indicated): - Real GDP growth (percent): 2021: 4.3; 2022: 4.5; 2023: 6.0; 2024: 6.5; 2025: 5.8; 2026: 5.0; 2027: 5.0 - Consumer price inflation (average, percent change): 2021: 7.4; 2022: 11.3; 2023: 11.1; 2024: 8.4; 2025: 6.1; 2026: 5.0; 2027: 5.0 - Tax revenue (percent of GDP): 2021: 10.3; 2022: 9.3; 2023: 9.8; 2024: 10.6; 2025: 11.4; 2026: 12.0; 2027: 12.3 - Primary balance (percent of GDP): 2021: -1.6; 2022: -2.3; 2023: -0.6; 2024: 0.9; 2025: 1.6; 2026: 1.6; 2027: 0.9 - Current account balance (percent of GDP): 2021: -3.8; 2022: -14.7; 2023: -12.6; 2024: -8.7; 2025: -9.0; 2026: -8.3; 2027: -7.9 - PV of public debt (percent of GDP): 2021: 71.0; 2022: 67.9; 2023: 63.2; 2024: 59.0; 2025: 53.4; 2026: 48.2; 2027: 43.4 - Gross official reserves (months of prospective imports): 2021: 7.0; 2022: 4.8; 2023: 4.4; 2024: 4.3; 2025: 4.3; 2026: 4.1; 2027: 3.9 - Downside scenario (percent of GDP or percent where indicated): - Real GDP growth (percent): 2021: 4.3; 2022: 3.4; 2023: 4.8; 2024: 5.8; 2025: 5.3; 2026: 5.0; 2027: 5.0 - Consumer price inflation (average, percent change): 2021: 7.4; 2022: 11.5; 2023: 11.9; 2024: 9.1; 2025: 6.3; 2026: 5.0; 2027: 5.0 - Tax revenue (percent of GDP): 2021: 10.3; 2022: 8.6; 2023: 9.1; 2024: 10.1; 2025: 11.0; 2026: 11.7; 2027: 12.2 - Primary balance (percent of GDP): 2021: -1.6; 2022: -3.6; 2023: -1.5; 2024: 0.2; 2025: 1.1; 2026: 1.5; 2027: 1.0 - Current account balance (percent of GDP): 2021: -3.8; 2022: -16.8; 2023: -16.0; 2024: -12.1; 2025: -12.3; 2026: -11.6; 2027: -11.2 - PV of public debt (percent of GDP): 2021: 71.0; 2022: 69.8; 2023: 66.2; 2024: 62.9; 2025: 58.0; 2026: 53.1; 2027: 48.2 - Gross official reserves (months of prospective imports): 2021: 7.0; 2022: 4.6; 2023: 4.2; 2024: 4.1; 2025: 4.1; 2026: 3.9; 2027: 3.7 ### Fiscal policy developments, pressures, and measures - 2022 fiscal pressures: - One-off expected petroleum-sector revenue likely will not materialize due to pending legal dispute (loss of US$30 million anticipated petroleum revenue noted later). - Asset sale from the Janneh Commission proceeding slower than envisaged. - Customs revenue collection affected by port congestion and diversion of imports to neighboring countries’ ports. - Fuel revenue losses accumulating; OMCs suspended sale of fuel products on September 2 and threatened to cease operations from October 17 (decision postponed). - Finalization of MegaBank privatization before end-December 2022 remains uncertain. - Civil service salary increase is weighing on the budget. - NAWEC may require government support if electricity tariffs are not revised upwards. - Authorities’ fiscal measures (2022): - Increased domestic fuel prices by 30-50 percent during January-October 2022. - For November, domestic pump prices exceed full-pass-through prices for gasoline; government still losing revenue on diesel. - Accelerated adoption of the public procurement bill securing supplementary budget support of about 1 percent of GDP from the World Bank. - Reduced or eliminated non-payroll-related allowances; reduced subsidies to SOEs; banned non-essential travel and training abroad; reduced per-diems; streamlined mobile phone and fuel allowances. - Stepped up collection of non-tax revenue (bridge tolls, frontloading airport concession fees, collecting more dividends from SOEs). - Task force set up to analyze NAWEC finances and recommend corrective measures. - Committed to finalize MegaBank privatization, accelerate sale of Janneh Commission assets, ensure strict cash management, and focus on ongoing investment projects. - Logistical measures to slightly alleviate port congestion; discussions to expand the port in the medium term. - Fiscal outcomes and financing in 2022: - The fiscal deficit is expected to widen and create a budget financing gap, enlarging the budget deficit by 0.7 percent of GDP and the fiscal financing gap by 0.5 percent of GDP relative to the 4th ECF review. - Authorities request to use about half of the requested ECF access augmentation (SDR7.78 million) to be on-lent from CBG to the budget. - Financing package components (selected figures, Millions US$): - Current account balance change: -54.3 (from -309.3 to -363.6) - Overall balance change: -88.4 (from -95.0 to -183.4) - Budget support grants: 20.0 -> 43.8 (change 23.8) - Use of IMF resources (net): 11.2 -> 32.8 (change 21.6) - Gross international reserves change: 62.8 -> 105.8 (change 43) - 2023 budget and consolidation: - 2023 fiscal framework anchored on an overall fiscal deficit of 2.7 percent of GDP (relaxation of 0.5 percentage point relative to the 4th ECF review, but a consolidation of 2.2 percentage points relative to 2022). - About half of the deficit reduction in 2023 is due to measures planned by authorities. - PV of public debt projected to decline below 55 percent of GDP in 2025. - Revenue and measures for 2023: - Development partners’ budget support commitments in 2023 amount to 2.1 percent of GDP. - Full-year cost of 30-percent salary increase in 2023: 1.1 percent of GDP. - Continuing 2022 spending measures expected to yield savings of 0.4 percent of GDP. - Reduction in subsidies to GGC. - Infrastructure driven mainly by foreign-financed projects; domestically financed investment limited to advancing ongoing projects. ### Fiscal tables and selected 2022 fiscal numbers (percent of GDP) - 2022 program/projection (selected lines): - Revenue: 19.6 -> 17.8 (change) - Domestic revenue: 14.7 -> 11.9 - Taxes: 10.1 -> 9.3 - Non-tax: 4.6 -> 2.6 - Grants: 4.9 -> 5.9 - Budget support: 1.0 -> 2.1 - Project grants: 3.9 -> 3.8 - Expenditures: 23.8 -> 22.7 - Expenses: 14.5 -> 13.8 - Compensation of employees: 4.3 -> 4.6 - Use of goods and services: 3.4 -> 2.8 - Interest: 2.7 -> 2.6 - Subsidies and transfers: 4.2 -> 3.8 - Net acquisition of nonfinancial assets: 9.3 -> 8.9 - Net lending (+)/borrowing (–): -4.2 -> -4.9 - Financing: 4.2 -> 4.9 - Net incurrence of liabilities: 3.4 -> 4.0 - Domestic: 2.5 -> 2.9 - Net borrowing: 1.4 -> 1.4 - RCF/ECF (Onlent): 1.5 -> 2.0 - Foreign: 0.9 -> 1.1 - Memorandum items: - Primary balance: -1.5 -> -2.3 - Domestic primary balance: 0.3 -> -1.7 - Revenue and Grants change drivers (percent of GDP impacts): - Tax: -0.7 - Non-tax: -2.0 - Grants: +1.0 - Expenditure change drivers (percent of GDP impacts): - Compensation of employees: +0.3 (30 percent salary increase +0.5; reduction of allowances -0.2) - Goods and services: -0.5 - Subsidies: -0.4 - Domestic capital spending: -0.2 - Other efficiency gains: -0.3 - Overall balance change: -0.7 - Financing composition change (percent of GDP impacts): - Loan repayment from SOE: +0.1 - On-lending of 50 percent of ECF augmentation to the budget: +0.4 - Lower-than-anticipated foreign amortization: +0.2 *Source: The Gambian authorities; and IMF staff estimates and projections.* ### 19. Revenue administration will be strengthened further to ensure achieving the fiscal ### 1gmbea2022002 - 19. Revenue administration will be strengthened further to ensure achieving the fiscal ### Revenue administration and tax measures - Expansion of the tax ledgers cleansing to other categories of taxpayers. - Acceleration of digitalization through Asycuda World and ITAS. - Stronger management of tax arrears. - Setting up of a fully functional Internal Affairs Unit at the GRA to enhance the internal assurance and integrity mechanism (proposed SB for end-Feb 2023). - Preparation of a national mandate and the policy document for customs border and inland controls. - Several other measures are also planned or underway. - Making fully functional GRA’s Internal Affairs Unit (end- Feb 2023 SB) will increase accountability within the institution and enhance revenue mobilization. ### Public debt outlook, sustainability, and risks - The Gambia’s public debt is deemed sustainable, but risks of external and overall debt distress remain high (MEFP ¶¶17-20). - DSA update shows breaches in the indicative thresholds are broadly similar to that seen during the 4th ECF review. - Downward revisions to export projections for 2022 weaken export-related debt indicators and cause breaches of indicative thresholds at various intervals. - Large downside risks to the debt outlook, especially due to: - Rapid increase in domestic debt (including by SOEs). - The protracted war in Ukraine, which could worsen the profile of the PV of overall-debt-to -GDP in the near future. - Measures to reduce debt vulnerabilities: - Contain domestic borrowing including by SOEs. - Ensure that PPPs do not give rise to contingent liabilities. - Continue to strictly adhere to the agreed external borrowing plan. - Strengthen liquidity and debt management. - Build strong external buffers to prepare for the upcoming expiration of debt rescheduling. - Expected improvement in debt sustainability relies on authorities’ policy efforts in their medium-term fiscal framework geared towards reducing debt vulnerabilities (Tables 2–3, and Annex II of Country Report No. 2022/195). - The primary fiscal balance is expected to turn to an average surplus of 1.4 percent of GDP over the medium term, predicated on strong revenue and expenditure measures envisaged by the authorities as well as stepped-up support from development partners. ### Public Financial Management (PFM), governance, and structural reforms - MoFEA has resumed publication of COVID-19 spending on the monthly expenditure report. - All procurement contracts approved by the Gambia Public Procurement Agency since 2021 are published on its website by type of procurement method. - Publication of the COVID-19 contracts with the beneficial owners was terminated at end-June 2021 when COVID-19 related spending started to be implemented using normal budget processes. - Audit report on the first phase of the COVID-19 spending was published; the audit report on the second phase was submitted to the National Assembly in October 2022 (prior action). - Building on the first draft of the new Public Finance Bill (SB for end-June 2022), the bill is expected to be finalized and approved by the Cabinet (proposed SB for end-Feb 2023). - The GPPA Act has been approved by the National Assembly to improve value-for-money in public resource use. - Authorities are revising the PPP bill, screening MDAs’ new projects through the GSRB, and training pilot MDAs on monthly cash forecast. - Use of performance contracts with MoFEA will be extended to three additional SOEs (postponed SB for end-February 2023). - Authorities have resubmitted the draft anti-corruption bill to the IMF for further review ahead of an upcoming IMF governance diagnostic mission. - The approval by the Cabinet of a new PFM act (proposed end-February 2023 SB) will strengthen the PFM legal framework and lay the foundation for implementing PFM reforms to achieve mid-term fiscal and debt sustainability. ### SOEs governance and quasi-fiscal risks - Urgent need to strengthen SOEs governance despite some improvement. - New SOEs directorate is helping improve oversight, but SOEs’ management has experienced high turnover and SOEs borrowing from banks soared, due to GGC borrowing to replace its ITFC facilities and also borrowing by other SOEs. - NAWEC is facing treasury challenges. - Three SOEs to be covered by extended performance contracts: Gambia Port Authority, Social Security and Housing Finance Corporation, and Gambia National Petroleum Corporation. - Risk of a rise in quasi-fiscal operations, including through SOEs, if social demands increase. ### AML/CFT and business environment - FIU continues to improve operational and technical capacities and is working with counterparts in Ghana and Nigeria with a view to joining the Egmont Group. - GIABA Plenary in May 2022 adopted a Mutual Evaluation Report (MER) of the Gambia’s AML/CFT frameworks; authorities have commenced measures based on an action plan to mitigate weaknesses identified in the MER. - The Gambia has developed an action plan to address deficiencies identified in the MER and has started reviewing its AML/CTF Act 2012 with a draft Bill produced and under review with support from KOICA through UNODC. - Measures to improve the business environment: - Creation of a trade and tourism hub. - Opening of GIEPA regional offices. - Coordination with the Ministry of Justice on plans to create dedicated commercial courts. - Establishment of a business council in collaboration with GCCI to enhance policy coordination and private sector participation. ### Climate policy and renewable energy - The Gambia has been implementing climate-related policies compatible with the goals of the 1.5°C Paris agreement to ensure sustainable development (MEFP ¶31). - Rapid increase in renewable energy capacity with a total of 170 MW in solar PV projects in the pipeline for 2021-2025. - The Gambia approved in September 2022 its US$4 billion Long-Term Climate-Neutral Development Strategy, which could enable The Gambia to meet its net zero target in 2050. - Climate risks: windstorms, floods, sea level rise, coastal erosion, and droughts are becoming more frequent and severe, calling for strengthened mitigation and adaptation and stepped-up international climate finance. ### Capacity development - Technical assistance to continue focusing on strengthening governance, revenue administration, public financial and debt management, financial sector supervision, and statistics (MEFP ¶¶27 and 32). - Governance diagnostic mission requested and slated for January 2023. - The Gambia continues to be among the largest beneficiaries of Technical Assistance in SSA, including through resident advisors at MoFEA, GRA, and CBG. ### Program modalities, financing, and safeguards - Program performance to be assessed through semi-annual reviews (MEFP Tables 1 and 2). - For the sixth and last ECF-supported program review, end-December 2022 QPCs and ITs remain unchanged from the 4th ECF review except modifications on net international reserves QPC, and ITs on domestic tax revenue and net domestic assets of the CBG. - A waiver for non-observance of the continuous QPC on external arrears is requested. - An end-September 2022 SB is postponed to end-February 2023 and two new SBs are proposed for end-February 2023. - Access augmentation proposed: SDR15.55 million (25 percent of quota) to help meet the urgent financing gap in 2022 while maintaining adequate forex reserves to prepare for large increase in debt service obligations from 2025 after expiration of the debt rescheduling period. - With the proposed augmentation, SDR7.78 million will be on-lent by the CBG to the government through an agreed MoU to help address budgetary pressures. - Another access augmentation of SDR20 million (32.15 percent of quota) was granted in 2021 at the first review of the ECF arrangement. - Financing assurances: - World Bank will provide a supplementary budget support of about US$20 million in 2022. - Program is fully financed over the remainder of the arrangement based on information from development partners. - AfDB provided an emergency fertilizer grant to support farmers; all traditional budget support partners (WB, EU, and AfDB) and the French Development Agency are committed to providing budget support in 2023. - Capacity to repay: - Gambia’s outstanding credit to the IMF and total fund obligations are significantly higher than the PRGT comparator group under most key metrics. - With the proposed ECF augmentation, repayments to the Fund are projected to rise over the medium term, peaking at around SDR 17.7 million per year in 2028-29 (about 26 percent of exports of goods and services). - Proposed augmentation falls within annual and cumulative access limits under PRGT financing and does not change materially risks to capacity to repay. - Safeguards: - Most of the IMF 2020 safeguards recommendations have been implemented. - Audit of the CBG’s 2021 financial statements was completed in May 2022 and recommendations are being implemented. - CBG Board scheduled to review the revised investment policy and guidelines in December 2022. ### Program risks and mitigation - Major risks: - Protracted war in Ukraine. - Resurgence of COVID-19 amid low vaccination rates. - These risks could weaken growth, amplify inflationary and forex pressures, and widen financing gaps. - Mitigation measures: - Strengthen program monitoring, including high-level participation in the reform monitoring committee. - Maintain adequate policy buffers. ### Key economic indicators and staff appraisal highlights - Growth revised down to 4.5 percent in 2022. - Inflation at a record-high 13.3 percent (y-o-y) in September 2022. - Domestic fuel prices adjusted upward by 30-50 percent; despite adjustments, fuel revenue losses reached about (text truncated in source). *Source: 1gmbea2022002 - 19. Revenue administration will be strengthened further to ensure achieving the fiscal* ### 1.3 percent of GDP during January-September 2022, which is weighing on the fiscal performance ### 1gmbea2022002 - 1.3 percent of GDP during January-September 2022, which is weighing on the fiscal performance ### Macroeconomic shocks and near-term impact - 1.3 percent of GDP during January-September 2022 is weighing on the fiscal performance, particularly in the context of a recent salary increase. - Combination of shocks: weaker-than-expected tourism sector, exports disruptions, lower remittances, and high food and fuel imports costs are generating forex shortages. - Forex shortages have forced the central bank to draw down on its forex reserves to help finance the imports of essential commodities. - These shocks are also exacerbating social tensions. ### Program performance under the ECF-supported arrangement - At end-June 2022: - All quantitative performance criteria were met. - All but one indicative targets were met. - All structural benchmarks were met. - The continuous performance criterion on external arrears was temporarily breached. - At end-September 2022: - Performance weakened: six out of nine indicative targets were met. - Three out of five structural benchmarks were met. - Some indicative targets in both fiscal and monetary sectors were missed due to multiple large shocks that have led to fuel revenue losses and forex shortages. ### Monetary and exchange rate policy response - Central bank actions: - Rescinded a ban on forex account withdrawals and is committed to allowing smooth functioning of the forex market. - Taken steps to ensure that the exchange rate reflects market forces to help restore supply-demand equilibrium. - The CBG increased its policy rate twice in 2022 from 10 to 12 percent; it intends to increase the rate further and pursue excess liquidity absorption to tackle inflation. - Ongoing financial sector reforms: banking supervision, financial deepening and inclusion, and central bank safeguards. - Observed outcomes: - FX inflows have been declining recently, contributing to forex shortages. - Reserve money is declining, driven by lower excess reserves. - Broad money is declining, driven by lower NFA. - Private credit is recovering while inflation picked up. ### Fiscal framework and debt vulnerabilities - Fiscal stance: - The fiscal framework will aim at alleviating the implications of the exogenous shocks on the population while reducing debt vulnerabilities. - The fiscal deficit is expected to decline although more slowly than under previous plans to account for the implications of the shocks on the population, including to alleviate the impacts of the high global fuel and food prices. - Authorities are taking revenue and spending measures to achieve an appropriate magnitude of fiscal consolidation in 2023, which will broadly keep public debt on the previously programmed downward path. - Debt and financing guidance: - As the risk of external and public debt distress remains high, it is paramount to: - contain domestic borrowing, - adhere to the program external borrowing plan, - refrain from non-concessional borrowing, - limit contingent liability risks from SOEs and PPPs. - Fiscal performance indicators and projections (selected figures drawn from the source): - Grants have supported weak domestic revenue in 2022. - Despite multiple spending pressures, current spending remains prudent. - Total public debt-to-GDP ratio is projected to decline in 2022. - Some other fiscal indicators are weakening due to the shocks. ### Structural reform agenda and policy priorities - Core reform areas: - Revenue administration. - Public financial management. - Governance. - Specific reforms and initiatives: - Digitalization. - Strengthening of public procurement. - Prioritization of public investment. - Enhanced oversight of state-owned enterprises. - Fight against corruption; authorities requested a technical assistance mission on governance diagnostics to help identify and focus further reform areas. - It would be paramount to accelerate the adoption of the anti-corruption bill by the National Assembly. - Ongoing and planned initiatives to improve the business environment include the creation of a trade and tourism hub, the opening of GIEPA regional offices, and the setting-up of dedicated commercial courts. - The Gambia has been implementing climate-related policies compatible with the goals of the 1.5°C Paris agreement to ensure sustainable development. - National development planning: - Following the expiration of the current national development plan, the new RF-NDP is expected to be finalized by December 2022. ### Staff recommendations and program decisions - Considering the broadly satisfactory program performance and the authorities’ strong policy commitments, staff recommends: - Completion of the fifth ECF-supported program review. - Support for the authorities’ requests for augmentation of access under the ECF arrangement. - A waiver for non-observance of a performance criterion. - Modification of a performance criterion and indicative targets. - Completion of the financing assurances review. *Source: 1gmbea2022002 - 1.3 percent of GDP during January-September 2022, which is weighing on the fiscal performance (IMF).* ### 1. Current account ### 1. Current account ### A. Goods and services - Goods and services: -517.7 -535.7 -773.3 -745.7 -832.7 -754.2 -712.3 -739.9 -750.0 -783.3 - Goods (net): -491.1 -525.2 -822.4 -713.1 -920.9 -779.4 -813.5 -853.6 -878.0 -925.7 - Exports, f.o.b.: 73.2 77.8 96.3 48.0 118.0 120.6 153.3 164.3 174.1 184.4 - Imports, f.o.b.: -564.3 -603.0 -918.7 -761.1 -1038.9 -900.0 -966.8 -1017.9 -1052.1 -1110.1 - Services (net): -26.7 -10.5 49.1 -32.6 88.1 25.3 101.2 113.7 128.0 142.4 - Services exports: 82.4 108.9 196.2 118.9 247.3 187.8 273.7 295.6 318.8 343.8 - Of which: Travel income: 46.6 58.0 115.9 71.5 152.9 130.0 208.3 225.3 244.4 265.0 - Services imports: -109.1 -119.4 -147.1 -151.5 -159.2 -162.5 -172.5 -181.9 -190.7 -201.4 ### B. Income (net) - Income (net): -31.0 -32.1 -32.4 -32.4 -31.2 -31.2 -32.4 -33.5 -34.8 -36.1 - Income credits: 2.4 2.5 2.5 2.5 2.4 2.4 2.5 2.6 2.7 2.8 - Income debits: -33.5 -34.6 -34.9 -34.9 -33.7 -33.7 -34.9 -36.2 -37.5 -39.0 ### C. Current transfers - Current transfers: 495.2 490.7 516.4 458.3 586.7 492.0 526.6 532.1 548.0 580.0 - Official transfers: 82.7 16.2 20.0 43.8 55.6 47.8 53.3 35.5 20.0 20.0 - Of which: COVID-19 assistance: 26.4 ........................... - Remittances: 400.2 462.0 483.5 401.6 516.9 430.0 458.7 481.7 512.7 544.3 - Other transfers: 12.3 12.6 12.9 12.9 14.2 14.2 14.6 14.9 15.3 15.7 - Current account (excl. official transfers): -136.3 -93.2 -309.3 -363.6 -332.9 -341.2 -271.4 -276.9 -256.7 -259.4 - Current account (incl. prospective official transfers): -53.6 -77.0 -289.3 -319.8 -277.2 -293.4 -218.1 -241.4 -236.7 -239.4 ### 2. Capital and financial account - A. Capital account: 66.9 103.6 85.8 82.9 105.0 106.9 100.3 136.6 137.3 138.0 - B. Financial account: 66.8 224.4 128.5 97.4 162.7 177.0 136.3 123.4 118.7 120.7 - Foreign direct investment: 68.5 99.3 99.7 99.7 108.1 108.1 113.5 119.2 124.6 130.9 - Portfolio investment: 3.8 3.9 4.1 4.1 4.5 4.4 4.8 5.1 5.4 5.8 - Other investment: -5.5 121.2 24.7 -6.4 50.1 64.4 18.1 -1.0 -11.3 -15.9 - Capital and financial account (total): 133.7 327.9 214.3 180.2 267.7 283.9 236.5 260.0 256.0 258.7 - Errors and omissions: 30.9 -128.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ### Overall balance and financing - Overall balance: 111.0 105.9 -95.0 -183.4 -65.2 -57.3 -34.8 -16.9 -0.7 -0.7 - Note: Overall balance does not include prospective budget support and project grants. - Financing: -96.4 -105.9 95.0 183.4 65.2 57.3 34.8 16.9 0.7 0.7 - Net international reserves (increase -): -104.9 -133.8 73.9 138.6 9.5 9.5 -18.5 -18.6 -19.3 -19.3 - Change in gross international reserves: -127.1 -178.3 62.8 105.8 8.2 8.3 -13.2 -11.6 -6.5 -0.3 - Use of IMF resources (net): 22.2 44.5 11.2 32.8 1.3 1.3 -5.2 -7.0 -12.8 -19.0 - Exceptional financing: 8.4 5.6 1.1 1.0 0.0 0.0 0.0 0.0 0.0 0.0 - Of which: CCRT debt relief: 4.4 5.6 1.1 1.0 0.0 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 22.2 20.0 43.8 55.6 47.8 53.3 35.5 20.0 20.0 - Budget support grants: 16.2 20.0 43.8 55.6 47.8 53.3 35.5 20.0 20.0 - Project support grants: 6.1 ........................ ### Memorandum items (selected) - Gross international reserves (US$ millions): 352.1 530.4 467.7 424.6 459.5 416.4 429.6 441.2 447.7 448.0 - Months of next year's imports of goods and services: 5.8 7.0 4.7 4.8 4.4 4.4 4.3 4.3 4.1 3.9 - Gross international reserves (w/o SDR allocation): 352.1 445.4 382.7 339.6 374.5 331.4 344.6 356.2 362.7 363.0 - Months of next year's imports of goods and services (w/o SDR allocation): 5.8 5.9 3.8 3.8 3.5 3.5 3.4 3.4 3.3 3.1 - Net international reserves (US$ millions): 292.3 427.7 364.2 299.6 354.7 290.0 265.4 274.9 284.5 294.1 - Months of next year's imports of goods and services (net international reserves): 4.9 5.6 3.6 3.4 3.4 3.1 2.7 2.7 2.6 2.5 - Net international reserves (w/o SDR allocation) (US$ millions): 291.6 342.7 279.2 214.6 269.7 205.0 180.4 189.9 199.5 209.1 - Months of next year's imports of goods and services (net, w/o SDR allocation): 4.8 4.5 2.8 2.4 2.6 2.2 1.8 1.8 1.8 1.8 - Exports of goods and services: 155.6 186.7 292.6 166.9 365.4 308.3 427.0 459.9 492.9 528.2 - Imports of goods and services: -673.4 -722.4 -1065.8 -912.6 -1198.1 -1062.5 -1139.3 -1199.8 -1242.8 -1311.5 - GMD per U.S. dollar, period average: 51.6 ........................... - External Debt service: 21.1 59.5 66.1 65.9 47.4 40.2 50.6 74.2 85.8 91.1 - NIR/External Debt Service (ratio): 13.8 7.2 5.5 4.6 7.5 7.2 6.1 4.4 4.0 4.0 *Sources: The Gambian authorities; and IMF staff estimates and projections.* ### Annex I. Foreign Exchange Shortages ### Annex I. Foreign Exchange Shortages ### Drivers and macro balance implications - Large exogenous shocks are exerting strong pressures on the balance of payments and triggering forex shortages: - The war in Ukraine, lingering effects of the COVID-19 pandemic, and some disruptions at the country’s borders. - Goods exports are projected to decline owing to a suspension of timber and cashew exports following politico-security concerns at the borders.1 - The rebound in tourist arrivals is projected to be more moderate than previously envisaged; several tour operators traditionally chartered aircraft from Ukraine, which are currently grounded. - Tourists from Europe are facing declines in their real income due to high inflation and economic slowdown. - Remittances inflows declined by 11 percent during January-September 2022 relative to the same period in 2021. - Import values in 2022 are much larger than in 2021 due to persistently high global food and fuel prices, and elevated freight costs. - Consequences for the current account and forex market: - The current account deficit in 2022 is expected to be wider than the projections in the 4th review staff report. - Forex supply has mostly fallen below demand in recent months (Annex I Figure 1). ### Impact on availability of essential commodities and services - The forex shortage is endangering the availability of essential commodities and exacerbating social tensions: - Oil marketing companies (OMCs) temporarily suspended the sale of fuel products on September 2 due to inability to find forex to cover import receipts and reduced margins given the domestic pump price structure; they threatened to cease operations from October 17 but agreed to continue discussions with the government. - Importers of basic food items are struggling to find forex to cover their import receipts. - Banks have been reluctant to open letters of credit for importers in recent months due to forex supply uncertainty. - The utility company (NAWEC) recently missed two payments on its external debt obligations due partly to the forex shortages; repeated missed payments may endanger the arrangement with its trade financing partner. - Central bank and reserve developments: - The central bank has been forced to draw down on forex reserves by US$75 million during January-August 2022 to support food and fuel importers. - Gross reserves declined from 7 months of imports at end-December 2021 to 5.1 months of imports in early October 2022. ### Key statistics: Average monthly stock of essential commodities, 2018-22 (Jan-Sep) - Rice (in metric tons): 36,743 (2018-21), 33,303 (2022), Difference (in percent): -9.4 - Sugar (in metric tons): 18,215 (2018-21), 12,130 (2022), Difference (in percent): -33.4 - Flour (in metric tons): 2,599 (2018-21), 1,552 (2022), Difference (in percent): -40.3 - Edible oil (in liters): 1,730,480 (2018-21), 453,296 (2022), Difference (in percent): -73.8 - Onion (in metric tons): 427 (2018-21), 473 (2022), Difference (in percent): 10.7 - Potato (in metric tons): 1,177 (2018-21), 271 (2022), Difference (in percent): -77.0 - Whole chicken (in metric tons): 462 (2018-21), 346 (2022), Difference (in percent): -25.0 - Chicken legs (in metric tons): 1,251 (2018-21), 940 (2022), Difference (in percent): -24.9 - Source: Gambian authorities. (From main and regular importers.) ### Observations from market indicators - Annex I Figure 1 indicates weekly banks’ FX transaction volumes showing purchases of FX (supply) and sales of FX (demand), with excess supply/demand plotted on the right-hand side; recent months show forex supply mostly below demand. - The central bank’s intervention shifted from buying forex in the past to drawing down reserves (US$75 million during January-August 2022) to support imports and preserve social cohesion. *Source: Annex I. Foreign Exchange Shortages, 1gmbea2022002* ### 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 aligned with surveillance, program objectives, and the National Development Plan. - TA-supported reforms in public financial management (PFM), revenue mobilization, debt management, financial sector supervision, and SOE governance helped The Gambia transition from an SMP to an ECF-supported program in March 2020. - During COVID-19, TA delivery priorities were refocused 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 reaffirmed ECF-supported program commitments and aim to build on gains in debt sustainability and fiscal prudence. - COVID-19 weakened capacity and increased the need to deepen capacity development (CD) engagement to deliver on ECF-supported program structural benchmarks. - Key CD focus areas include: - strengthening PFM, - improving revenue mobilization, - avoiding worsening debt vulnerabilities amid pandemic-related spending and BoP pressures, - a governance diagnostic mission to identify potential future ECF conditionality to tackle macro-critical governance weaknesses and corruption vulnerability. ### Priorities and Objectives (selected sectoral objectives as presented) - 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 macroprudential awareness of the CBG and clarify responsibilities and 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 given 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 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 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. ### Letter of Intent — key requests and commitments (summary of Attachment content) - The Government requests: - completion by the IMF Executive Board of the fifth review of the ECF-supported program and the associated financing assurances review, - approval of an augmentation of access by SDR 15.55 million (25 percent of our quota), - a waiver for the temporary breach of a continuous QPC, - modification of the performance criterion on net international reserves and the indicative targets on domestic tax revenue and CBG’s net domestic assets at end-December 2022. - Disbursement and on-lending plan: - The requested augmentation of SDR 15.55 million combined with the initially scheduled disbursement of SDR 5 million. - The initially scheduled disbursement of SDR 5 million and half of the augmentation amount (totaling SDR 12.775 million) would be on-lent to the Treasury to help preserve social spending and reduce recourse to domestic borrowing. - Fiscal posture: - The Government will ensure achieving the net domestic borrowing QPC of the ECF-supported program at end-2022 while slightly relaxing, by 0.5 percent of GDP, the budget deficit, financed by on-lending half of the ECF augmentation without jeopardizing the debt reduction path. - Measures to finance a 30-percent increase in public servants’ salary include streamlining public spending and increasing passthrough of international oil prices to domestic pump prices to improve tax collection. - Transparency: - Government consents to publication of the IMF staff report, this letter, the supplemental MEFP, and the TMU once the Executive Board completes the fifth review. ### Recent Economic Developments (key figures and dynamics) - Growth and output - GDP is forecast to grow by 4.5 percent in 2022, revised down from 5.6 percent at the time of the fourth review. - The CBG index of economic activity in 2022H2 moved above its pre-pandemic level and points to a slightly positive output gap. - Inflation and monetary policy - Inflation entered double-digits in April 2022 and reached 13.3 percent in September 2022. - The CBG increased the policy rate by one percentage point at its May and September 2022 monetary policy committee meetings, bringing it up to 12 percent. - Credit and monetary aggregates - Private sector credit grew 32.5 percent (y-o-y) in September 2022, compared to 20.7 percent (y-o-y) in December 2021. - Fiscal and budgetary developments - At end-June, domestic revenue collection fell short of projection by 0.2 percent of GDP; revenue losses on petroleum products reached about 1 percent of GDP. - Overall fiscal balance was contained at 2.8 percent of GDP at end-June, which is 0.8 percentage point of GDP lower than anticipated. - Revenue losses from petroleum products intensified and reached GMD1.36 billion at end-September. - Net domestic borrowing target at end-September was above the program ceiling by GMD 483.9 million (0.4 percent of GDP), due mainly to shortfall in financing caused by delays in MegaBank privatization. - Parliament approved in July a 30-percent salary increase for the civil service, translating into a 25-percent increase in the wage bill; cost to the 2022 budget is estimated at 0.5 percent of GDP. - Measures to cover salary costs include upward adjustment in domestic fuel prices, reduction/elimination of non-payroll allowances, increased PIT and CIT collection, reduction in government consumption, and lower-than-anticipated interest payments. - Balance of payments and FX market - From January through August 2022, the CBG sold US$74.9 million to facilitate importation of essential basic commodities. - The CBG introduced in May a ban on withdrawal from foreign currency deposits by commercial banks’ customers; the ban was rescinded on August 31, 2022. - Health and social - Vaccination rates as of end-September 2022: 22 percent of the total population and 34.3 percent of the targeted population (12 years of age and older) vaccinated with at least one dose. - Financial sector indicators - Banking system capital adequacy ratio estimated at 26.9 percent at end-June 2022; statutory requirement ratio is 10 percent. - Non-performing loans (NPLs) of commercial banks improved to 4.1 percent of gross loans at end-June 2022 (a one percentage point improvement since end-2021). - NPLs in microfinance companies (MFCs) increased from 7.0 percent of gross loans at end-2021 to 9 percent at end-June 2022. - COVID-19-related transparency - Reporting of COVID-19 spending resumed in the monthly budget execution report. - The National Audit Office completed the second phase of an ex-post audit of COVID-19-related spending; the final consolidated report was submitted to the National Assembly for review in October 2022. ### Performance under the ECF-Supported Program (select outcomes) - At end-June 2022: - All quantitative performance criteria (QPCs) were met. - The floor on the stock of net usable international reserves (NIR) was exceeded by US$30 million. - Four external debt-related QPCs were 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). - Newly contracted concessional debt stood at US$34 million out of the US$115 million annual ceiling. - The QPC on net domestic borrowing was marginally below the program ceiling. - Three out of four indicative targets (ITs) were met; the IT on domestic tax revenue collection was missed by 0.2 percent of GDP due to lower collection of taxes on petroleum products. - The IT on poverty reducing spending was met with large margins. - Subsequent developments: - The continuous QPC on non-accumulation of external arrears was temporarily breached in August-September due to a delayed repayment to the ITFC by NAWEC. - End-September indicative targets on net domestic borrowing and tax revenue collection were missed; the indicative target on net international reserves was missed as the CBG intervened to support imports amid FX shortages. - Three out of five end-September structural benchmarks were completed on time; the phase 2 audit report of COVID-19-related spending was submitted to the National Assembly in October 2022. - Progress is being made on the remaining SB on extension of performance contracts to three additional SOEs. *Source: Annex V. Capacity Development Strategy, 2021–22* ### 11. Preliminary data suggest that performance at end-September 2022 was mixed. The ### 11. Preliminary data suggest that performance at end-September 2022 was mixed. The ### Program performance at end-September 2022 - The continuous QPC on the accumulation of the external arrears was temporarily breached as the repayment of debt service obligations to the ITFC by NAWEC, the executing agency, in August-September was completed with a delay due to difficulties in obtaining FX combined with the cash flow constraints caused by the rising fuel cost. - The floor on net international reserves was missed by US$ 25 million owing to the central bank interventions to support the import of fuel and basic commodities. - The celling on the NDB was breached by GMD 483.9 million (about 0.4 percent of GDP) as we could not fully absorb the financing gap created by delays in the sale of MegaBank. - The indicative target on domestic tax collection was missed despite GRA’s efforts to collect more domestic taxes. - All other QPCs and ITs were met. ### Structural benchmarks and reforms (end-June and end-September 2022) - All structural benchmarks (SBs) at end-June were met; some end-September 2022 SBs were met (Table 2 referenced in source). - Key SBs achieved: - Launched the Taxpayer Charter in April 2022 to improve GRA–taxpayer relations and enhance compliance. - Expanded the social registry to cover six additional districts before end-June 2022. - Completed and submitted to the IMF country team in June 2022 the first draft of the new Public Finance Bill. - With IMF technical support, the CBG conducted stress testing of all banks at end-December 2021, helping meet the related end-September SB. - Tax ledgers cleansing for large taxpayers completed in September 2022. - Tax audit for 5 SIC holders completed; identified forgone revenues of about GMD 90 million during 2019-2021. - Phase 2 audit report of COVID-19-related spending submitted to stakeholders and consolidated report submitted to the National Assembly in October 2022. - Delayed items and planned actions: - Signing of performance contracts between MoFEA and three additional key SOEs (GPA, GNPC and SSHFC) delayed; negotiations on KPI targets taking longer than expected. Plan to complete this reform by end-February 2023 (end-September 2022 SB proposed to be postponed to end-February 2023). ### Macroeconomic outlook and risks - Risks: Tilted to the downside due to the protracted war in Ukraine and lingering effects of the Covid-19 pandemic; additional risks include commodity price shocks, an abrupt global slowdown or recession, uncertainty around the COVID-19 pandemic, and climate change (e.g., major flooding in July 2022). - Real GDP growth projections: - 4.5 percent in 2022. - Projected 6.0 percent in 2023 (slightly lower than the 6.2 percent projected at the time of the fourth ECF review). - Growth to peak at 6.5 percent in 2024, then return to around 5 percent in the medium term. - Inflation: - Expected to remain high for the remainder of 2022 and in 2023 due to high global fuel and food prices induced by the war in Ukraine, before declining to 5 percent in the medium term. - Balance of payments and FX pressures: - Pressures may persist if spillovers from Russia’s war in Ukraine intensify, commodity price shocks do not dissipate, or an abrupt global slowdown occurs. ### A. The National Development Plan - Progress on RF-NDP and LTDV 2050: - Completed key stakeholder consultations across all 120 Wards, MDAs, civil society including women and persons with disability, private sector, and development partners. - First draft of the RF-NDP being finalized; expected to be validated by end-December 2022 after review and validation. - Drafting of the LTDV expected to be completed by end-December 2022. ### B. Fiscal Policy - Commitment: Broadly achieve 2022 fiscal targets under the ECF-supported program despite revenue shortfalls and salary increase. - Measures taken and resources mobilized: - Steps to finalize privatization of Megabank and accelerate asset sales under the Janneh Commission. - Issued a certificate of urgency to the National Assembly; adoption of the procurement act paved the way for disbursement of a US$20 million budget support from the World Bank before year end. - Collected GMD 170 million additional dividends from SOEs. - Bolstered revenue collection from petroleum products to secure GMD 750 million in 2022H2. - Measures to collect more non-tax revenue, including bridge toll and airport concession fees. - Strengthening cash management and establishing a reform monitoring committee; prioritizing spending. - Budget impact and deficit: - Pressures intensifying on the budget from high food and fuel prices and related social tensions. - Proposal to expand the budget deficit from about 4.4 to 4.9 percent of GDP, financed by the on-lending of half of the ECF access augmentation (0.5 percent of GDP) for budget financing, while endeavoring to contain net domestic borrowing in 2022 below the program ceiling. - 2023 budget objectives: - Reduce fiscal deficit by 2.2 percentage points of GDP relative to 2022 to 2.7 percent of GDP. - Keep public debt on a downward path. - 2023 revenue measures (projected outcomes): - Tax collection from expiring SIC holders expected to generate GMD 75 million. - Increase in salaries of civil servants estimated to generate PIT of about GMD 100 million. - Improve passthrough from global to domestic fuel prices to help recover lost oil revenues — estimated to generate GMD 360 million in additional revenue. - Payment of airport concession revenue frontloaded to July 2022 expected to yield GMD 75 million in 2023. - Issued circulars to enforce withholding tax deductions on government projects and to ensure timely tax payments by SOEs. - Measures to improve tax collection in telecommunication and real estate sectors. - Resulting projections: tax revenue projected at 9.8 percent of GDP in 2023; non-tax revenue projected at 2.7 percent of GDP; budget support from development partners projected at 2.1 percent of GDP. - 2023 spending measures: - Current spending expected to decline by 1.1 percentage point of GDP in 2023, to 12.7 percent of GDP. - Measures include: (i) reducing all non-payroll-related allowances from the wage bill, reducing the budgetary cost of the salary increase from 1.1 percent of GDP to 0.7 percent of GDP; (ii) reducing subsidies to GGC by GMD 275 million relative to 2022 due to higher global groundnut prices; (iii) streamlining non-essential travel and trainings abroad, post-paid mobile phones, and fuel allocation to eligible officials. - Remaining spending pressures: relocation of embassy personnel abroad and maintenance of government assets. - Infrastructure investment projected at 9 percent of GDP, mainly foreign-financed; focus on completing ongoing projects and not introducing new locally financed projects. - Commitment: If fuel-related revenue losses increase, take all necessary measures, including on the spending side, to achieve program targets. - Financing for 2023: - Received assurances on financing from development partners. - Requesting on-lending of the disbursement (SDR 5 million) and half of the access augmentation (SDR7.775 million) in 2023 attached to the sixth review under the ECF arrangement from the CBG to the government. - Aim to contain net domestic borrowing at GMD 2 billion (1.4 percent of GDP). ### C. Debt Sustainability - Outlook and targets: - Public debt profile deemed sustainable but at high risk of distress. - Commitment to reduce the present value of total public debt below the benchmark of 55 percent of GDP around 2025. - Expect primary balance to gradually improve from a deficit of 2.3 percent of GDP in 2022 and 0.6 percent of GDP in 2023 to an average surplus of about 1.2 percent of GDP in the medium term. - Public debt-to-GDP ratio expected to decline from 80.8 percent in 2022 to 52.7 percent in 2027. - Borrowing strategy and practice: - Continue caution on borrowing and adhere to agreed borrowing plan. - Rely primarily on grants and highly concessional loans to finance infrastructure gap. - At end-September 2022, Government contracted US$61 million in external concessional debt out of the US$115 million ceiling for 2022. - Strengthen PPP legal framework to ensure PPP projects do not pose fiscal risks, including guarantees or contracting of non-concessional financing by weak SOEs. - Continue publication of annual borrowing plan at the beginning of each fiscal year and on a rolling quarterly basis. - Debt data and reconciliation: - Continued efforts to reconcile and clean external debt data and record domestic debt in the Meridian system. - Engaging major creditors on debt reconciliation exercises regularly. - Communication with Libya and Venezuela regarding debt service, but sanctions and conflicts hinder negotiations. - Working with the US Treasury Technical Assistance adviser to publish the quarterly bond issuance plan on a rolling basis. ### D. Monetary and Exchange Rate Policies - Monetary policy stance: - CBG considers tightening further to address heightened inflationary pressures. - CBG will monitor inflation and economic activity and take necessary measures to fulfill its price stability mandate. - Additional policy rate adjustments to achieve a positive real policy rate will be complemented by liquidity management tools (e.g., issuance of CBG bills) to reduce excess liquidity and moderate reserve money growth. - CBG to step up communication on its anti-inflation strategy to better anchor inflation expectations. - Foreign exchange policy and reserves: - CBG to observe a de jure free-floating foreign exchange regime without undue restrictions on FX activity; fundamentals of demand and supply will determine exchange rate. - Continuous supervision of FX market data to ensure accurate reporting and alignment of CBG computed and published rates with market activity. - Short-term FX conditions: demand expected to remain somewhat robust above supply due to declining remittances, ban on timber trade, and redirection of cashew related inflows; increasing demand pressures for imports of essential commodities may trigger reserve drawdown and exert pressure on the Dalasi. - Reserve projections: net international reserves expected to decline to US$300 million and gross reserves to 4.8 months of prospective imports at end-December 2022. - Reopening of high tourist season and the exchange rate policy expected to support forex supply and help ease pressure. ### E. Financial sector resilience and safeguards - Banking sector stress tests and resilience: - CBG completed at end-September 2022 a stress-testing exercise of the entire commercial banking industry based on banks’ balance sheets at end-December 2021 (end-September 2022 SB). - Results show the banking sector remains solvent even with a 400 percent shock to NPLs, but credit risks remain. - Work underway to improve the model, data quality and coverage, and assumptions. - Commercial banks now required to submit loan portfolios quarterly to ensure granularity and proper loan classifications. - Capital markets and financial inclusion: - Following enactment of the Capital Markets and Securities Act 2021, CBG engaged private sector and plans underway to establish a capital market for equities and bonds trading. - National Financial Inclusion Strategy (NFIS) launched in January 2022; implementation underway with seven working groups and an action plan developed. - Safeguards, governance, and central bank investment policy: - IMF 2020 safeguards recommendations largely implemented except for capacity building for relevant departments; capacity building ongoing. - Audit of 2021 financial statement completed and all critical matters resolved, except for the divestiture of MegaBank. - Interim audit of 2022 financial statements initiated in September 2022; completion expected by end-March 2023, subject to finalization of MegaBank privatization. - Closure of dormant accounts ongoing with the Accountant General Department. - CBG staff intends to submit a revised investment policy and guidelines to the CBG Board by end-December 2022 to align investment objectives with IMF technical assistance recommendations. ### SOEs and contingent liabilities - Strengthening governance and financial management in SOEs to minimize contingent liabilities and foster economic efficiency. - Turnaround strategy under preparation; quarterly financial performance reports to detect and mitigate fiscal risks. - Parliament to deliberate on recently submitted SOE Bill. - Publication and reporting: - 2020 SOE audited financial statements, except for NAWEC, published by October 2022. - 2020 performance report of SOEs completed and submitted for executive signature before publication; 2021 report expected by end-December 2022. - Progress on performance contracts with GPA, GNPC, and SSHFC at an advanced stage; expected to be concluded by end-February 2023 (end-September 2022 SB proposed to be postponed to end-February 2023). - SOE arrears and NAWEC: - Total of GMD 163 million of SOE cross arrears settled by end-August. - NAWEC facing challenges to fulfill debt obligations (including to ITFC) due to rising operational cost, volatility in fuel prices, and limited cash flow. *Source: 1gmbea2022002 - 11. Preliminary data suggest that performance at end-September 2022 was mixed.* ### 25. We completed a mid-term performance review of GRA’s Corporate Strategic Plan ### 25. We completed a mid-term performance review of GRA’s Corporate Strategic Plan (CSP) 2020–24 ### Revenue mobilization and GRA institutional reforms - CSP 2020–24 continues to guide revenue mobilization efforts. - Broaden tax base by tapping revenue potential of: hospitality, cable television, and real estate sectors. - Taxpayer Charter approved, launched and published on the GRA website in April (end-June 2022 SB). - Drafted governance and integrity documents submitted for validation by the Reforms and Modernization Committee: - Gift policy, Conflict of Interest policy, Whistle blower policy, and Investigation manual. - To be presented to top management and the Board after validation. - Compliance management strategy development ongoing with consultant recruited. - Policies and standard operational documents developed for Risk Management (RM) and Post Clearance Audit (PCA). - Border and Inland Control (BIC) facing challenges; additional measures with IMF technical assistance to develop a national mandate and policy document. - Internal Affairs Unit (IAU) setup "well in progress"; IAU expected to function at full scale to enhance internal assurance and integrity and support revenue collection (proposed new SB for End-February 2023). ### Ledger Reconstruction and Maintenance (LRM) - LRM project commenced in April 2022, starting with large taxpayers. - Project includes verifying registration details and updating GamTaxNet. - All large taxpayers’ registration details updated to date. - Tax ledgers reconstruction for large taxpayers completed in September 2022 with a total of 314 taxpayer files fully captured in GamTaxNet (end-September 2022 SB). - Capturing returns data enables correct creation of taxpayer ledger accounts. - Plan to use reconstructed ledger information to develop and implement a tax arrears management strategy. ### Digital transformation and customs modernization - Progress on development of a compliance risk management strategy to prepare for ITAS implementation. - Identifying needs for change enablement plan, technology enablement stream, and performance support framework with technical assistance. - Will prepare and implement the ITAS roadmap building on progress. - ASYCUDA WORLD formally launched in June 2022 after training customs staff and other end users. - Banjul Wharf and Head Office piloted; Transit Module rolled out to four outstations including Amadallai, Farafenni, Basse, and Giborroh. - After pilot corrections, system rolled out to all customs outstations. - Fiber installed in all offices to ensure stable environment. ### Tax expenditure policy (TEP) and incentives review - Tax audit campaign on five exempt entities holding EPZL or GEIPA Special Investment Certificates completed (end-September 2022 SB). - Working on developing list of more SIC holders to extend assessment. - Assessment findings to assist revisiting fiscal incentives. - Ministry in charge of Trade commissioned a study to assess the impact of SICs from 2010 to date to inform cost–benefit analysis of tax incentives issued by GIEPA. - Outcome will inform on-going review of the GIEPA Act. ### Other tax policy and legal measures - Directorate for Revenue and Tax Policy established at MoFEA with mandate including: - Studies on tax design and adequacy, law and institutional arrangements, reviewing concession contracts’ revenue performance, revenue performance analysis, participation in concession negotiations, revenue sharing simulations, review/advice on tax exemption impact on DRM and National Development Planning, revenue and economic impact analyses, tax and non-tax forecasting for the MTFF, monitoring Tax Expenditure Policy, and preparing tax expenditure assessments and tax policy analysis reports. - Reviewing and amending Income Tax and Value Added Tax (IVAT) 2012, Customs and Excise Act 2010, and GRA Act 2004 to strengthen laws. - Continuing work on assenting to the Revised Kyoto Convention with stakeholders with World Customs Organization assistance. - Drafting Tax Agent Regulations and ASYCUDA WORLD regulations for MoFEA review and approval. ### Revenue-loss measures and social protection - Plan to initiate discussions on gradual phase out of revenue-losing measures introduced to alleviate shocks once exogenous shocks and their implications dissipate. - Improving social registry to allow rolling-out a means-tested social program in future instead of blanket subsidies. ### Public Financial Management (PFM) — strategy and procurement - 2021–25 PFM reform strategy continues to guide reforms. - Public procurement: - Final amendments to GPPA bill completed by Ministry of Justice; bill approved in early October 2022 by the National Assembly following certificate of urgency by the President. - Regulations finalized with support from European Union and World Bank; signing to follow. - Revised PPP Bill resubmitted to Ministry of Justice; revised National PPP draft Policy produced and reviewed in retreat; plan to submit final version to Cabinet. - Contract management committee constituted to oversee ongoing PPP projects. - Newly initiated PPP procurement includes single Window Platform at GRA and container tracking project with GPA. ### Civil service reforms and performance management - Performance Management prioritized; Ministry of Public Service, Administrative Reform, Policy Coordination and Delivery in 2023 will elaborate a policy on resource-based management (RBM) for Cabinet consideration, including Commonwealth commitment for results toolkits. ### IFMIS, cash management, and Treasury operations - IFMIS rolled out to all Local Government Authorities; currently being rolled out to seven subvented agencies (EFSTH, Curator of Inter Estate, NANA, GBOS, CCM and GGC). Plans to roll out to ten additional self-accounting projects. - Cash management: - Circular conditioning cash allocations to MDAs’ timely submission of updated quarterly cash plans starting 2022Q2; allocations withheld for non-submission. - AGD and Budget Directorate identifying pilot MDAs to train on IFMIS cash flow planning to submit monthly cash forecasts electronically. - Cash forecasting manual finalization delayed but expected to be completed by March-2023. - Treasury Single Account committee concluded negotiations with commercial banks on revenue collection platform and preparing MOUs detailing operating modalities. - Revenue collected by GRA transferred bi-weekly to CBG and daily to consolidated revenue fund. - Categorization of dormant accounts ongoing; closure expected by December 2022. - Plan to review accounts of projects and subvented agencies in commercial banks. ### Public Finance Bill, COVID-19 spending, and investment selection - First draft of revised Public Finance Bill completed by end-June 2022 (revised end-June 2022 SB); review session held; PFM Directorate incorporating comments. - Cabinet to approve revised Public Finance Bill by end-February 2023 (proposed new SB for end-February 2023). - Update of 2016 Regulations and development of a PFM Manual completed in November 2022. - COVID-19 spending: NAO completed second phase of audit and submitted consolidated report to new National Assembly in October 2022 for review and publication; transparency requirements being observed. - Investment selection: project assessments continued throughout 2022. As of end-September 2022, total cost of externally financed projects reviewed stood at about US$137 million. - Aid Coordination Directorate shared new project proposal template with MDAs for preliminary assessment prior to GSRB appraisal and 2023 budget inclusion. ### MTEFF and Public Investment Program (PIP) - Draft MTEFF 2023-2026 finalized and used to set 2023 budget ceilings; aligns medium-term expenditure priorities with National Development Plan and focuses on Health and Agriculture. - Specific MDAs identified for priority sectors pilot under PIP; required to provide ACD with new development project concept notes for GSRB review and PIP incorporation. - Medium-Term Policy Framework for PIP 2022-2025 developed with World Bank technical support; aligned with 2023 fiscal year budget cycle and NDP. ### Aid Policy and capacity constraints - Gambia Aid Policy (2023-2032) developed and validated with UNDP support to increase effectiveness of external assistance and mobilize additional aid for short- to medium-term investment needs. - Draft action plan developed; final document to be published after incorporation of adjustments and recommendations. - Capacity constraints in ACD and line ministries/agencies identified; capacity building and financing of aid policy action plan remain challenges. ### Fiscal Risk Management - Preparing First Fiscal Risk Statement (FRS) with aim to publish by end-December 2022. - Staff training on models and tools started in October 2022. - FRS covers macro-fiscal risks, SOE fiscal risks, public debt, government loans and guarantees, expenditure arrears, SSHFC and civil service pension scheme, climate change and natural events, remittance volatility, tourism, groundnut farmgate price formation, and contingent liabilities. - FRS intended to map and broadly quantify key fiscal risks and integrate into annual budget appropriation process to strengthen PFM. ### Governance, anti-corruption, and audits - Engaging with newly elected National Assembly to accelerate adoption of anti-corruption bill; formal request sent for IMF Governance Diagnostics Assessment mission. - Anti-corruption bill included among priority bills to be adopted possibly during December 2022 session; plan to subsequently set up Anti-corruption Commission. - Continued publication of all government approved contracts on GPPA website categorized by procurement methods. - Directorate of Internal Audit received Quality Assurance Framework mission by IMF and will use recommendations to enhance compliance. ### Anti-trafficking and AML/CFT measures - Human trafficking: - National Agency Against Trafficking in Persons (NAATIP) strengthened; increased prosecutions, stakeholder sensitization and training, enhanced witness protection. - Collaboration with US embassy implementing 2021 U.S. State Department TIP Report recommendations helped The Gambia move up to Level 2 in the 2022 U.S. TIP Report. - AML/CFT: - Financial Intelligence Unit (FIU) mentored by Financial Intelligence Center of Ghana (FICG) and Nigerian Financial Intelligence Unit (NFIU) with aim to join Egmont Group; meetings monthly and visits in September 2022. - Preliminary findings acknowledge significant progress in physical security, I.T. security, I.T. equipment, AML/CFT software (deployment of goAML), and operational capacity. - GIABA Plenary in May 2022 adopted Mutual Evaluation Report (MER) identifying key deficiencies in effectiveness across all immediate outcomes under FATF standards, while noting some progress on legal and institutional frameworks, risk assessment, and enforcement. - The Gambia placed in GIABA’s Enhanced Follow-Up Process requiring annual reporting; action plan developed to address MER deficiencies. - KOICA through UNODC started review of AML/CTF Act 2012; draft Bill produced and under review to address MER deficiencies. - Central Bank of The Gambia (CBG) established an AML/CFT unit in banking supervision to conduct onsite and offsite examinations using a risk-based approach; unit includes staff from banking supervision, insurance, other financial institutions, and risk management departments; capacity building ongoing to develop guidelines, procedural manuals, and regulatory returns. ### Business environment and private sector development - Business registration single window deployment to GIEPA under discussion; cabinet paper being prepared. - Seeking US$500,000 to revamp IT infrastructure at registration office; engaging development partners and exploring integration with government digitalization. - Progress on establishing a commercial court: Ministry of Justice produced list of basic requirements including temporary rental; financing discussions ongoing with Vice President’s office. - National Business Council task force established to follow up on national food testing lab; The Gambia Standards Bureau to host lab with support from WACOMP for equipment, training, and accreditation. - Feasibility study for Special Economic Zone along Trans-Gambia Corridor advertised with ECOWAS and AfDB; proposals received and reports sent to partners for no objection. - Initiatives to improve access to finance: - Working to establish robust Credit Reference Bureau (CRB) including legal framework. - Consultant conducted assessment of market conditions for credit reporting system. - Assessment recommendations validated by CRB task force: (i) draft new Credit Reporting Act and regulations; (ii) digitize TIN using QR codes to ensure high standards of data quality; (iii) choose all Banks and the largest MFIs as data providers during Phase One of Roll-Out Plan. - Drafting of Credit Reporting Act led by MoFEA and CBG. ### Poverty reduction, climate change, and capacity development - Poverty reduction: - Expanded Social Registry to six additional districts in North Bank Region by end-June 2022. - Registry now covers 36 out of 43 districts, starting from the poorest, representing about 40 percent of the population. - Preparations to collect data in two more urban districts to increase population coverage. - Registry contains demographic, socio-economic and disability data; used during Foni region conflict to target government support. - System set up to respond to shocks; National Social Protection Secretariat (NSPS) finalizing data sharing protocol. - Climate change: - The Gambia deemed compatible with 1.5°C Paris climate agreement goals and internationally supported target "almost sufficient" per Climate Action Tracker latest update. - Long-Term Climate-Neutral Development Strategy 2050 validated in September 2022 with estimated cost of US$4 billion. - Seeking climate-related financing to fill estimated cost alongside existing donor project mitigation funds. - Mini solar grid project of 120.6 kW started in March 2022, financed by ECOWAS Renewable Energy Facility (EREF) with USAID and Power Africa support, aiming to provide electricity access to more than 4,000 residents in Nyamanarr. - Capacity development: - Continue leveraging partner technical assistance (including IMF) to strengthen revenue administration, PFM (cash management, fiscal transparency, project appraisal and selection, SOE accounting), macroeconomic statistics, debt management, monetary policy design, and bank supervision capacity. - Support welcomed for planned governance diagnostic and corruption vulnerability exercise. ### Program monitoring and future engagement with IMF - Government to continue measures to meet quantitative targets and observe structural benchmarks under the ECF-supported program. - Program subject to semiannual reviews and performance criteria, indicative targets and structural benchmarks set out in Tables 1 and 2 and the attached Technical Memorandum of Understanding. - Sixth and final program review will be based on targets and benchmarks through end-February 2023. - After completion of the sixth and last review under current ECF-supported program, government intends to explore possibility of a successor program supported by an IMF arrangement. *Source: Excerpt from the referenced IMF document.* ### 1. Net domestic borrowing of the central government (ceiling) ### 1. Net domestic borrowing of the central government (ceiling) ### Quantitative performance criteria and outcomes (2022) - 1. Net domestic borrowing of the central government (ceiling) - Target / Outturn / Status: - 1,673 / 1,617 / Met - 1,839 / 1,806 / Met - 1,749 / 2,233 / Not Met - 1,659 / 1,659 - 2. Stock of net usable international reserves of the central bank (floor, US$ million) - Target / Outturn / Status: - 359 / 406 / Met - 349 / 385 / Met - 367 / 342 / Not Met - 361 / 300 - 3. New external payment arrears of the central government (ceiling, US$ million) - Target / Outturn / Status: - 2 / 0.0 / 0.0 / Met - 0.0 / 0.0 / Met - 0.0 / 3.0 / Not Met - 0.0 / 0.0 - 4. New nonconcessional external debt contracted or guaranteed by central government (ceiling, US$ million) - Target / Outturn / Status: - 2 / 0.0 / 0.0 / Met - 0.0 / 0.0 / Met - 0.0 / 0.0 / Met - 0.0 / 0.0 - 5. Outstanding stock of external public debt with original maturity of one year or less (ceiling, US$ million) - Target / Outturn / Status: - 2 / 0.0 / 0.0 / Met - 0.0 / 0.0 / Met - 0.0 / 0.0 / Met - 0.0 / 0.0 - 6. New concessional external debt contracted or guaranteed by central government (annual ceiling, US$ million) - Source notes: 2, 3, 4 - Annual ceiling: 115 - Outturns / Status: - 115 / 34 / Met - 115 / 34 / Met - 115 / 61 / Met - 115 / 115 - Note: Indicative targets - 7. Total domestic tax revenue (floor) - Target / Outturn / Status: - 2,800 / 2,995 / Met - 5,750 / 5,569 / Not Met - 9,000 / 8,206 / Not Met - 12,000 / 11,158 - 8. Monthly ceiling on central bank credit to the central government at non-market terms (GMD millions) - Source note: 5 - Target / Outturn / Status: - 0.0 / 0.0 / Met - 0.0 / 0.0 / Met - 0.0 / 0.0 / Met - 0.0 / 0.0 - 9. Stock of net domestic assets of the central bank (ceiling) - Source note: 6 - Target / Outturn / Status: - 7,868 / 5,752 / Met - 7,868 / 6,652 / Met - 7,868 / 6,887 / Met - 7,868 / 7,956 - 10. Poverty-reducing expenditure (floor) - Target / Outturn / Status: - 1,400 / 3,498 / Met - 3,000 / 5,978 / Met - 4,800 / 8,024 / Met - 6,500 / 6,500 ### Memorandum items (selected figures) - Budget Support (grants, US$ millions) - 0.0 / 0.0 / ... - 20.0 / 20.0 / ... - 20.0 / 20.0 / ... - 20.0 / 43.8 - Base Money (stock, GMD millions) - 19,845 / 21,974 / ... - 19,204 / 21,816 / ... - 20,139 / 20,124 / ... - 20,886 / 18,951 - IMF disbursements (SDR millions) - 0.0 / 0.0 / ... - 5.0 / 5.0 / ... - 5.0 / 5.0 / ... - 10.0 / 25.6 - Of which: augmentation - 0.0 / 0.0 / ... - 0.0 / 0.0 / ... - 0.0 / 0.0 / ... - 0.0 / 15.6 - CCRT debt relief (SDR millions) - 0.0 / 0.0 / ... - 0.8 / 0.8 / ... - 0.8 / 0.8 / ... - 0.8 / 0.8 ### Notes and select program design features (from TMU and footnotes) - Continuous criteria: These criteria apply on a continuous basis, including beyond end-December 2021. - Debt limit: The debt limit is formulated in nominal terms due to authorities’ limited capacity to monitor and observe conditionality on aggregate debt levels (including in PV terms). - Footnote on performance criterion: A performance criterion at end-December 2020. - Footnote on grants: Excludes grants under the CCRT. - Technical definitions and reporting requirements are set out in the Attachment II: Technical Memorandum of Understanding, including: - Definition and adjuster for Net Domestic Borrowing of the Central Government: - Exclusions: (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 balances of the project accounts listed in Table 1, (iii) face value of government securities issued to increase the CBG’s capital to the statutory level enshrined in the CBG Act. - Adjuster: If privatization of MegaBank is delayed beyond end-2022, the NDB ceiling for end-December 2022 will be revised upwards by the amount of the privatization proceeds; if applied in 2022, net domestic borrowing ceilings in 2023 will be adjusted downwards by the amount of the proceeds from the quarter in which proceeds are received. - Net Domestic Assets of the Central Bank: - Definition: NDA = reserve money − net foreign assets of the CBG. Reserve money = currency issued by the CBG + deposits of commercial banks at the CBG. - For monitoring, foreign assets and liabilities will be converted at 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. - Net Usable International Reserves (NIR) of the CBG: - Definition: NIR = usable reserve assets − reserve liabilities. Usable reserve assets exclude assets that are pledged, collateralized, encumbered, claims on residents, derivatives claims vis-à-vis domestic currency, precious metals, assets in nonconvertible currencies, and illiquid assets. - For monitoring, conversion at the same TMU rates as for NDA. - New external debt payment arrears: - Definition: external debt obligations of the central government not paid when due according to contractual terms (taking into account contractual grace periods). - Exclusions for program purposes: (i) obligations for which creditor accepted in writing to negotiate alternative schedules before payment; (ii) claims represented as disputed by government; (iii) arrears that cannot be settled due to international sanctions; (iv) arrears on trade credits (except ITFC). - New non-concessional external debt contracted or guaranteed by central government: - Applies to new debt denominated in any currency other than Gambian dalasi; excludes IMF loans and concessional debts and any debt with maturity ≤ one year. Assessed continuously. - Concessionality threshold: grant element ≥ 35 percent (PV vs nominal), using program reference rate for six-month USD LIBOR = 2.42 percent and unified discount rate = 5 percent. - Tax revenue (indicative target): - Definition: taxes and duties collected by Domestic Taxes Department and Customs and Excises Department of the Gambia Revenue Authority (GRA); excludes nontax revenue and certain levies collected on behalf of other organizations. - Central bank credit to the central government at non-market terms: - Definition: consolidated balance on the Treasury Main Account, Consolidated Revenue Fund, and other revenue accounts; includes gross claims on the central government on the central bank balance sheet with terms materially different from market; covers overdue payments of principal and interest on government securities held by the central bank. - Poverty-reducing expenditures: - Definition: expenditures financed out of The Gambia Local Fund (GLF) across specified sectors and programs; includes COVID-19 spending implemented through COVID-19 project accounts. ### Structural benchmarks (selected status items, 2022–23) - Prior actions and structural benchmarks (status highlights) - Submit the phase 2 audit report of COVID-19-related spending to the National Assembly — Prior action — Met (report submitted to Parliament at end-October 2022). - Complete and adopt Taxpayer Charter (GRA/MOFEA) — end-June 2022 — Met. - Develop, approve, and use accurate tax ledgers for large taxpayers — end-September 2022 — Met. - Conduct a tax audit on at least five companies holding special investment certificates (SIC) — end-September 2022 — Met. - Make fully functional GRA’s Internal Affairs Unit — end-February 2023 — Proposed new SB. - Publish the phase 2 audit report of COVID-19-related spending on MOFEA website — end-September 2022 — Not met. - Expand the social registry to cover additional six districts — end-June 2022 — Met. - Prepare first draft of a new Public Finance Bill (in consultation with Fund staff) — end-June 2022 — Met. - Extend signing of performance contracts between MoFEA and three additional key SOEs — end-September 2022 — Propose to postpone to end-February 2023. - Approval by Cabinet of a new PFM act — end-February 2023 — Proposed new SB. - Conduct balance sheet stress tests of two banks (one large and one medium sized) — end-September 2022 — Met. ### External borrowing plan (overview, 2020–23) - Table summary (selected figures) - Total debt contracted (2021 Act. / 2022 Prog. / 2023 Proj. / 2020–23) - 120 / 115 / 91 / 80 / 104 / 207 / 207 (table presents multi-year breakdown by source and use) - Concessional debt (sample) - 120 / 100 / 91 / 80 / 89 / 192 / 192 - Multilateral debt (sample) - 0 / 0 / 65 / 71 / 40 / 64 / 105 / 135 - Port expansion component appears across concessional/multilateral lines (US$65 million total: US$50 million concessional, US$15 million nonconcessional blended with a grant to meet 35-percent grant-element requirement). *Source: 1gmbea2022002 - 1. Net domestic borrowing of the central government (ceiling).* ### 27. Supporting material: A monthly report on poverty-reducing expenditures will be ### 1gmbea2022002 - 27. Supporting material: A monthly report on poverty-reducing expenditures will be ### Reporting requirement: Poverty-reducing expenditures - A monthly report on poverty-reducing expenditures will be transmitted within four weeks of the end of each month. ### K. Prices - The monthly disaggregated consumer price index, including weights for each major category, with January 2020 = 100, will be transmitted within four weeks of the end of each month. ### L. Government Accounts Data - A monthly consolidated Central Government budget report (i.e., the analytical table) on budget execution for the month and cumulatively from the beginning of the year, will be transmitted to the IMF within four weeks of the end of each month. The report will cover: - revenue data by major items (such as taxes on income, profits, and capital gains; domestic taxes on goods and services; taxes on international trade and transactions; other taxes; non-tax revenue); - external grants by type (e.g., budget support grants, project grants); - details of recurrent expenditure (including goods and services, interest payments, and subsidies and other current transfers); - details of capital expenditure and net lending (including data on externally financed capital expenditure, expenditure from the Gambia Local Fund, and net lending); - the overall balance, the primary and the basic balance; - details of budget financing (including net domestic and net external borrowing and their components). - End-week data on net domestic borrowing (including data on the project accounts listed in Table 1) will be transmitted weekly within five business days of the end of each week. ### M. Monetary Sector Data - The balance sheet of the CBG, prepared on the basis of current and program exchange rates, will be transmitted on a monthly basis to the IMF within four weeks of the end of each month. The balance sheet will explicitly identify all claims on, and liabilities to, the government. - Claims include overdrafts, holdings of treasury bills, government bonds, advances to the government in foreign currency, and other claims on the government. - Liabilities include balances in the treasury expenditure account, the consolidated revenue fund and other revenue accounts, the treasury bill special deposit account, the privatization proceeds account, and other deposit accounts. - The transmission will include the individual balances on the government accounts listed in Table 1. - The consolidated balance sheet of the commercial banks and a monetary survey (i.e., a consolidation of the accounts of the CBG and commercial banks), including foreign currency deposits held by residents of The Gambia with commercial banks, will be transmitted within four weeks of the end of each month. - Daily data on reserve money will be transmitted weekly within five business days of the end of each week. ### N. Treasury Bill Market and Interbank Money Market - Weekly data on the amounts offered and issued, net issuance, over/under subscription, and yields (interest rates) of the various instruments will be transmitted on a weekly basis within five business days of the end of each week. - Data on treasury bills and CBG bills outstanding (both at face value and at discounted value and including information on the distribution by bank and non-bank holders) will be transmitted on a monthly basis within six weeks of the end of each month. - Daily data on the interbank money market (interest rates, maturities, and volumes of transactions) will be transmitted weekly within five business days of the end of each week. ### O. External Sector Data - The CBG will forward within four weeks of the end of each month, data on transactions in official reserves. - Daily interbank market exchange rates, defined as the simple average of the daily weighted average buying and selling rates, will be transmitted on a weekly basis within five business days of the end of the week. - Weekly interbank market exchange rates, defined as the simple average of the weekly weighted average buying and selling rates, will be transmitted on a monthly basis within seven days of the end of the month. - The CBG’s monthly average and end-month exchange rates, including those for all currencies in which foreign assets and liabilities are denominated, will be transmitted within seven days after the end of each month. - Daily data on foreign exchange intervention by the central bank will be transmitted weekly within five business days of the end of each week. - A detailed reserve statement with end-week data on net usable international reserves of the CBG will be transmitted weekly within five business days of the end of each week. - The CBG will also forward monthly data on the volume of transactions (purchases, sales, and total) in the foreign exchange market by each major group of participants (CBG, commercial banks, and foreign exchange bureaus) in dalasi within seven days of the end of each month. ### P. Public Enterprises’ Data - MoFEA will forward within eight weeks of the end of each quarter, data on monthly cash flow of NAWEC, GNPC, GAMTEL, GAMCEL, GCAA, SSHFC, and NFSPMC. - 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. ### Table 1: Project accounts at the CBG excluded from the Calculation of NDB (selection) - ACCOUNT NUMBER — PROJECT ACCOUNT NAME - 1101004067 — NATIONAL AGRICULTURAL LAND & WATER MANAGEMENT DEV. PROJECT (NEMA) - 1103002218 — BUILDING RESILIENCE TO RECURRING FOOD INSECURITY IN THE GAMBIA IDB COMPONENT - 1101005064 — AGRICULTURAL VALUE CHAIN PROJECT (GCAV) - 1101004689 — BUILDING RESILIENCE AGAINST FOOD & NUTRITION INSECURITY IN THE SAHEL PROJECT. - 1101004483 — GAMBIA COMMERCIAL AGRICULTURE VALUE CHAIN PROJECT. - (Table 1 contains additional project account entries.) ### Table 2: Data Reporting Requirements (selected entries) - 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 - Commercial banks' balance sheets — Monthly — 30 days after month-end - CBG balance sheet (including NDA) — 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 - 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 - 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 ### Debt sustainability analysis: Key outcomes and indicators - Risk of external debt distress — High - Overall risk of debt distress — High - The Gambia’s overall and external debt distress risk ratings remain high and public debt continues to be deemed sustainable. - The DSA notes breaches of the indicative thresholds for: - PV of external debt-to-exports, - external debt service-to-exports, - external debt service-to-revenue. - These breaches reflect continued weakness in 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 threshold by 2025, underpinned by fiscal consolidation and support from development partners. - Downside risks cited include the protracted war in Ukraine and the path of the COVID-19 pandemic. - Composite Index — 2.91 (based on October 2022 WEO update and 2021 WB CPIA published in July 2022; debt carrying capacity remains medium). - Approved by M. Mlachila, G. Palomba (IMF), M. Estevão, A.Adugna (IDA); prepared by the staffs of the International Monetary Fund and the International Development Association; dated November 29, 2022. - The Gambia’s total public debt to GDP stood at 83.8 percent and external debt to GDP at *Source: Excerpts from the IMF staff report chapter on reporting requirements and the Joint Bank-Fund Debt Sustainability Analysis update for The Gambia.* ### 48.4 percent as of end-2021 (Text Figure 1). The debt stock figures for July 2022 are broadly similar to ### 1gmbea2022002 - 48.4 percent as of end-2021 (Text Figure 1). The debt stock figures for July 2022 are broadly similar to ### Debt stocks and creditor composition - Total public debt profile remains on a downward trajectory and broadly in line with the previous DSA. - Nominal external debt in July 2022 fell by around 2 percent to US$949 million compared to end-2021, driven by principal repayments to some large creditors (e.g., Kuwait Fund, IsDB, IDA). - External debt composition: - External debt primarily comprises concessional and semi-concessional loans from multilateral and plurilateral creditors (32.6 percent of GDP). - Bilateral and commercial creditors comprise relatively smaller shares. - Domestic debt at end-2021: 35.4 percent of GDP, issued mostly as: - T-bills: 18.5 percent of GDP - Bonds: 16.9 percent of GDP - Undisbursed loans: US$286 million in July 2022, compared to US$298 million in end-2021. ### Debt service projections and profile (2022–2030) - Overall debt service between 2022-2030: cumulative US$620 million (previously US$627 million in fourth ECF review). - Amortization: $557 million - Interest charges: US$63 million - Debt service and undisbursed debt projections on existing debt in the latest baseline are broadly similar to projections during the fourth ECF review, with minor changes to the amortization profile in the early years. ### Macroeconomic assumptions and forecasts (Key points) - Growth and inflation: - 2022 and 2023 GDP growth projections revised downwards due to repercussions of the war in Ukraine and lingering pandemic impacts. - Tourism rebounding but remains significantly below pre-pandemic performances. - Domestic inflation is double-digit. - COVID-19 vaccination rate remains low at around 22 percent. - A major flood in July 2022 disrupted economic activity. - Fiscal framework: - 2022-23 overall deficit revised upward due primarily to the war in Ukraine impacts and full-year effects of civil service salary increase in 2023. - Medium-term fiscal consolidation driven by revenue mobilization, completion of major infrastructure projects, and phasing-out of war- and pandemic-related measures. - Authorities plan to replace non-targeted measures with means-tested income support. - Revenue measures: strengthen revenue administration, cleanse and maintain tax ledgers for large taxpayers, accelerate Asycuda World implementation, consolidate toll bridge collection, and develop customs border and inland controls mandate and policy. - Current account: - Current account deficit expected to remain substantial in the medium term. - External pressures on balance of payments and foreign exchange expected to persist in 2022-23. - Longer term improvement expected as tourism strengthens, export disruptions dissipate, and imports related to large OIC-related investment projects diminish. - Financing assumptions: - Interest rates revised to reflect domestic and global developments. - Baseline assumes a prudent borrowing strategy: gradually increase share of domestic debt and seek new external financing only on concessional terms. ### Key macroeconomic indicators (selected rows from Text Table 2; in percent of GDP unless otherwise indicated) - Real GDP Growth (percent), Current DSA: - 2021: 4.3 - 2022: 4.5 - 2023: 6.0 - 2024: 6.5 - 2025: 5.8 - 2026: 5.0 - 2027: 5.0 - 15-year average: 5.0 - Exports of goods and services growth (percent), Current DSA: - 2021: 20.0 - 2022: -10.6 - 2023: 84.8 - 2024: 38.5 - 2025: 7.7 - 2026: 7.2 - 2027: 7.2 - 15-year average: 9.9 - Imports of goods and services growth (percent), Current DSA: - 2021: 7.3 - 2022: 26.3 - 2023: 16.4 - 2024: 7.2 - 2025: 5.3 - 2026: 3.6 - 2027: 5.5 - 15-year average: 6.6 - CA deficit (percent of GDP), Current DSA: - 2021: 3.8 - 2022: 14.7 - 2023: 12.6 - 2024: 8.7 - 2025: 9.0 - 2026: 8.3 - 2027: 7.9 - 15-year average: 2.5 - Public investment (percent of GDP), Current DSA: - 2021: 6.2 - 2022: 8.9 - 2023: 9.0 - 2024: 8.8 - 2025: 9.7 - 2026: 9.0 - 2027: 9.4 - 15-year average: 8.0 - Overall fiscal deficit (Includes grants), Current DSA: - 2021: 4.6 - 2022: 4.9 - 2023: 2.7 - 2024: 1.8 - 2025: 0.9 - 2026: 0.5 - 2027: 0.9 - 15-year average: 2.0 ### Realism checks and program context - Projected fiscal adjustment for next three years is in the top quartile of distribution of approved Fund-supported programs for LICs since 1990. - Drivers supporting projection realism: phasing out of COVID-19 and war-related measures, completion of OIC-related infrastructure projects, revenue mobilization, and development partners’ disbursements. - Contribution of government capital to real GDP growth considered conservative and in line with historical magnitudes. - Forecast errors have been large historically; large residuals partly attributed to debt data reconciliation mentioned in the fourth review. ### Debt carrying capacity and classification - Uses CI vintage October 2022 WEO and 2021 CPIA. - Debt carrying capacity classification: “Medium”. - CI score: 2.91 (previous DSA: 2.95). - Import coverage of reserves is the most significant contributor to the CI score, followed by the CPIA value. ### Risk rating and debt sustainability assessment - External debt distress risk: “High”, but sustainable. - Under the baseline: - Three of the four external debt indicators breach thresholds for varying periods within the forecast horizon. - PV of external debt-to-exports breaches the threshold of 180 between 2022-2024, then falls below and declines thereafter. - Debt-service-to-exports breaches the threshold of 15 in 2022 and again between 2025-29; continuous 5-year (6-year overall) breach moves toward the limit of sustainability. - External debt service-to-revenue breaches the threshold of 18 in 2022 and again between 2025–28 before falling below thereafter. - PV of external debt-to-GDP remains within the threshold of 40 for the entire forecast horizon. - Under stress scenarios: - All external indicators breach thresholds for most of the forecast horizon. - For ratios to exports, the export shock is the most severe; for other indicators, the combination shock is most severe. - Public debt assessment: - Overall public debt position assessed at high risk of debt distress but remains sustainable. - Under the baseline, PV of total public debt-to-GDP breaches benchmark 55 between 2022–24, falls within benchmark in 2025 and declines thereafter. - PV of debt-to-revenue and debt service-to-revenue are on a declining trend for the baseline horizon. - Under the stress scenario, PV of total public debt-to-GDP remains above benchmark until 2029. - Non-debt flows shock is the most extreme for PV of total public debt-to-GDP under stress. ### Key thresholds and CI components (Text Table 3 excerpts) - Applicable external debt burden thresholds and total public debt benchmark: - PV of debt in % of Exports: 180 - Debt service in % of Exports: 15 - PV of total public debt in percent of GDP: 55 - PV of total public debt in percent of GDP (alternative benchmark): GDP 40 (as listed) - Debt service in % of Revenue: 18 - CI Score components contributions (selected): - CPIA: coefficient 0.385, 10-year average value 2.97, contribution 1.15 (39%) - Real growth rate: coefficient 2.71, 10-year average value 9.51, contribution 0.14 (5%) - Import coverage of reserves: coefficient 4.05, 10-year average value 37.09, contribution 1.50 (52%) - CI Score: 2.91 (100%), CI rating: Medium ### Risks to the assessment - Downside risks include: - Protracted war in Ukraine (further pressure on imports and inflation) - Renewed COVID-19 waves - Uncertainty over donor support disbursements and associated fiscal pressures - Early signs of slowing capital inflows from remittances - Climate risks (e.g., major flooding in July 2022) - Data revisions, availability of concessional financing for infrastructure projects, potential decline in donor support *Source: IMF staff estimates and projections as presented in the DSA material for The Gambia (Text Figures and Tables as cited).* ### 10. They agree with the thrust of the analysis and acknowledged the challenges. However, they ### 10. They agree with the thrust of the analysis and acknowledged the challenges. However, they ### Measures taken and authorities' stance - Authorities have taken measures to reduce the overall debt burden and address the sustained high risk of debt distress. - Authorities aim to achieve reduced debt vulnerabilities with: - sustained restraint in new borrowing; and - a strong medium-term fiscal framework. - On long-standing external arrears: - progress in discussions with the Libyan authorities on reconciling the debt owed to Libya; - contacting the Venezuelan authorities to re-engage on the discussion on arrears. ### Risks and drivers of debt pressure - External shocks and domestic factors adding upward pressure: - COVID pandemic impacts; - repercussions of the war in Ukraine; - mounting infrastructure investment needs in The Gambia. - Expiry of debt relief mechanisms: - Expiry of the DSSI and CCRT increases challenges ahead, with upcoming increase of debt service commitments from 2025. - Additional financing needs generated by stress-test shocks are assumed to be covered by PPG external MLT debt in the external DSA. ### Debt projections and stress-test outcomes (selected indicators from Figures and Tables) - Stress-test framework notes: - "The most extreme stress test is the test that yields the highest ratio in or before 2032." - Stress tests with one-off breaches are presented but one-off breaches are deemed away for mechanical signals. - Selected projected indicator behaviors (2022–32, from figures and tables): - Debt service-to-revenue ratio: charted across 2022–2032 with "Most extreme shock is Combination". - PV of debt-to-exports ratio: charted with "Most extreme shock is Exports". - PV of debt-to-GDP ratio: charted with "Most extreme shock is Combination". - Debt service-to-exports ratio: charted with "Most extreme shock is Exports". - External Debt Sustainability Framework — baseline scenario key numbers (select years and indicators exactly as presented): - External debt (nominal) 2019: 47.3 (percent of GDP) - External debt (nominal) 2020: 50.2 - External debt (nominal) 2021: 49.8 - External debt (nominal) 2022: 50.2 - External debt (nominal) 2023: 47.2 - External debt (nominal) 2024: 44.5 - External debt (nominal) 2025: 41.3 - External debt (nominal) 2026: 38.7 - External debt (nominal) 2027: 36.5 - External debt (nominal) 2032: 27.6 - External debt (nominal) 2042: 15.5 - Change in external debt 2019: -0.9 - Change in external debt 2020: 2.9 - Change in external debt 2021: -0.4 - Change in external debt 2022: 0.4 - Identified net debt-creating flows 2019: -2.9 - Identified net debt-creating flows 2020: -0.9 - Identified net debt-creating flows 2021: -6.6 - Identified net debt-creating flows 2022: 8.0 - Identified net debt-creating flows 2023: 5.1 - Non-interest current account deficit 2019: 5.4 - Non-interest current account deficit 2020: 2.8 - Non-interest current account deficit 2021: 3.3 - Non-interest current account deficit 2022: 14.2 - Grant element of new public sector borrowing (selected projected values): - 2023: 39.2 (in percent) - 2024: 36.7 - 2025: 37.8 - 2026: 34.8 - 2027: 42.8 - 2028: 43.6 - 2029: 39.7 - 2030: 39.5 - Government revenues (excluding grants, in percent of GDP): - 2019: 14.0 - 2020: 14.5 - 2021: 14.3 - 2022: 11.9 - 2023: 12.5 - 2024: 13.3 - 2025: 14.3 - 2026: 15.0 - 2027: 15.3 - 2032: 15.5 - 2042: 15.0 - Gross external financing need (Million of U.S. dollars): - 2019: 87.2 - 2020: -11.4 - 2021: 40.9 - 2022: 303.0 - 2023: 253.2 - 2024: 176.6 - 2025: 209.5 - 2026: 204.7 - 2027: 201.7 - 2032: 34.1 - 2042: -257.0 - Real GDP growth (in percent): - 2019: 6.2 - 2020: 0.6 - 2021: 4.3 - 2022: 4.5 - 2023: 6.0 - 2024: 6.5 - 2025: 5.8 - 2026: 5.0 - 2027: 5.0 - 2032: 5.0 - 2042: 3.6 - Effective interest rate (percent): - 2019: 1.6 - 2020: 0.3 - 2021: 1.1 - 2022: 1.2 - 2023: 1.9 - 2024: 0.9 - 2025: 0.9 - 2026: 0.9 - 2027: 0.9 - 2032: 1.1 - 2042: 1.1 - PV of PPG external debt (in Million of US dollars): - 2019: 710.7 - 2020: 736.1 - 2021: 764.8 - 2022: 795.3 - 2023: 807.6 - 2024: 805.5 - 2025: 806.2 - 2026: 865.8 - 2027: 1071.6 ### Debt composition and creditor breakdown (Table 1, selected figures for 2021–23) - Total public debt (2021): 1,671.5 (In US$ millions); 100.0 (Percent total debt); 83.8 (Percent GDP) - External debt (2021): 965.9 (US$ millions); 57.8 (Percent total debt); 48.4 (Percent GDP) - Multilateral creditors (2021): 651.3 (US$ millions); 39.0 (Percent total debt) - IMF (2021): 104.4 (US$ millions); 6.2 (Percent total debt) - World Bank (2021): 132.1 (US$ millions); 7.9 (Percent total debt) - ADB/AfDB/IADB (2021): 56.2 (US$ millions); 3.4 (Percent total debt) - Other Multilaterals (2021): 358.6 (US$ millions); 21.5 (Percent total debt) - o/w: IsDB and OFID (2021): 222.2 (US$ millions); 13.3 (Percent total debt) - Bilateral creditors (2021): 284.4 (US$ millions); 17.0 (Percent total debt) - Paris Club (2021): 0.5 (US$ millions) - Non-Paris Club (2021): 283.9 (US$ millions) - o/w: Saudi and Kuwait Fund (2021): 146.9 (US$ millions); 8.8 (Percent total debt) - Commercial creditors (2021): 30.2 (US$ millions); 1.8 (Percent total debt) - o/w: M.A. Kharafi and Sons (2021): 30.2 (US$ millions) - Domestic debt (2021): 705.6 (US$ millions); 42.2 (Percent total debt); 35.4 (Percent GDP) - T-Bills (2021): 368.3 (US$ millions); 22.0 (Percent total debt) - Bonds (2021): 337.3 (US$ millions); 20.2 (Percent total debt) - Nominal GDP (2021): 2,034.4 (US$ millions); 121.7 (Percent, memo item) ### External borrowing plan (Table 2, 2020–23, select entries) - Total debt contracted (2020–23 aggregate fields shown as row values): - 2020: 120 (US$ million) - 2021: 115 (Act.) - 2022: 98 (Act.) - 2023: 180 (Prog./Proj. entries across years) - Concessional debt (2020–23): - 2020: 120 - 2021: 100 - 2022: 91 - 2023: 80 - Later projections: 89, 192, 192 (as listed across columns) - Multilateral debt (selected cell values): 0, 0, 65, 71, 40, 64, 10, 51, 35 (presented across table columns) - Port expansion financing (as annotated): - Of which: Port expansion 0, 0, 5, 000, 50, 50, 50 (values appear in table for associated years) - Nonconcessional debt footnote: - "The nonconcessional debt is part of a concessional financing package for the port expansion." ### Realism and debt-driver diagnostics (Figures 3–4 key points) - Drivers of debt dynamics (baseline external debt): - Charts decompose contributions: Residual, Price and exchange rate, Real GDP growth, Nominal interest rate, Current account + FDI, Change in PPG debt. - Distribution across LICs for which LIC DSAs were produced is shown for unexpected changes in debt. - Realism tools (Figure 4) highlight: - Public and private investment rates (historical and projected). - Contribution to real GDP growth from government and private investment. - Fiscal adjustment and possible growth paths under different fiscal multipliers (Multiplier = 0.2, 0.4, 0.6, 0.8). - 3-Year Adjustment in Primary Balance distribution for Fund-supported programs for LICs. *Source: Excerpts from IMF staff report figures, tables, and text provided in the chapter (1gmbea2022002).* ### 4. The Gambia: ### 4. The Gambia ### Baseline public sector debt and projections - Public sector debt: - 2019: 83.0 percent of GDP - 2020: 85.9 percent of GDP - 2021: 83.8 percent of GDP - 2022: 80.8 percent of GDP - 2023: 75.4 percent of GDP - 2024: 70.2 percent of GDP - 2025: 63.6 percent of GDP - 2026: 57.9 percent of GDP - 2027: 52.7 percent of GDP - 2032: 41.1 percent of GDP - 2042: 27.3 percent of GDP - Historical average: 75.2 percent of GDP - Projection average: 56.8 percent of GDP - Of which external debt: - 2019: 47.2 percent of GDP - 2020: 49.5 percent of GDP - 2021: 48.4 percent of GDP - 2022: 48.4 percent of GDP - 2023: 45.9 percent of GDP - 2024: 43.6 percent of GDP - 2025: 40.6 percent of GDP - 2026: 38.3 percent of GDP - 2027: 36.2 percent of GDP - 2032: 27.6 percent of GDP - 2042: 15.4 percent of GDP - Historical average: 41.4 percent of GDP - Projection average: 37.1 percent of GDP ### Change in debt and identified debt-creating flows - Change in public sector debt (year-on-year): - 2019: -0.6 percent of GDP - 2020: 2.9 percent of GDP - 2021: -2.1 percent of GDP - 2022: -3.0 percent of GDP - 2023: -5.4 percent of GDP - 2024: -5.2 percent of GDP - 2025: -6.6 percent of GDP - 2026: -5.7 percent of GDP - 2027: -5.2 percent of GDP - 2032: -2.0 percent of GDP - 2042: -1.0 percent of GDP - Identified debt-creating flows: - 2019: -5.1 percent of GDP - 2020: -0.2 percent of GDP - 2021: -4.3 percent of GDP - 2022: -2.8 percent of GDP - 2023: -5.3 percent of GDP - 2024: -5.1 percent of GDP - 2025: -6.5 percent of GDP - 2026: -5.7 percent of GDP - 2027: -5.2 percent of GDP - 2032: -2.0 percent of GDP - 2042: -1.0 percent of GDP - Historical average: -0.3 percent of GDP - Projection average: -3.8 percent of GDP - Primary deficit (noninterest): - 2019: -0.6 percent of GDP - 2020: -1.0 percent of GDP - 2021: 1.6 percent of GDP - 2022: 2.3 percent of GDP - 2023: 0.6 percent of GDP - 2024: -0.9 percent of GDP - 2025: -1.6 percent of GDP - 2026: -1.6 percent of GDP - 2027: -0.9 percent of GDP - 2032: 0.7 percent of GDP - 2042: 0.0 percent of GDP - Historical average: 0.7 percent of GDP - Projection average: 0.4 percent of GDP - Revenue and grants: - 2019: 21.2 percent of GDP - 2020: 23.0 percent of GDP - 2021: 16.8 percent of GDP - 2022: 17.8 percent of GDP - 2023: 19.1 percent of GDP - 2024: 19.4 percent of GDP - 2025: 20.7 percent of GDP - 2026: 20.5 percent of GDP - 2027: 20.5 percent of GDP - 2032: 19.3 percent of GDP - 2042: 17.1 percent of GDP - Historical average: 16.6 percent of GDP - Projection average: 20.0 percent of GDP - Grants (component of revenue and grants): - 2019: 7.1 percent of GDP - 2020: 8.5 percent of GDP - 2021: 2.5 percent of GDP - 2022: 5.9 percent of GDP - 2023: 6.6 percent of GDP - 2024: 6.1 percent of GDP - 2025: 6.4 percent of GDP - 2026: 5.5 percent of GDP - 2027: 5.2 percent of GDP - 2032: 3.8 percent of GDP - 2042: 2.1 percent of GDP ### Automatic debt dynamics and other contributions - Automatic debt dynamics (contribution): - 2019: -4.6 percent of GDP - 2020: 0.8 percent of GDP - 2021: -5.9 percent of GDP - 2022: -3.9 percent of GDP - 2023: -5.3 percent of GDP - 2024: -3.1 percent of GDP - 2025: -2.1 percent of GDP - 2026: -0.6 percent of GDP - 2027: -0.8 percent of GDP - 2032: -0.3 percent of GDP - 2042: 0.4 percent of GDP - Contribution from interest rate/growth differential: - 2019: -4.0 percent of GDP - 2020: 0.8 percent of GDP - 2021: -4.1 percent of GDP - 2022: -5.2 percent of GDP - 2023: -5.0 percent of GDP - 2024: -3.3 percent of GDP - 2025: -2.0 percent of GDP - 2026: -1.0 percent of GDP - 2027: -0.9 percent of GDP - 2032: 0.0 percent of GDP - 2042: 0.6 percent of GDP - Contribution from average real interest rate (component): - 2019: 0.9 percent of GDP - 2020: 1.3 percent of GDP - 2021: -0.6 percent of GDP - 2022: -1.6 percent of GDP - 2023: -0.4 percent of GDP - 2024: 1.3 percent of GDP - 2025: 1.9 percent of GDP - 2026: 2.1 percent of GDP - 2027: 1.9 percent of GDP - 2032: 2.0 percent of GDP - 2042: 1.9 percent of GDP - Contribution from real GDP growth (component): - 2019: -4.9 percent of GDP - 2020: -0.5 percent of GDP - 2021: -3.5 percent of GDP - 2022: -3.6 percent of GDP - 2023: -4.6 percent of GDP - 2024: -4.6 percent of GDP - 2025: -3.9 percent of GDP - 2026: -3.0 percent of GDP - 2027: -2.8 percent of GDP - 2032: -2.1 percent of GDP - 2042: -1.4 percent of GDP - Contribution from real exchange rate depreciation: - 2019: -0.6 percent of GDP - 2020: 0.0 percent of GDP - 2021: -1.8 percent of GDP - 2022: ... (data truncated in source) - Other identified debt-creating flows: - 2019: 0.0 percent of GDP - 2020: 0.0 percent of GDP - 2021: 0.0 percent of GDP - 2022: -1.1 percent of GDP - 2023: -0.6 percent of GDP - 2024: -1.1 percent of GDP - 2025: -2.9 percent of GDP - 2026: -3.5 percent of GDP - 2027: -3.5 percent of GDP - 2032: -2.3 percent of GDP - 2042: -1.4 percent of GDP - Historical average: 0.0 percent of GDP - Projection average: -2.4 percent of GDP - Other debt-creating/reducing flow (specified): - 2022: -1.2 percent of GDP - 2023: -0.6 percent of GDP - 2024: -1.1 percent of GDP - 2025: -2.9 percent of GDP - 2026: -3.5 percent of GDP - 2027: -3.5 percent of GDP - 2032: -2.3 percent of GDP - 2042: -1.4 percent of GDP - Residual: - 2019: 4.5 percent of GDP - 2020: 3.1 percent of GDP - 2021: 2.2 percent of GDP - 2022: 1.1 percent of GDP - 2023: -0.4 percent of GDP - 2024: 0.1 percent of GDP - 2025: -0.1 percent of GDP - 2026: 0.3 percent of GDP - 2027: 0.2 percent of GDP - 2032: -0.3 percent of GDP - 2042: -0.2 percent of GDP - Historical average: 3.8 percent of GDP - Projection average: -0.1 percent of GDP ### Key sustainability indicators (selected) - PV of public debt-to-GDP ratio (projections shown in table, sample values): - 2022: 71.0 percent of GDP - 2023: 67.9 percent of GDP - 2024: 63.3 percent of GDP - 2025: 59.1 percent of GDP - 2026: 53.6 percent of GDP - 2027: 48.3 percent of GDP - 2032: 33.0 percent of GDP - 2042: 22.7 percent of GDP - PV of public debt-to-revenue and grants ratio (sample projection values): - 2022: 422.1 - 2023: 380.8 - 2024: 331.4 - 2025: 304.1 - 2026: 258.8 - 2027: 235.7 - 2032: 171.0 - 2042: 132.6 - Debt service-to-revenue and grants ratio: - 2019: 113.6 - 2020: 108.1 - 2021: 147.6 - 2022: 121.3 - 2023: 103.5 - 2024: 99.1 - 2025: 97.6 - 2026: 100.0 - 2027: 92.8 - 2032: 88.8 - 2042: 75.0 - Gross financing need: - 2019: 23.5 percent of GDP - 2020: 23.8 percent of GDP - 2021: 26.4 percent of GDP - 2022: 22.8 percent of GDP - 2023: 19.7 percent of GDP - 2024: 17.3 percent of GDP - 2025: 15.8 percent of GDP - 2026: 15.4 percent of GDP - 2027: 14.7 percent of GDP - 2032: 15.5 percent of GDP - 2042: 11.4 percent of GDP ### Key macroeconomic and fiscal assumptions (selected) - Real GDP growth (percent): - 2019: 6.2 - 2020: 0.6 - 2021: 4.3 - 2022: 4.5 - 2023: 6.0 - 2024: 6.5 - 2025: 5.8 - 2026: 5.0 - 2027: 5.0 - 2032: 5.0 - 2042: 5.0 - Historical average: 3.6 - Projection average: 5.3 - Average nominal interest rate on external debt (percent): - 2019: 1.7 - 2020: 0.3 - 2021: 1.1 - 2022: 1.2 - 2023: 2.0 - 2024: 0.9 - 2025: 0.9 - 2026: 1.0 - 2027: 1.0 - 2032: 1.1 - 2042: 1.1 - Historical average: 1.4 - Projection average: 1.1 - Average real interest rate on domestic debt (percent): - 2019: 1.9 - 2020: 4.8 - 2021: -0.7 - 2022: -3.3 - 2023: -1.1 - 2024: 6.2 - 2025: 8.9 - 2026: 11.0 - 2027: 11.8 - 2032: 17.1 - 2042: 18.1 - Historical average: 4.5 - Projection average: 10.0 - Inflation rate (GDP deflator, percent): - 2019: 6.3 - 2020: 2.2 - 2021: 7.8 - 2022: 9.0 - 2023: 9.3 - 2024: 6.7 - 2025: 5.3 - 2026: 4.1 - 2027: 4.4 - 2032: 4.8 - 2042: 4.8 - Historical average: 6.0 - Projection average: 5.7 - Growth of real primary spending (deflated by GDP deflator, percent): - 2019: 23.4 - 2020: 7.3 - 2021: -12.7 - 2022: 14.3 - 2023: 3.5 - 2024: 0.6 - 2025: 9.0 - 2026: 3.8 - 2027: 8.9 - 2032: 0.1 - 2042: 3.8 - Historical average: 7.4 - Projection average: 6.2 - Primary deficit that stabilizes the debt-to-GDP ratio (percent of GDP): - 2019: 0.0 - 2020: -3.9 - 2021: 3.7 - 2022: 5.3 - 2023: 6.0 - 2024: 4.3 - 2025: 5.0 - 2026: 4.1 - 2027: 4.2 - 2032: 2.6 - 2042: 1.0 - Historical average: -0.1 - Projection average: 4.3 ### Sensitivity analysis (high-level highlights from Tables 5 and 6) - Baseline PV of public external debt-to-GDP ratio (selected years): - 2022: 33.9 percent - 2023: 32.8 percent - 2024: 31.7 percent - 2025: 30.1 percent - 2026: 28.3 percent - 2027: 26.6 percent - 2028: 25.1 percent - 2029: 23.6 percent - 2030: 21.9 percent - 2031: 20.5 percent - 2032: 19.3 percent - Bound test examples (B5 one-time 30 percent nominal depreciation for external debt PV-to-GDP): - 2022: 33.9 percent - 2023: 41.4 percent - 2024: 34.4 percent - 2025: 34.4 percent - 2026: 32.5 percent - 2027: 30.3 percent - 2028: 26.5 percent - 2029: 25.2 percent - 2030: 23.4 percent - 2031: 22.1 percent - 2032: 20.9 percent - PV of debt-to-revenue ratio baseline (selected years): - 2022: 441.1 - 2023: 248.0 - 2024: 186.3 - 2025: 175.6 - 2026: 163.4 - 2027: 152.6 - 2028: 144.3 - 2029: 113.1 - 2030: 104.5 - 2031: 96.6 - 2032: 89.6 - Debt service-to-revenue ratio baseline (selected years): - 2022: 121.3 - 2023: 103.5 - 2024: 99.1 - 2025: 97.6 - 2026: 100.0 - 2027: 92.8 - 2028: 88.8 - 2029: 75.0 - 2030: ... (table continues) - Public debt (Table 6 baseline PV of debt-to-GDP ratio, selected years): - 2022: 67.9 percent - 2023: 63.3 percent - 2024: 59.1 percent - 2025: 53.6 percent - 2026: 48.3 percent - 2027: 43.5 percent - 2028: 40.1 percent - 2029: 37.3 percent - 2030: 35.8 percent - 2031: 34.6 percent - 2032: 33.0 percent - PV of Debt-to-Revenue Ratio (Table 6 baseline series, sample values): - 2022: 380.8 - 2023: 331.4 - 2024: 304.1 - 2025: 258.8 - 2026: 235.7 - 2027: 212.0 - 2028: 189.0 - 2029: 175.1 - 2030: 179.3 - 2031: 175.2 - 2032: 171.0 - Debt service-to-revenue ratio (Table 6 baseline series): - 2022: 121.3 - 2023: 103.5 - 2024: 99.1 - 2025: 97.6 - 2026: 100.0 - 2027: 92.8 - 2028: 82.9 - 2029: 78.5 - 2030: 77.9 - 2031: 84.7 - 2032: 88.8 ### Program performance (summary of authorities' statement) - Overall engagement: - Authorities appreciate candid engagement with staff and broadly share staff’s assessment. - Authorities seek Executive Directors’ support to complete the fifth review under the Extended Credit Facility (ECF) arrangement and financing assurances review, and request modifications and waivers related to a performance criterion and indicative targets. - Quantitative performance criteria (QPCs): - All QPCs at end-June 2022 were met. - Performance at end-September 2022 was mixed: - Continuous QPC on external arrears was temporarily breached due to delayed settlement of the national utility company debt service obligations resulting from elevated fuel prices and forex supply constraints. - The floor on net international reserves was missed due to central bank interventions to support imports of fuel and essential commodities. - Authorities constituted a committee to monitor the national utility company financial situation and design corrective measures. - Authorities are strengthening cash management and aligning quarterly spending plans with the treasury and borrowing plans with the NDB target. - New Public Finance Bill will require any additional spending to be matched with additional revenue or spending reallocations in a supplementary budget. - Indicative targets and structural benchmarks: - Three out of four end-June 2022 indicative targets were met; the floor on domestic tax revenue was missed due to lower collection of taxes on petroleum products. - All three end-June 2022 structural benchmarks were met; three out of five end-September 2022 structural benchmarks were met. - Publication of phase 2 audit report of COVID-19 spending was not completed, though submitted to the National Assembly as a prior action. - Signing of performance contracts between the Ministry of Finance and three additional SOEs (GPA, GNPC and SSHFC) delayed; negotiations expected to conclude by end-February 2023. ### Recent economic developments - Real GDP growth: - 2021: 4.3 percent - Projected 2022: 4.5 percent - Projected 2023: 6.0 percent - Medium-term average: 5 percent - Inflation: - Increased from 7.3 percent to 13.2 percent in October 2022 - Food inflation average: 15.3 percent - Inflation expected to remain high in 2022 and 2023 before stabilizing to 5 percent in the medium term - Current account and reserves: - Current account deficit in 2022 expected to worsen by 1 percent of GDP - Reserves declined from 7 months of import cover in 2021 to 4.6 months in 2022 ### Fiscal policy and debt sustainability actions by authorities - Fiscal framework: - 2023 fiscal framework anchored on an overall fiscal deficit of 2.7 percent of GDP - Authorities aim to achieve a consolidation of 2.2 percentage points relative to 2022 - Revenue mobilization measures: - Broadening the tax base to include hospitality, cable television, and real estate - Enhancing tax collection from expiring Special Investment Certificates (SIC) exemption holders - Increasing PIT from higher civil service salaries, airport concession fees, dividends from SOEs, and revenue buffers from fuel passthrough when global fuel prices decline - Completed Tax audit for five exempt entities holding SICs and plan to extend exercise to other entities - Expanding tax ledgers cleaning; accelerating digital transformation of tax system via ASYCUDA World and ITAS - Strengthening management of tax arrears; establishing an Internal Affairs Unit for assurance and integrity - Established a Revenue and Tax Policy Directorate at the Ministry of Finance to focus on tax policy formulation and strengthen revenue collection - SOE and expenditure management: - Working to improve compliance of SOEs to enhance PAYE and VAT collection - Mid-term performance review completed under the 2020-24 Corporate Strategic Plan (CSP) - Taxpayer Charter and Ledger Reconstruction and Maintenance (LRM) completed with large taxpayers; GamTaxNet updated to enhance revenue *Sources: Country authorities; and staff estimates and projections.* ### 12. To strengthen expenditure controls, the authorities have eliminated non-payroll-related ### 12. To strengthen expenditure controls, the authorities have eliminated non-payroll-related ### Expenditure control measures and public financial management - Eliminated non-payroll-related allowances of civil servants. - Reduced subsidies to SOEs. - Eliminated non-essential travels and trainings abroad. - Reduced per-diems. - Streamlined mobile phones and fuel allowance to eligible officials. - Reduced other allocations on goods and services. - Established a well-functioning monitoring committee to foster spending and investment efficiency. - Rolled out the Integrated Financial Management Information System (IFMIS) to all Local Government Authorities and to seven subvented agencies. - Plan to extend IFMIS to additional ten self-accounting projects. ### Public debt strategy and fiscal management - Authorities committed to placing public debt on a downward path and reducing the present value of total public debt below 55 percent of GDP by 2025. - Current stance: debt is sustainable but elevated and at a high risk of distress. - Financing approach: cautious borrowing plans, reliance mainly on grants and highly concessional loans to bridge the infrastructure gap. - Use of a medium-term fiscal framework to reduce debt. - Strengthening the public private partnership (PPP) legal framework to mitigate fiscal risks from PPP projects. - Ongoing actions: reconciling external debt data, recording of domestic debt in the Meridian system, and communicating with creditors. ### Monetary policy and inflation - Central Bank of The Gambia (CBG) has been mopping up liquidity to curtail monetary growth and rein in inflation. - External and domestic inflationary pressures include the war in Ukraine, the lean period typical of crop harvests, and depreciation of the dalasi. - Policy rate actions: increased in May 2022 and September 2022 from 10 percent to 12 percent to curb inflation. - CBG remains vigilant to price developments and stands ready to recalibrate the monetary stance to further contain inflation. - CBG implementing a clear and transparent communication strategy to help anchor inflation expectations. ### Exchange rate and foreign exchange market - Authorities operate under a free float exchange rate regime. - Due to a persistent imbalance in the forex market, CBG took steps since early October 2022 to address the wedge between its published exchange rate and the parallel market rate. - Measures included clarifying to banks and forex bureaus that they can transact officially at a market-based exchange rate while adjusting the basis of the published exchange rate, and rescinding a ban on forex account withdrawals. - Result: the exchange rate premium narrowed to 5-11 percent at end-October 2022 from 15-20 percent in mid-September 2022. - CBG committed to allow smooth functioning of the forex market. ### Financial sector soundness and supervision - Financial sector remains sound with ample liquidity. - Banking system resilient with strong private sector credit growth. - CBG actions: strengthen banking supervision, enhance financial deepening and inclusion, and implement safeguards recommendations. - Developed an in-house stress testing framework. - Strengthening Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) frameworks to enhance correspondent banking relationships and restore stability in the banking system. ### Structural reforms and development planning - Progress on Green Recovery-Focused National Development Plan (RF-NDP) and Long-Term Development Vision (LTDV) 2050. - Completed key stakeholder consultations across all 120 Wards and MDAs, and with civil society, including women, persons with disability, private sector, and development partners at the national level. - Completed the first draft of RF-NDP in October 2022. - Plan to complete drafting of LTDV by end-December 2022. - Private sector development measures: - Implementing reforms to improve business environment, increase competitiveness, foster economic growth, and job creation. - Deployed the business registration single window and integrating the electronic single window for business registration with government digitization. - Completed expansion of the Social Registry to include socio-economic information to help identify the most vulnerable population for targeted social support. ### Governance, anti-corruption, and human trafficking - Approved the public procurement Act through the National Assembly to improve the use of public resources. - Revising the PPP bill, screening MDAs’ new projects, and training pilot MDAs on monthly cash forecasting. - Extending performance contracts to three additional key SOEs to strengthen their financial positions. - Resubmitted the draft of the anti-corruption bill to the IMF for review and awaiting the IMF governance diagnostic mission. - Improvements in combatting human trafficking: - Strengthened the National Agency Against Trafficking in Persons. - Improved to Tier 2 in the 2022 U.S. Trafficking in Persons Report. ### Climate change policy and resilience - Developed policy actions in line with the goals of 1.5°C Paris climate agreement with supported target meeting the requirements of the Climate Action Tracker latest update. - Approved the Long-Term Climate-Neutral Development Strategy in September 2022, which could enable The Gambia to attain the net zero target in 2050. - Ongoing efforts to strengthen climate mitigation and adaptation and seek international financing to address droughts, floods, rising sea level, and coastal erosion. ### COVID-19 transparency and accountability - Continued adherence to transparency and accountability commitments on COVID-19 related spending. - COVID-19 spending reported in the monthly budget execution report. - In October 2022, the National Audit Office (NAO) completed and submitted to the National Assembly the report of the second phase of an ex-post audit of COVID-19-related spending, including cash payments to tourist workers, frontline workers, overseas students, media houses, and audit of quarantine centers. ### Conclusion and IMF engagement - Gambian authorities remain committed to reforms agreed under the ECF program despite challenging circumstances. - Fund support has been critical in stabilizing the economy and contributing to capacity development and effective policy implementation needed to sustain the recovery. - Authorities consider Fund support key to complement their reform agenda and realize national economic objectives as outlined in the National Development Plan. - Authorities look forward to continued technical support and policy advice. *Source: 1gmbea2022002 - IMF country document excerpt.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1gmbea2022002.pdf_