## 1gmbea2023001 - The Gambia: Economic and Policy Developments (excerpts)

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### Context and shocks
- Repercussions of the war in Ukraine and lingering impacts of the COVID-19 pandemic weighing on The Gambia’s socio-economic environment; inflation pressures persist and are intensifying.
- Severe foreign exchange shortages experienced in late 2022 have somewhat eased.
- This sixth review is the last review under the current Extended Credit Facility (ECF) arrangement; the authorities have requested a successor program drawing on the national development plan and lessons from the expiring program.
- Timber exports: banned due to political and security concerns at the borders.
- Authorities committed to meet zero emission targets by 2050.

### Recent economic developments (activity, inflation, tourism, remittances)
- Real GDP growth:
  - 4.3 (2021), 4.5 (2022 Prel.), 4.4 (2023 Prog. / estimated at 4.4 percent in 2022 in text).
- Headline inflation:
  - 7.4 (2021), 11.3 (2022), 11.5 (2023 Prel. in table); text reports headline inflation at 14.8 percent (y-o-y) in March 2023; elsewhere noted 17.4 percent in April 2023.
- CBG composite index of economic activity (CIEA) strengthened and marginally surpassed pre-pandemic level.
- Tourist arrivals: increased by 80 percent relative to 2021 but remained below pre-pandemic levels by 22 percent; another reference: increased by 83 percent relative to 2021.
- Workers’ remittances: US$544 million (2021) to US$507 million (2022).
- Contributors to inflation: elevated global food and fuel prices, recent increase in utility tariffs, and Dalasi depreciation.
- Dalasi depreciation: more than 10 percent against the US dollar between September 2022 and March 2023 (wedge with parallel market rate broadly closed since end-January 2023).

### Macroeconomic policy responses and outlook (fiscal, monetary, exchange rate, structural)
- Fiscal policy:
  - Remains anchored on the approved 2023 budget despite shocks; emphasis on bolstering domestic revenue mobilization and prioritizing investment projects given high debt vulnerabilities.
  - 2022 fiscal outturns showed a large payment float of 0.7 percent of GDP; clearance of arrears amounted to 0.2 percent of GDP.
  - Overall fiscal deficit: -4.6 (2021 Act.), -4.8 (2022 Prog.), -4.9 (2023 Prel.), with program target overall deficit unchanged at 2.7 percent of GDP for 2023 in policy guidance.
- Monetary policy:
  - Central Bank increased the policy rate for a fourth time since mid-2022 to 14 percent (February 2023); elsewhere reported MPC increased policy rate by 200 basis points to 16 percent in May 2023 (text variations).
  - Staff advises CBG to stand ready to tighten further, ensure real interest rate is firmly positive, and continue controlling liquidity (issuance of CBG bills, sterilization of forex interventions).
- Exchange rate and FX:
  - Measures to allow the exchange rate to reflect market forces helped ease foreign exchange shortages; CBG became a slight net buyer since January 2023 with cumulative net purchases of $6.1 million (purchases $10.4 million; sales $4.3 million over January-February 2023).
  - Gross forex reserves stabilized around US$450 million since end-December 2022; gross official reserves: 530.4 (2021), 424.6 (2022), 454.7 (2023 Prel.).
  - Months of next year's imports of goods and services: 7.1 (2021), 4.8 (2022), 5.1 (2023 Prel.), projected 4.4 (2024 Prog.), projected 3.6 (2028).
- Structural reforms:
  - Renewed momentum: GPPA procurement act signed; SOE bill approved by National Assembly (March 2023); PFM act approved by Cabinet (March 2023) and to be submitted to National Assembly.
  - Performance contracts signed with three additional SOEs in February 2023; plan to extend performance contracts to all SOEs by end-2024.
  - Anticorruption bill expected to be approved during May-June session; recommended to adopt anti-corruption bill, implement IMF governance diagnostic recommendations, and improve financial inclusion and business environment.
- Climate and energy projects:
  - Published a US$4 billion Long-Term Climate-Neutral Development Strategy aiming for net zero by 2050.
  - Launched a US$27 million project for a 23-megawatts solar plant and an eight megawatts energy storage system (February 2023).

### Program performance and IMF staff assessment
- Program performance: broadly satisfactory.
  - Five out of six quantitative performance criteria and three out of four indicative targets at end-December 2022 were met.
  - Continuous QPC on external arrears was temporarily breached; delayed payments to ITFC (~0.2 percent of GDP) were subsequently paid in full.
  - Structural benchmarks: two met, one completed after the deadline.
- Staff recommendation: completion of the sixth ECF review and support for the authorities’ request for a waiver of nonobservance of a performance criterion given corrective measures.

### Key fiscal and debt metrics (selected, percent of GDP unless indicated)
- Domestic revenue (taxes and other revenues): 14.3 (2021), 11.9 (2022), 12.0 (2023 Prel.), 12.5 (2024 Prog.), projections through 2028 rising to 14.8.
  - Tax Revenue: 10.3 (2021), 9.3 (2022), 9.2 (2023 Prel.), projected 11.9 (2028).
- Grants: 2.5 (2021), 5.9 (2022), 5.6 (2023 Prel.), projected to decline to 4.8 (2028).
- Total expenditures: 21.4 (2021), 22.7 (2022), 22.5 (2023 Prel.), projected around 20.0 (2028).
- Net lending (+)/borrowing (–): -4.6 (2021), -4.8 (2022), -4.9 (2023 Prel.), projected -0.4 (2028).
- Primary balance: -1.6 (2021), -2.3 (2022), -2.7 (2023 Prel.), turning positive 1.0 (2026) and 1.2 (2028).
- Public debt: 83.5 (2021), 80.8 (2022), 83.9 (2023 Prel.), projected 51.7 (2028).
  - Domestic public debt: 35.1 (2021), 32.4 (2022), 32.2 (2023 Prel.), projected 19.7 (2028).
  - External public debt: 48.4 (2021), 48.4 (2022), 51.8 (2023 Prel.), projected 32.0 (2028).
  - External public debt (millions of US$): 965.9 (2021), 1003.7 (2022), 1029.3 (2023 Prel.), subsequent annual entries include 1,032.2; 1,052.1; 1,047.1; 1,036.3; 1,036.3; 1,039.0.
- PV of overall debt-to-GDP ratio: 70.8 (2021), 67.9 (2022), 69.8 (2023 Prel.), projected 41.1 (2028).
- Text Table 1 (selected 2022 fiscal figures, percent of GDP):
  - Revenue: 16.8 (Act.), 17.8 (Prog.), 17.6 (Prel.)
  - Domestic revenue: 14.3 (Act.), 11.9 (Prog.), 12.0 (Prel.)
  - Grants: 2.5 (Act.), 5.9 (Prog.), 5.6 (Prel.)
  - Expenditures: 21.4 (Act.), 22.7 (Prog.), 22.5 (Prel.)
  - Net lending (+)/borrowing (–): -4.6 (Act.), -4.8 (Prog.), -4.9 (Prel.)

### External sector and reserves (trade, current account, reserves)
- Exports, f.o.b (US$ values, percent change): 6.2 (2021), -38.3 (2022), -38.6 (2023 Prel.), 151.1 (2024 Prog.), subsequent projections 151.2, 27.4, 6.9, 5.7, 5.7, 5.8.
- Imports, f.o.b (US$ values, percent change): 6.9 (2021), 26.2 (2022), 22.9 (2023 Prel.), 18.3 (2024 Prog.), subsequent projections 21.4, 10.1, 6.1, 3.4, 5.4, 4.7.
- External current account balance excluding official transfers: -0.5 (2021), -16.8 (2022), -7.9 (2023 Prel.), projected -8.1 (2028).
- External current account balance including official transfers: -0.1 (2021), -14.7 (2022), -6.0 (2023 Prel.), projected -7.5 (2028).
- Gross official reserves (millions of US$): 530.4 (2021), 424.6 (2022), 454.7 (2023 Prel.), 416.4 (2024 Prog.), 471.5 (2025), and through 2028: 458.1.
  - Months of next year's imports of goods and services: 7.1 (2021), 4.8 (2022), 5.1 (2023 Prel.), 4.4 (2024 Prog.), projected 3.6 (2028).
- Balance of payments (selected levels, US$ millions):
  - Goods and services (aggregate): -535.7 -745.7 -656.4 -754.2 -754.9 -738.2 -778.3 -793.9 -832.8 -864.4 (levels for multi-year series).
  - Travel income (levels): 58.0 71.5 135.0 130.0 130.0 208.1 222.9 238.6 255.3 273.2.
- Trade flows (US$ millions): Exports of goods and services: 186.7 166.9 235.0 308.3 307.6 426.2 456.5 485.4 516.2 549.2; Imports of goods and services: -722.4 -912.6 -891.4 -1062.5 -1062.5 -1164.5 -1234.7 -1279.3 -1349.0 -1413.6.

### Monetary and financial indicators
- Broad money (contributions to growth; percent): 19.5 (2021), 4.0 (2022), 7.1 (2023 Prel.), projected 6.9 (2028).
- Net foreign assets (contribution): 8.8 (2021), -10.7 (2022), -4.5 (2023 Prel.), projected 0.6 (2028).
- Net domestic assets (contribution): 10.7 (2021), 14.7 (2022), 11.6 (2023 Prel.), projected 6.3 (2028).
- Credit to central government (net): 9.3 (2021), 5.5 (2022), 7.5 (2023 Prel.), projected 0.0 (2028).
- Credit to the private sector (net): 3.1 (2021), 6.0 (2022), 3.8 (2023 Prel.), projected 6.3 (2028).
- Banking system indicators at end-December 2022:
  - Capital adequacy ratio: 24.8 percent.
  - Liquidity ratio: 63.7 percent.
  - NPL ratio: 4.6 percent.
  - Bank excess reserves: fell from 14.2 percent of reserve money at end-2021 to 4.8 percent at end-2022.
- Private sector credit growth: 25 percent in 2022 (20.7 percent in 2021); sectoral distribution in 2022: Building and construction 21 percent; Commerce 16 percent (another table cites trade and tourism 18.1 percent); Agriculture 13 percent (13.1 percent in another table).
- Financial inclusion targets: NFIS aims to provide access to the formal financial system for 70 percent of the adult population by 2025.
- Aggregate data of six micro-finance companies: NPLs rose from 7 percent in December 2021 to 11 percent in December 2022.

### Outlook, risks, and policy priorities (baseline and downside highlights)
- Baseline projections (selected):
  - Real GDP growth: 4.4 (2022 Prel.), 5.6 (2023 Baseline), 6.3 (2024), 5.8 (2025), 5.0 (2026), 5.0 (2027), 5.0 (2028).
  - Consumer price inflation (average): 11.5 (2022), 12.8 (2023), 9.4 (2024), 6.1 (2025), 5.0 (2026–2028).
  - Tax revenue (percent of GDP): 9.2 (2022), 9.5 (2023), 10.0 (2024), 10.7 (2025), 11.2 (2026), 11.6 (2027), 11.9 (2028).
  - Primary balance: -2.7 (2022), -0.6 (2023), 1.0 (2024), 1.6 (2025), 1.7 (2026), 1.2 (2027), 1.2 (2028).
  - PV of public debt: 69.8 (2022), 60.4 (2023), 57.6 (2024), 53.7 (2025), 49.6 (2026), 45.3 (2027), 41.1 (2028).
  - Gross official reserves (months of prospective imports): 5.1 (2022), 4.5 (2023), 4.2 (2024), 4.0 (2025), 3.6 (2026), 3.5 (2027), 3.2 (2028).
- Downside scenario (selected):
  - Real GDP growth: 4.4 (2023 Downside), 4.4 (2024), 5.6 (2025), 5.3 (2026), 5.0 (2027–2028).
  - Consumer price inflation (average): 13.6 (2023), 10.0 (2024), 6.3 (2025), 5.0 (2026–2028).
  - Tax revenue: 8.8 (2023), 9.3 (2024), 10.1 (2025), 10.8 (2026), 11.3 (2027), 11.7 (2028).
  - Primary balance: -1.7 (2023), 0.1 (2024), 0.9 (2025), 1.1 (2026), 0.9 (2027), 1.1 (2028).
  - PV of public debt: 61.9 (2023), 59.9 (2024), 56.7 (2025), 53.1 (2026), 49.0 (2027), 45.0 (2028).
  - Gross official reserves (months): 4.9 (2022 Prel.), 4.1 (2023), 3.8 (2024), 3.6 (2025), 3.3 (2026), 3.1 (2027), 2.9 (2028).
- Key downside risks:
  - Protracted war in Ukraine jeopardizing tourist arrivals and intensifying inflationary pressures.
  - Rising global interest rates exerting depreciation pressures on the dalasi.
  - Remittances reverting to pre-Covid historical levels as pandemic effects ease and source-country real incomes are eroded by high inflation.
  - Domestic risks: persistent high inflation triggering wage demands, increased socio-political tensions, fiscal pressures.
  - Natural disasters damaging infrastructure and livelihoods.

### Policy priorities and recommendations (selected, exact phrasing preserved where numeric)
- Fiscal:
  - Continue to bolster domestic revenue mobilization and prioritize investment projects.
  - Strengthen fiscal and external buffers by containing domestic borrowing and focusing on grants and highly concessional loans.
  - Implement a strong medium-term fiscal framework to keep public debt on a downward path as the debt rescheduling period expires.
  - Strengthen social safety nets.
  - Utilize unused 2022 domestic borrowing space (~GMD 800 million or about 0.6 percent of 2023 GDP) to clear end-2022 payment floats while keeping debt reduction path broadly unchanged.
  - Relaunch MegaBank privatization to generate potential proceeds for easing 2023 financing pressures.
- Monetary and exchange rate:
  - Central Bank: continue to use policy toolkit to fight inflation, ensure exchange rate reflects market forces, and tighten further if inflation pressures persist.
  - Ensure real interest rate is firmly positive; continue controlling liquidity via issuance of CBG bills and sterilization for forex interventions.
- Financial sector and structural:
  - Deepen and strengthen the financial sector; enhance oversight of NBFIs and microfinance companies; repeat bank stress testing periodically.
  - Maintain renewed reform momentum: prepare and enforce regulations of newly approved laws, adopt the anti-corruption bill, implement IMF governance diagnostic recommendations, improve financial inclusion and the business environment to support private sector-led growth and poverty reduction.
  - Enhance transparency and oversight of SOEs; expand performance contracts and create SOE commission following SOE bill.
- Debt management:
  - Focus on grants and highly concessional loans; strictly adhere to agreed external borrowing plan and ensure SOEs and PPPs do not create fiscal risks or contingent liabilities.
  - Build strong external buffers in preparation for upcoming expiration of debt deferrals.

### Debt sustainability and external financing (DSA highlights)
- Risk of external debt distress: High.
- Overall risk of debt distress: High.
- Public debt: total public debt to GDP ~84 percent as of end-2022.
- Composition of PPG external debt (2022): around 68 percent owed to multilateral creditors; bilateral creditors: 29 percent; commercial creditors: 3 percent.
- Cumulative overall external debt service between 2022-2029: US$652 million (Amortization: $562 million; Interest: $90 million).
- Undisbursed loans: US$250 million in December 2022.
- DSA baseline findings:
  - PV of external debt-to-exports breaches the threshold level of 180 in 2023, then falls below and declines thereafter.
  - Debt-service-to-exports ratio breaches threshold level of 15 in 2023 and again between 2025-28.
  - PV of overall debt-to-GDP ratio remains on a downward path and drops below its benchmark of 55 percent of GDP by 2025 under baseline.
- Stress tests:
  - Combined contingent liabilities test assumes a shock of 7.0 percent of GDP.
  - Under stress, PV of debt-to-GDP breaches 40 in 2024 and falls below in 2027; PV of debt-to-exports and debt-service ratios remain under pressure in several years.
- Financing assurances:
  - Program is fully financed with firm commitments in place for the remainder of the program period; final disbursement following completion of the 6th ECF program review will be on-lent to the government.
- Capacity to repay:
  - The Gambia’s outstanding credit to the IMF and total Fund obligations are significantly higher than the PRGT comparator group under most key metrics; repayments to the Fund will peak at 4.9 percent of government revenues and 25.8 percent of total debt service in 2028 and 2029, respectively.

### Reporting, monitoring, and capacity development (selected operational requirements)
- TMU and reporting:
  - Net Domestic Borrowing (NDB) reporting and definitions specified; supporting material and weekly/monthly reporting timelines established for government accounts, reserve changes, CBG balance sheet, treasury bill market data, and SOE cash flow statements.
  - Program monitoring conversion rates (end-October 2020) for net domestic assets calculations: 51.84 GMD/USD; 1.17 USD/EUR; 1.30 USD/GBP; 0.92 CHF/USD; 1.41 USD/SDR; 104.58 JPY/USD.
- Data and capacity:
  - Need to accelerate implementation of capacity development recommendations across governance diagnostic, revenue administration, PFM, central banking, AML/CFT, financial sector, and macroeconomic statistics.
  - Authorities benefit from resident advisors at GRA and CBG.
- Institutional reporting deadlines (selection):
  - Weekly: T-bills auction data, project accounts data, international reserves and NFA & NDA — 7 days after week-end.
  - Monthly: Commercial banks' balance sheets, CBG balance sheet, consolidated Central Gov. budget execution, CPI — 30 days after month-end.
  - Quarterly: Balance of payments — 30 days after quarter-end; GDP — 90 days after year-end.
- MoFEA to forward within eight weeks of the end of each quarter data on the stock of consolidated Central Government’s payment arrears to NAWEC at the end of each month.

*Sources: The Gambian authorities; and IMF staff estimates and projections. May 25, 2023.*

### 7.9 million.

### 1gmbea2023001 - 7.9 million.

### Context and shocks
- The repercussions of the war in Ukraine and the lingering impacts of the COVID-19 pandemic are weighing on The Gambia’s socio-economic environment; inflation pressures persist and are intensifying.
- The severe foreign exchange shortages experienced in late 2022 have somewhat eased.
- This sixth review is the last review under the current Extended Credit Facility (ECF) arrangement; the authorities have requested a successor program drawing on the national development plan and lessons from the expiring program.

### Recent economic developments
- Real GDP growth: 4.3 (2021), 4.5 (2022 Prel.), 4.4 (2023 Prog. / estimated at 4.4 percent in 2022 in text).
- Headline inflation: 7.4 (2021), 11.3 (2022), 11.5 (2023 Prel. in table); text reports headline inflation at 14.8 percent (y-o-y) in March 2023.
- CBG composite index of economic activity (CIEA) strengthened and marginally surpassed pre-pandemic level.
- Tourist arrivals: increased by 80 percent relative to 2021 but remained below pre-pandemic levels by 22 percent.
- Workers’ remittances: US$544 million (2021) to US$507 million (2022).
- Timber exports: banned due to political and security concerns at the borders.
- Contributors to inflation: elevated global food and fuel prices, recent increase in utility tariffs, and Dalasi depreciation.

### Macroeconomic policy responses and outlook
- Fiscal policy: remains anchored on the approved 2023 budget despite shocks; emphasis on bolstering domestic revenue mobilization and prioritizing investment projects given high debt vulnerabilities.
- Monetary policy: Central Bank increased the policy rate for a fourth time since mid-2022 to 14 percent and is encouraged to make full use of its policy toolkit to fight inflation and ensure the exchange rate reflects market forces.
- Exchange rate and FX: measures to allow the exchange rate to reflect market forces helped ease foreign exchange shortages; authorities to continue ensuring exchange rate reflects market developments to prevent resurgence of shortages.
- Structural reforms: renewed momentum—approval of the PFM act by Cabinet and SOE bill by the National Assembly; encouraged to prepare and enforce regulations, adopt the anti-corruption bill, implement IMF governance diagnostic recommendations, and improve financial inclusion and business environment.
- Authorities committed to meet zero emission targets by 2050.

### Program performance and IMF staff assessment
- Program performance: broadly satisfactory. Five out of six quantitative performance criteria and three out of four indicative targets at end-December 2022 were met.
- Continuous QPC on external arrears was temporarily breached; authorities have taken strong corrective measures.
- Structural benchmarks: two met, one completed after the deadline.
- Staff recommendation: completion of the sixth ECF review and support for the authorities’ request for a waiver of nonobservance of a performance criterion given corrective measures.

### Key fiscal and debt metrics (selected, percent of GDP unless indicated)
- Domestic revenue (taxes and other revenues): 14.3 (2021), 11.9 (2022), 12.0 (2023 Prel.), 12.5 (2024 Prog.), projections through 2028 rising to 14.8.
  - Tax Revenue: 10.3 (2021), 9.3 (2022), 9.2 (2023 Prel.), projected 11.9 (2028).
- Grants: 2.5 (2021), 5.9 (2022), 5.6 (2023 Prel.), projected to decline to 4.8 (2028).
- Total expenditures: 21.4 (2021), 22.7 (2022), 22.5 (2023 Prel.), projected around 20.0 (2028).
- Net lending (+)/borrowing (–): -4.6 (2021), -4.8 (2022), -4.9 (2023 Prel.), projected -0.4 (2028).
- Primary balance: -1.6 (2021), -2.3 (2022), -2.7 (2023 Prel.), turning positive 1.0 (2026) and 1.2 (2028).
- Public debt: 83.5 (2021), 80.8 (2022), 83.9 (2023 Prel.), projected 51.7 (2028).
  - Domestic public debt: 35.1 (2021), 32.4 (2022), 32.2 (2023 Prel.), projected 19.7 (2028).
  - External public debt: 48.4 (2021), 48.4 (2022), 51.8 (2023 Prel.), projected 32.0 (2028).
  - External public debt (millions of US$): 965.9 (2021), 1003.7 (2022), 1029.3 (2023 Prel.), subsequent annual entries include 1,032.2; 1,052.1; 1,047.1; 1,036.3; 1,036.3; 1,039.0 (as listed).
- PV of overall debt-to-GDP ratio: 70.8 (2021), 67.9 (2022), 69.8 (2023 Prel.), projected 41.1 (2028).

### External sector and reserves
- Exports, f.o.b (US$ values, percent change): 6.2 (2021), -38.3 (2022), -38.6 (2023 Prel.), 151.1 (2024 Prog.), subsequent projections 151.2, 27.4, 6.9, 5.7, 5.7, 5.8.
- Imports, f.o.b (US$ values, percent change): 6.9 (2021), 26.2 (2022), 22.9 (2023 Prel.), 18.3 (2024 Prog.), subsequent projections 21.4, 10.1, 6.1, 3.4, 5.4, 4.7.
- External current account balance excluding official transfers: -0.5 (2021), -16.8 (2022), -7.9 (2023 Prel.), projected -8.1 (2028).
- External current account balance including official transfers: -0.1 (2021), -14.7 (2022), -6.0 (2023 Prel.), projected -7.5 (2028).
- Gross official reserves (millions of US$): 530.4 (2021), 424.6 (2022), 454.7 (2023 Prel.), 416.4 (2024 Prog.), 471.5 (2025), and through 2028: 458.1.
  - Months of next year's imports of goods and services: 7.1 (2021), 4.8 (2022), 5.1 (2023 Prel.), 4.4 (2024 Prog.), projected 3.6 (2028).

### Monetary and financial indicators
- Broad money (contributions to growth; percent): 19.5 (2021), 4.0 (2022), 7.1 (2023 Prel.), projected 6.9 (2028).
- Net foreign assets (contribution): 8.8 (2021), -10.7 (2022), -4.5 (2023 Prel.), projected 0.6 (2028).
- Net domestic assets (contribution): 10.7 (2021), 14.7 (2022), 11.6 (2023 Prel.), projected 6.3 (2028).
- Credit to central government (net): 9.3 (2021), 5.5 (2022), 7.5 (2023 Prel.), projected 0.0 (2028).
- Credit to the private sector (net): 3.1 (2021), 6.0 (2022), 3.8 (2023 Prel.), projected 6.3 (2028).

### Outlook, risks, and policy priorities
- Outlook: Risks are tilted to the downside given uncertain external environment and continued repercussions of the war in Ukraine.
- Policy priorities and recommendations:
  - Continue to bolster domestic revenue mobilization and prioritize investment projects.
  - Strengthen fiscal and external buffers by containing domestic borrowing and focusing on grants and highly concessional loans.
  - Implement a strong medium-term fiscal framework to keep public debt on a downward path as the debt rescheduling period expires.
  - Strengthen social safety nets.
  - Central Bank: continue to use policy toolkit to fight inflation, ensure exchange rate reflects market forces, and tighten further if inflation pressures persist.
  - Deepen and strengthen the financial sector.
  - Maintain renewed reform momentum: prepare and enforce regulations of newly approved laws, adopt the anti-corruption bill, implement IMF governance diagnostic recommendations, and improve financial inclusion and the business environment to support private sector-led growth and poverty reduction.

*Sources: The Gambian authorities; and IMF staff estimates and projections. May 25, 2023.*

### 0.7 percent of GDP. However, the fiscal

### The Gambia: Economic and Policy Developments (excerpts)

### Fiscal Performance and Public Debt (2022–2023)
- Fiscal outturns showed a large payment float of 0.7 percent of GDP.
- Text Table 1 (selected 2022 fiscal figures, percent of GDP):
  - Revenue: 16.8 (Act.), 17.8 (Prog.), 17.6 (Prel.)
  - Domestic revenue: 14.3 (Act.), 11.9 (Prog.), 12.0 (Prel.)
    - Taxes: 10.3 (Act.), 9.3 (Prog.), 9.2 (Prel.)
    - Non-tax: 4.0 (Act.), 2.6 (Prog.), 2.8 (Prel.)
  - Grants: 2.5 (Act.), 5.9 (Prog.), 5.6 (Prel.)
    - Budget support: 0.7 (Act.), 2.1 (Prog.), 1.9 (Prel.)
    - Project grants: 1.8 (Act.), 3.8 (Prog.), 3.7 (Prel.)
  - Expenditures: 21.4 (Act.), 22.7 (Prog.), 22.5 (Prel.)
    - Expenses: 15.2 (Act.), 13.8 (Prog.), 14.1 (Prel.)
    - Compensation of employees: 4.4 (Act.), 4.6 (Prog.), 4.7 (Prel.)
    - Use of goods and services: 3.8 (Act.), 2.8 (Prog.), 3.4 (Prel.)
    - Interest: 3.0 (Act.), 2.6 (Prog.), 2.2 (Prel.)
    - Subsidies and transfers: 4.0 (Act.), 3.8 (Prog.), 3.9 (Prel.)
    - Net acquisition of nonfinancial assets: 6.2 (Act.), 8.9 (Prog.), 8.4 (Prel.)
      - Foreign financed: 3.2 (Act.), 6.5 (Prog.), 6.5 (Prel.)
      - Gambia local fund: 3.0 (Act.), 2.4 (Prog.), 1.9 (Prel.)
  - Net lending (+)/borrowing (–): -4.6 (Act.), -4.8 (Prog.), -4.9 (Prel.)
  - Financing: 4.7 (Act.), 4.8 (Prog.), 4.8 (Prel.)
    - Net acquisition of financial assets: -0.2 (Act.), 0.8 (Prog.), 0.0 (Prel.)
    - Net incurrence of liabilities: 4.9 (Act.), 4.0 (Prog.), 4.8 (Prel.)
      - Domestic: 4.3 (Act.), 2.9 (Prog.), 3.2 (Prel.)
      - Net borrowing: 2.6 (Act.), 1.4 (Prog.), 0.7 (Prel.)
      - RCF/ECF (Onlent): 2.1 (Act.), 2.0 (Prog.), 2.0 (Prel.)
      - Foreign: 0.5 (Act.), 1.1 (Prog.), 1.6 (Prel.)
    - Change in arrears/Float1/: -0.3 (Act.), -0.4 (Prog.), 0.5 (Prel.)
    - Statistical discrepancy: -0.1 (Act.), 0.0 (Prog.), 0.1 (Prel.)
  - Memorandum items:
    - Primary balance: -1.6 (Act.), -2.3 (Prog.), -2.7 (Prel.)
    - Domestic primary balance: -0.2 (Act.), -1.7 (Prog.), -1.8 (Prel.)
- In 2022, clearance of arrears amounted to 0.2 percent of GDP while payment floats reached 0.7 percent of GDP.
- Privatization: MegaBank privatization not finalized; expected budget resources delayed due to installment payment proposal.
- Public debt: broadly unchanged from end-2021 to end-2022, at around 84 percent of GDP.

### Monetary Policy, Inflation, and Exchange Rate Developments
- Central bank policy changes:
  - CBG increased the policy rate by a total of 4 percentage points since May 2022, reaching 14 percent at its February 2023 meeting.
- Monetary aggregates (2022):
  - Broad money growth: 7 percent (2022) versus 19.5 percent (2021).
  - Reserve money contracted by around 1 percent.
  - Bank reserves contracted by around 16 percent.
- Exchange rate and FX reserves:
  - Dalasi depreciated against the US dollar by more than 10 percent between September 2022 and March 2023.
  - Wedge with parallel market rate broadly closed since end-January 2023.
  - CBG reduced forex sales in December 2022 and became a slight net buyer since January 2023.
  - Gross forex reserves stabilized at around US$450 million since end-December 2022 and were at 4.8 months of prospective imports at end-March 2023.
- Policy guidance:
  - Staff advises the central bank to stand ready to tighten further, ensure real interest rate is firmly positive, and continue controlling liquidity (issuance of CBG bills, sterilization of forex interventions).

### Financial Sector and Banking System
- Private sector credit growth: 25 percent in 2022 (20.7 percent in 2021).
- Banking system indicators at end-December 2022:
  - Capital adequacy ratio: 24.8 percent.
  - Liquidity ratio: 63.7 percent.
  - NPL ratio: 4.6 percent.
  - Bank excess reserves: fell from 14.2 percent of reserve money at end-2021 to 4.8 percent at end-2022.
- Sectoral distribution of private credit in 2022:
  - Building and construction: 21 percent.
  - Commerce: 16 percent.
  - Agriculture: 13 percent.
- Measures on NAWEC:
  - Electricity tariffs increased by about 30 percent in March-April 2023.
  - Rollout of prepaid meters and a task force to monitor NAWEC operational and financial situation.

### Structural Reforms and Program Performance
- Recent reform progress:
  - GPPA procurement act signed; regulations being finalized.
  - Performance contracts signed with three additional SOEs in February 2023.
  - SOE bill approved by National Assembly in March 2023.
  - Anticorruption bill expected to be approved during May-June session.
  - PFM act approved by Cabinet and to be submitted to National Assembly.
- Program performance (end-December 2022):
  - Five out of six quantitative performance criteria (QPCs) met.
  - Ceiling on net domestic borrowing met with a margin of 0.7 percent of GDP.
  - Continuous QPC on external payment arrears temporarily breached; delayed payments to ITFC (~0.2 percent of GDP) were subsequently paid in full.
  - Three out of four indicative targets met; IT on net domestic assets of the central bank missed.
  - Two out of three structural benchmarks for end-February 2023 met; the third completed after the deadline.
  - Authorities requested a waiver for non-observance of a performance criterion; staff supports the waiver given the minor and temporary nature of the breach and corrective measures taken.

### Outlook and Risks (Baseline and Downside)
- Baseline projections (selected):
  - Real GDP growth: 4.4 (2022 Prel.), 5.6 (2023 Baseline), 6.3 (2024), 5.8 (2025), 5.0 (2026), 5.0 (2027), 5.0 (2028).
  - Consumer price inflation (average): 11.5 (2022), 12.8 (2023), 9.4 (2024), 6.1 (2025), 5.0 (2026–2028).
  - Tax revenue (percent of GDP): 9.2 (2022), 9.5 (2023), 10.0 (2024), 10.7 (2025), 11.2 (2026), 11.6 (2027), 11.9 (2028).
  - Primary balance: -2.7 (2022), -0.6 (2023), 1.0 (2024), 1.6 (2025), 1.7 (2026), 1.2 (2027), 1.2 (2028).
  - Domestic primary balance: -1.8 (2022), -0.2 (2023), 1.3 (2024), 2.5 (2025), 2.9 (2026), 2.8 (2027), 2.9 (2028).
  - Current account balance: -5.9 (2022), -13.7 (2023), -10.5 (2024), -11.1 (2025), -10.2 (2026), -9.6 (2027), -9.1 (2028).
  - PV of public debt: 69.8 (2022), 60.4 (2023), 57.6 (2024), 53.7 (2025), 49.6 (2026), 45.3 (2027), 41.1 (2028).
  - Gross official reserves (months of prospective imports): 5.1 (2022), 4.5 (2023), 4.2 (2024), 4.0 (2025), 3.6 (2026), 3.5 (2027), 3.2 (2028).
- Downside scenario (selected):
  - Real GDP growth: 4.4 (2023 Downside), 4.4 (2024), 5.6 (2025), 5.3 (2026), 5.0 (2027–2028).
  - Consumer price inflation (average): 13.6 (2023), 10.0 (2024), 6.3 (2025), 5.0 (2026–2028).
  - Tax revenue: 8.8 (2023), 9.3 (2024), 10.1 (2025), 10.8 (2026), 11.3 (2027), 11.7 (2028).
  - Primary balance: -1.7 (2023), 0.1 (2024), 0.9 (2025), 1.1 (2026), 0.9 (2027), 1.1 (2028).
  - Current account balance: -15.8 (2023), -12.6 (2024), -13.0 (2025), -12.1 (2026), -11.5 (2027), -11.0 (2028).
  - PV of public debt: 61.9 (2023), 59.9 (2024), 56.7 (2025), 53.1 (2026), 49.0 (2027), 45.0 (2028).
  - Gross official reserves (months): 4.9 (2022 Prel.), 4.1 (2023), 3.8 (2024), 3.6 (2025), 3.3 (2026), 3.1 (2027), 2.9 (2028).
- Key downside risks highlighted:
  - Protracted war in Ukraine jeopardizing tourist arrivals and intensifying inflationary pressures.
  - Rising global interest rates exerting depreciation pressures on the dalasi.
  - Remittances reverting to pre-Covid historical levels as pandemic effects ease and source-country real incomes are eroded by high inflation.
  - Domestic risks: persistent high inflation triggering wage demands, increased socio-political tensions, fiscal pressures.
  - Natural disasters damaging infrastructure and livelihoods.

### Policy Priorities and Recommendations
- Fiscal policy:
  - Anchor 2023 fiscal framework on adopted 2023 budget: overall fiscal deficit target unchanged at 2.7 percent of GDP.
  - Measures to boost revenue collection, including adjustment of domestic pump prices; at end-April 2023, revenue from petroleum products were about 40 percent of the annual target.
  - Strengthen targeted social safety nets to offset fuel price increases.
  - Contain allowances to keep personnel expenses within approved wage envelope, reprioritize spending, and strengthen cash management.
  - Utilize unused 2022 domestic borrowing space (~GMD 800 million or about 0.6 percent of 2023 GDP) to clear end-2022 payment floats while keeping debt reduction path broadly unchanged.
  - Relaunch MegaBank privatization to generate potential proceeds for easing 2023 financing pressures.
  - Swift implementation of revenue administration reforms: tax registry cleansing, large taxpayers' ledgers, Asycuda World, GAMTAXNET rollout, Internal Affairs Unit functionality, stricter collection of withholding taxes and rental incomes, accelerate ITAS implementation, enforce GIEPA regulations, adjustment to IVAT Act 2012 to ringfence against profit shifting, enhance data matching and audits.
- Debt management:
  - Focus on grants and highly concessional loans.
  - Implement a strong medium-term fiscal framework, bolster domestic revenue mobilization, execute previous revenue-related commitments.
  - Strictly adhere to agreed external borrowing plan and ensure SOEs and PPPs do not create fiscal risks or contingent liabilities.
  - Build strong external buffers in preparation for upcoming expiration of debt deferrals.
- Monetary and exchange rate policy:
  - Stand ready to tighten policy further if inflationary pressures persist.
  - Ensure real interest rate is firmly positive.
  - Continue controlling liquidity via issuance of CBG bills and sterilization for forex interventions to anchor inflation expectations.

*Sources: The Gambian authorities; and IMF staff estimates and projections.*

### 17.      The central bank should pursue

### 17.      The central bank should pursue

### Exchange rate policy and foreign exchange market
- The CBG intends to maintain an exchange rate policy that ensures equilibrium between supply and demand on the foreign exchange market.
- The reference rate will be computed and communicated daily based on actual transactions in the FX market.
- CBG interventions should be limited to smoothing excessive market volatility and addressing disorderly market conditions.
- The CBG should continue improving its communication strategy, clarifying exchange rate policy to market participants through formal letters to avoid miscommunications and self-fulfilling loss of market trust.
- To prevent resurgence of forex pressures given the ban on timber exports and the end of the tourism season, discussions are underway to resolve disruptions of cashew exports and improve trade between The Gambia and other ECOWAS countries.
- Text Figure 5: GMD/USD exchange rate series referenced for 2018–2023 (figure shows monthly points from 2018M12 through 2023M3).

### Monetary policy and inflation
- The CBG increased its policy rate for a fourth time since mid-2022, to 14 percent in February 2023.
- If inflationary pressures persist, the CBG should tighten further the monetary policy stance.
- Forex shortages experienced in 2022 have eased; the central bank has become a slight net buyer on the foreign exchange market since early 2023.
- Forex reserves stood at 4.8 months of prospective imports in March 2023.
- The CBG should take all necessary measures to ensure that the exchange rate reflects market forces and fundamentals and to prevent recurrence of forex shortages (risks linked to end of tourism season and timber export ban).

### Financial deepening and financial sector oversight
- Authorities implementing the National Financial Inclusion Strategy (NFIS) aim to provide access to the formal financial system for 70 percent of the adult population by 2025, including the most vulnerable groups, women, and youth.
- Steps taken include:
  - Gauging access to digital financial services through mobile money operators.
  - Approving Islamic microfinance guidelines to bridge religious barriers to financial access.
  - Training women organizations on financial services.
- The CBG should enhance oversight of the non-bank financial sector, especially microfinance companies (MFCs).
- Following the 2022 banking system stress testing exercise, the CBG should remain vigilant and repeat the exercise periodically to account for adverse developments (growth slowdown, rising domestic inflation and interest rates, declining households’ real income).
- The CBG should encourage banks and NBFIs to continually report debtor information to the credit reference bureau (CRB) and consistently use the CRB in credit decisions.
- There is a need to enhance knowledge of IFRS by CBG supervisors and banks.
- The CBG’s protection against cybersecurity should be upgraded due to recent attacks exposing critical weaknesses.
- Aggregate data of the six micro-finance companies indicate non-performing loans rose from 7 percent in December 2021 to 11 percent in December 2022.

### SOEs, public financial management, governance, and structural reforms
- Following adoption of the SOE bill, an SOE commission will be created to strengthen governance and oversight of SOEs.
- Authorities plan to extend use of performance contracts to three more SOEs by end-2023 and roll them out to all SOEs by end-2024.
- Important to enhance transparency of SOEs’ financial and non-financial information, including publication of relevant documents.
- The anti-corruption bill (at consideration stage at the National Assembly) will revamp the assets declaration framework and pave the way for establishing an anticorruption commission.
- Expand use of the investment selection tool under The Gambia Strategic Review Board (GSRB) to domestically financed investment projects, including PPP candidate projects, and enhance reporting on all PPP commitments.
- The PFM act should be swiftly approved; accelerate implementation of program-based budgeting and gender budgeting to strengthen governance, boost transparency of public financial management, enhance efficiency of public spending, and reduce corruption risks.

### Governance, AML/CFT, and public sector reforms
- Stage two COVID-19 audit report submitted to the National Assembly; discussions expected in May-June 2023 to enable publication.
- Governance diagnostics mission identified reforms including digitalization and automation of administrative processes, contract enforcement, land tenure, and limits on discretion in public decisions; authorities intend to publish the report and implement recommendations.
- Authorities have commenced implementing recommendations of the GIABA mutual evaluation; effectiveness of the AML/CFT framework should be strengthened further via legal amendments and increased resourcing of key institutions (e.g., the Financial Intelligence Unit).
- Recommended reforms include improving application of preventive measures (PEPs, beneficial ownership), enhancing risk-based supervision of higher risk reporting entities (banks, real estate), and increasing capacity for investigations and prosecutions of corruption and money laundering.

### Development plan and business environment
- The Recovery-Focused National Development Plan (RF-NDP) validated in late 2022; yet to be approved by cabinet and officially launched.
- Authorities preparing a financing strategy for the RF-NDP and plan preliminary consultations with development partners ahead of a roundtable conference expected later in the year.
- The Business Council was reconvened; since 2020, the Women Enterprise Fund provided financial literacy training to over 30,000 women and girls and loans to over 600 women groups.

### Climate and energy projects
- The Gambia published a US$4 billion Long-Term Climate-Neutral Development Strategy aiming for net zero by 2050.
- The country will benefit from the West Africa Coastal Areas Resilience Investment Project with US$246 million financed by the World Bank to strengthen coastal resilience.
- West African Power Pool selected consultants to provide Transaction Advisory Services for development of a Regional Solar Park.
- In February 2023, authorities launched a US$27 million project for a 23-megawatts solar plant and an eight megawatts energy storage system (part of electricity restoration and modernization project co-financed by the World Bank and the European Investment Bank).

### Capacity development
- Need to accelerate implementation of capacity development recommendations from recent missions covering governance diagnostic, revenue administration, PFM, central banking, anti-money laundering, financial sector, rule of law, tax policy, fuel pricing, liquidity forecasting, banking supervision, cyber security, and macroeconomic statistics.
- Authorities benefit from presence of resident advisors at GRA and CBG.

### Program modalities, risks, and financing
- Risks: Protraction of the war in Ukraine could intensify pressures on inflation, balance of payments, government revenue and spending; morose global environment and trade disruptions may slow tourist arrivals and export receipts.
- Mitigation: Bolster domestic revenue mobilization, embrace spending restraint, facilitate sub-regional trade, strengthen internal and external policy buffers, and implement reform triggers to unlock budget support from development partners.
- Capacity to repay: The Gambia’s outstanding credit to the IMF and total Fund obligations are significantly higher than the PRGT comparator group under most key metrics; repayments to the Fund will peak at 4.9 percent of government revenues and 25.8 percent of total debt service in 2028 and 2029, respectively.
- Financing assurances: Program is fully financed with firm commitments in place for the remainder of the program period; final disbursement following completion of the 6th ECF program review will be on-lent to the government.
- Discussions on debt reconciliation with Libya ongoing; most recent correspondence in March 2022. Regarding arrears to Venezuela, virtual meetings were held in early 2022 and a mission is expected in The Gambia.
- Safeguards: CBG implemented most 2020 safeguards assessment recommendations, including Board approval of revised investment policy and guidelines in March 2023; further progress needed in foreign reserves management and internal audit function.

### Staff appraisal and overall evaluation
- Economic growth in 2022 remained at its 2021 level at around 4.4 percent as tourist arrivals rebounded but remained below pre-pandemic levels and remittance inflows declined.
- Inflationary pressures persist due to high global food and fuel prices caused by the war in Ukraine.
- The Covid-19 pandemic has receded; forex shortages experienced in 2022 have eased.
- Program performance under the ECF was broadly satisfactory: all but one quantitative performance criterion, and all but one indicative target at end-December 2022 were met.
- The continuous QPC on external payment arrears was breached due to delayed payments by NAWEC to the ITFC; authorities increased electricity tariffs in April 2023 and NAWEC is rolling out prepaid meters.
- Fiscal policy will remain anchored on the approved 2023 budget given high debt vulnerabilities; measures include reducing fuel revenue losses, securing budgetary resources, focusing on grants and highly concessional loans, limiting fiscal risks from SOEs and PPPs, and implementing a strong medium-term fiscal framework with measures to bolster domestic revenue mobilization and public financial management.
- Staff supports completion of the sixth and final review under the ECF arrangement and supports a waiver of non-observance of a performance criterion given the minor and temporary nature of the breach and corrective measures.
- Discussions on a successor program may be initiated tentatively in Q3-Q4 2023.

*Source: IMF staff report text (excerpts).*

### 35.      Staff recommends that the next Article IV consultation with The Gambia take place

### 35.      Staff recommends that the next Article IV consultation with The Gambia take place within the standard 12-month cycle.

### Staff Recommendation
- Staff recommends that the next Article IV consultation with The Gambia take place within the standard 12-month cycle.

### Recent Economic Developments (highlights from figures and text)
- Economic recovery continued in 2022, albeit slower than previously expected.
- Private credit picked up from pandemic lows.
- Fiscal pressures from the war in Ukraine worsened fiscal indicators, but public debt stabilized.
- Forex reserves declined in 2022 but have broadly stabilized thereafter.
- Inflation accelerated, driven primarily by high global food and fuel prices.
- The CBG tightened monetary policy stance in 2022 to tame accelerating inflation; the CBG sold forex causing reserve money and bank excess reserves to decline.

### Fiscal Sector Developments (selected findings)
- Grants increased in 2022, including supplementary support towards year-end, while domestic revenue declined.
- Despite multiple spending pressures, including from an increased wage bill, current spending was reduced which helped limit the worsening of the overall fiscal deficit.
- Some other fiscal indicators also weakened due to the shocks, but total public debt-to-GDP ratio stabilized in 2022.
- Large drop in domestic financing was observed in 2022.

### Monetary Developments (selected findings)
- The CBG tightened policy in 2022; yields on 364-day T-Bills, policy rate, and average interbank rates rose.
- Broad money growth decelerated in 2022, driven by a significant decline in the NFA of the central bank.
- Pickup in inflation coincided with an acceleration of credit to the private sector.
- Reserve money and components: currency in circulation, required reserves, and excess reserves showed contractionary pressures following forex sales.

### Medium-Term Outlook (2020–28 projections)
- Real GDP Growth: "GDP at constant prices 4.34.54.46.05.66.35.85.05.05.0" (as presented).
- Inflation: Headline inflation is expected to peak in 2023 and is projected to gradually converge toward the CBG medium-term target; Consumer prices (average) row: "7.411.311.511.112.99.56.05.05.05.0" (as presented).
- Fiscal consolidation is expected to be driven by expenditure restraint and improved tax effort.
- Public debt: projected to decline steadily in the medium term; Public debt (Percent GDP) row: "83.580.883.975.472.869.064.059.855.651.7" (as presented).
- External current account deficit: expected to narrow from 2023 onwards once tourism fully recovers.

### Key Statistics and Projections (selected exact entries preserved)
- GDP deflator: "7.89.010.39.311.27.05.14.14.44.6"
- Consumer prices (end of period): "7.612.413.79.712.07.15.05.05.05.0"
- Exports, f.o.b (US$ values): "6.2-38.3-38.6151.1151.227.46.95.75.75.8"
- Imports, f.o.b (US$ values): "6.926.222.918.321.410.16.13.45.44.7"
- Broad money: "19.54.07.16.511.610.710.76.86.16.9"
- Net foreign assets: "8.8-10.7-4.51.63.54.94.10.30.40.5"
- Net domestic assets: "10.714.711.64.88.15.96.66.55.76.4"
- Domestic revenue (percent of GDP): "14.311.912.012.512.112.713.514.114.514.8"
- Grants (percent of GDP): "2.55.95.66.66.76.16.35.45.14.8"
- Total expenditures (percent of GDP): "21.422.722.521.721.620.820.720.020.120.0"
- Net lending (+)/borrowing (–) (percent of GDP): "-4.6-4.8-4.9-2.7-2.7-2.0-1.0-0.5-0.6-0.4"
- Primary balance (percent of GDP): "-1.6-2.3-2.7-0.6-0.61.01.61.71.21.2"
- External public debt (millions of US$): "965.91003.71029.31038.21,032.2      1,052.1      1,047.1      1,036.3     1,036.3      1,039.0"
- Gross official reserves (millions of US$): "530.4424.6454.7416.4471.5469.7466.3452.9453.5457.1"
- Gross official reserves (months of next year's imports): "7.14.85.14.44.94.64.44.03.83.6"
- Nominal GDP (billions of dalasi): "104.9119.5120.9138.5142.0161.5179.6196.3215.3236.4"
- GDP per capita (US$): "816.4845.2830.8881.7870.1932.7977.21,006.5     1,039.6      1,075.4"

### Central Government Operations (selected exact figures, millions of local currency)
- Revenue (2022, Act.): "21,316"; (2023, Prel.) "21,292"; (2024, Prog.) "26,443"; (2028, Proj.) "46,408".
- Domestic revenue (2022, Act.): "15,001"; (2023, Prel.) "14,501"; (2024, Prog.) "17,252"; (2028, Proj.) "35,035".
- Grants (2022, Act.): "2,648"; (2023, Prel.) "6,790"; (2024, Prog.) "9,192"; (2028, Proj.) "11,373".
- Total expenditures (2022, Act.): "22,496"; (2023, Prel.) "27,174"; (2024, Prog.) "30,120"; (2028, Proj.) "47,363".
- Net lending (+)/borrowing (–) (2022, Act.): "-4,848"; (2023, Prel.) "-5,882"; (2024, Prog.) "-3,676"; (2028, Proj.) "-956".
- Domestic financing (2022, Act.): "4,553"; (2023, Prel.) "3,904"; (2024, Prog.) "2,395"; (2028, Proj.) "0".

### Monetary Accounts (selected exact figures, millions of local currency)
- Net foreign assets (end of period): "28,953" (2021), "22,289" (2022), "26,146" (2023 Prel.), projected "36,797" (2028).
- Broad money (end of period): "62,494" (2021), "65,041" (2022), "66,917" (2023 Prel.), projected "110,915" (2028).
- Reserve money (end of period): "21,124" (2021), "19,003" (2022), "20,928" (2023 Prel.), projected "26,260" (2028).
- Credit to private sector (percent change, memorandum): "20.740.025.08.618.718.622.524.721.921.5" (as presented).

### Balance of Payments / External Sector (selected exact entries)
- External current account balance excluding official transfers (percent of GDP): "-0.5-16.8-7.9-14.6-14.0-11.0-10.8-9.3-8.7-8.1" (as presented).
- External current account balance including official transfers (percent of GDP): "-0.1-14.7-6.0-12.6-11.9-8.9-9.5-8.6-8.0-7.5" (as presented).

*Sources: The Gambian authorities; and IMF staff estimates and projections.*

### 1. Current account

### 1. Current account

### A. Goods and services — levels (US$ millions)
- Goods and services (aggregate): -535.7 -745.7 -656.4 -754.2 -754.9 -738.2 -778.3 -793.9 -832.8 -864.4
- Goods (net): -525.2 -713.1 -693.3 -779.4 -780.0 -837.7 -887.4 -913.7 -963.0 -1006.2
  - Exports, f.o.b.: 77.8 48.0 47.8 120.6 120.0 152.9 163.5 172.7 182.6 193.1
  - Imports, f.o.b.: -603.0 -761.1 -741.1 -900.0 -900.0 -990.6 -1050.8 -1086.5 -1145.5 -1199.3
- Services (net): -10.5 -32.6 37.0 25.3 25.1 99.4 109.1 119.9 130.2 141.8
  - Services exports: 108.9 118.9 187.3 187.8 187.6 273.4 293.0 312.7 333.7 356.1
    - Of which: Travel income: 58.0 71.5 135.0 130.0 130.0 208.1 222.9 238.6 255.3 273.2
  - Services imports: -119.4 -151.5 -150.3 -162.5 -162.5 -173.9 -183.9 -192.8 -203.5 -214.3

### A. Goods and services — percent of GDP (2024–28 projections)
- Goods and services: -26.3 -34.4 -30.8 -32.3 -32.8 -29.1 -28.4 -27.3 -26.9 -26.2
- Goods (net): -25.8 -32.9 -32.5 -33.4 -33.9 -33.0 -32.4 -31.4 -31.1 -30.5
  - Exports, f.o.b.: 3.8 2.2 2.2 5.2 5.2 6.0 6.0 5.9 5.9 5.9
  - Imports, f.o.b.: -29.6 -35.1 -34.7 -38.6 -39.1 -39.0 -38.3 -37.4 -37.0 -36.4
- Services (net): -0.5 -1.5 1.7 1.1 1.1 3.9 4.0 4.1 4.2 4.3
  - Services exports: 5.4 5.5 8.8 8.1 8.2 10.8 10.7 10.8 10.8 10.8
  - Services imports: -5.9 -7.0 -7.0 -7.0 -7.1 -6.8 -6.7 -6.6 -6.6 -6.5
  - Travel income (percent of GDP): 2.9 3.3 6.3 5.6 5.7 8.2 8.1 8.2 8.2 8.3

### B. Income (net)
- Levels (US$ millions): -32.1 -32.4 -32.4 -31.2 -31.2 -32.4 -33.5 -34.8 -36.1 -37.6
  - Income credits: 2.5 2.5 2.5 2.4 2.4 2.5 2.6 2.7 2.8 2.9
  - Income debits: -34.6 -34.9 -34.9 -33.7 -33.7 -34.9 -36.2 -37.5 -39.0 -40.5
- Percent of GDP (2024–28 projections):
  - Income (net): -1.6 -1.5 -1.5 -1.3 -1.4 -1.3 -1.2 -1.2 -1.2 -1.1
  - Income credits: 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
  - Income debits: -1.7 -1.6 -1.6 -1.4 -1.5 -1.4 -1.3 -1.3 -1.3 -1.2
  - Of which: Interest on government debt: 0.5 0.5 0.5 0.6 0.4 0.5 0.4 0.4 0.3 0.3

### C. Current transfers
- Levels (US$ millions): 566.3 458.3 559.9 492.0 512.0 545.5 551.2 577.6 620.3 654.4
  - Official transfers: 9.7 43.8 40.0 47.8 47.8 54.0 35.5 20.0 20.0 20.0
  - Remittances: 544.0 401.6 507.0 430.0 450.0 476.9 500.8 542.3 584.6 618.3
  - Other transfers: 12.6 12.9 12.9 14.2 14.2 14.6 14.9 15.3 15.7 16.1
- Percent of GDP (2024–28 projections):
  - Current transfers: 27.8 21.1 26.3 21.1 22.3 21.5 20.1 19.9 20.0 19.8
  - Official transfers: 0.5 2.0 1.9 2.1 2.1 2.1 1.3 0.7 0.6 0.6
  - Remittances: 26.7 18.5 23.8 18.4 19.6 18.8 18.3 18.6 18.9 18.8
  - Other transfers: 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.5

### Current account balances
- Current account (excl. official transfers) — levels (US$ millions): -11.2 -363.6 -168.9 -341.2 -321.9 -279.1 -296.1 -271.0 -268.7 -267.6
- Current account (incl. prospective official transfers) — levels (US$ millions): -1.5 -319.8 -128.9 -293.4 -274.1 -225.1 -260.6 -251.0 -248.7 -247.6
- Percent of GDP (2024–28 projections):
  - Current account (excl. official transfers): -0.5 -16.8 -7.9 -14.6 -14.0 -11.0 -10.8 -9.3 -8.7 -8.1
  - Current account (incl. prospective official transfers): -0.1 -14.7 -6.0 -12.6 -11.9 -8.9 -9.5 -8.6 -8.0 -7.5

---

### 2. Capital and financial account

### A. Capital account — levels (US$ millions)
- Capital account: 103.6 82.9 82.7 106.9 106.9 100.2 136.6 137.2 137.9 138.6
- Percent of GDP (2024–28 projections): 5.1 3.8 3.9 4.6 4.6 3.9 5.0 4.7 4.5 4.2

### B. Financial account — levels (US$ millions)
- Financial account: 224.4 97.4 -93.5 177.0 182.7 127.4 126.7 112.1 129.0 135.0
  - Foreign direct investment: 99.3 99.7 99.7 108.1 108.1 116.0 122.3 127.8 134.2 141.3
  - Portfolio investment: 3.9 4.1 4.1 4.4 4.4 4.8 5.2 5.5 5.9 6.3
  - Other investment: 121.2 -6.4 -197.2 64.4 70.2 6.6 -0.8 -21.2 -11.1 -12.5
- Capital and financial account (aggregate levels): 327.9 180.2 -10.7 283.9 289.6 227.7 263.3 249.4 267.0 273.6
- Percent of GDP (2024–28 projections):
  - Financial account: 11.0 4.5 -4.4 7.6 7.9 5.0 4.6 3.9 4.2 4.1
  - Foreign direct investment: 4.9 4.6 4.7 4.6 4.7 4.6 4.5 4.4 4.3 4.3
  - Portfolio investment: 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
  - Other investment: 6.0 -0.3 -9.2 2.8 3.1 0.3 0.0 -0.7 -0.4 -0.4
  - Capital and financial account: 16.1 8.3 -0.5 12.2 12.6 9.0 9.6 8.6 8.6 8.3

### Errors and omissions and overall balance
- Errors and omissions (levels): -204.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
- Overall balance — levels (US$ millions): 112.4 -183.4 -179.6 -57.3 -32.3 -51.4 -32.8 -21.7 -1.7 6.0
- Overall balance — percent of GDP (2024–28 projections): 5.5 -8.5 -8.4 -2.5 -1.4 -2.0 -1.2 -0.7 -0.1 0.2

---

### Financing, reserves, and memorandum items

### Financing and reserve changes — levels (US$ millions)
- Financing (levels): -112.4 183.4 179.6 57.3 32.3 50.6 31.9 20.7 0.7 -6.0
- Net international reserves (increase -): -133.8 138.6 138.6 9.5 -15.5 -3.5 -3.6 0.7 -19.3 -26.0
  - Change in gross international reserves: -178.3 105.8 106.0 8.3 -16.8 1.8 3.4 13.4 -0.6 -3.6
  - Use of IMF resources (net): 44.5 32.8 32.6 1.3 1.3 -5.3 -7.0 -12.7 -18.7 -22.4
- Exceptional financing: 5.6 1.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
  - Of which: CCRT debt relief: 5.6 1.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
  - Of which: DSSI: 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
- Prospective donor financing: 15.8 43.8 40.0 47.8 47.8 54.0 35.5 20.0 20.0 20.0
  - Budget support grants: 9.7 43.8 40.0 47.8 47.8 54.0 35.5 20.0 20.0 20.0
  - Project support grants: 6.1 ..............................

### Reserves and import coverage — levels and months
- Gross international reserves (US$ millions): 530.4 424.6 454.7 416.4 471.5 469.7 466.3 452.9 453.5 457.1
  - Months of next year's imports of goods and services: 7.1 4.8 5.1 4.4 4.9 4.6 4.4 4.4 4.0 3.8
- Gross international reserves (w/o SDR allocation) (US$ millions): 445.4 339.6 369.7 331.4 386.5 384.7 381.3 367.9 368.5 372.1
  - Months of next year's imports of goods and services: 6.0 3.8 4.2 3.5 4.0 3.7 3.6 3.3 3.1 2.9
- Net international reserves (US$ millions): 427.7 299.6 325.9 290.0 347.7 295.1 291.4 285.0 293.8 324.5
  - Months of next year's imports of goods and services: 5.8 3.4 3.7 3.1 3.6 2.9 2.7 2.5 2.5 2.6
- Net international reserves (w/o SDR allocation) (US$ millions): 342.7 214.6 240.9 205.0 262.7 210.1 206.4 200.0 208.8 239.5
  - Months of next year's imports of goods and services: 4.6 2.4 2.7 2.2 2.7 2.0 1.9 1.8 1.8 1.9

### Trade flows (US$ millions)
- Exports of goods and services: 186.7 166.9 235.0 308.3 307.6 426.2 456.5 485.4 516.2 549.2
- Imports of goods and services: -722.4 -912.6 -891.4 -1062.5 -1062.5 -1164.5 -1234.7 -1279.3 -1349.0 -1413.6

### Exchange rate and external debt service
- GMD per U.S. dollar, period average: 51.6 ... 56.7 ........................
- External Debt service: 59.5 65.9 76.6 40.2 71.3 54.8 76.0 87.7 91.6 105.9
- NIR/External Debt Service (ratio): 7.2 4.6 4.2 7.2 4.8 6.2 4.6 3.9 4.0 3.7

---

*Sources: The Gambian authorities; and IMF staff estimates and projections.*

### Annex I. Renewed Momentum on Structural Reforms

### Annex I. Renewed Momentum on Structural Reforms

### Political context and reform momentum
- The results of the presidential and legislative elections in early 2022 led to a second-term mandate for the President and gave a parliamentary majority to the ruling party’s coalition.
- This "broadly comfortable political basis" has allowed continuation and acceleration of government policies; many delayed reforms were restarted and some have already been completed.

### Public procurement reform
- The 2020 Gambia Public Procurement Authority Act was approved by the National Assembly and signed into law in late 2022, after several delays.
- Objectives and main provisions:
  - Foster transparency in public procurement and promote value for money in public spending.
  - Introduce e-procurement.
  - Redefine the conditions for single-source procurement.
  - Add preference clauses to support local businesses and marginalized groups such as women, youths and the physically challenged.
- Implementation gap and risk:
  - Exclusion of some SOEs from being subjected to the provisions of the new act creates a vacuum requiring close attention to ensure SOEs have transparent and cost-effective procurement processes.
  - The implementation regulations of the act are expected to be finalized in the coming weeks.

### State-Owned Enterprises (SOEs) governance
- SOEs Bill status:
  - The State-Owned Enterprises (SOEs) Bill was approved in March 2023.
- Aims and key provisions of the Bill:
  - Strengthen corporate governance of SOEs by addressing weaknesses identified in the 2019-20 Ernst & Young SOEs’ audits, including executive interference, unsuitable accounting practices, and inefficient service delivery.
  - Create a new commission in charge of the oversight of SOEs.
  - Require all SOEs to operate under IFRS.
  - Improve the selection process and introduce term limits for Board directors and CEO.
  - Strengthen the reporting and audit framework.
  - Require that any ad-hoc public services delivery requested by the executive be properly documented and fully compensated.
  - Recommend the use of performance contracts.
- Residual governance risk:
  - Despite improvements, the bill has some provisions that could render SOEs vulnerable to executive interferences; these shortcomings could be addressed under the revised constitution.

### Performance contracts for SOEs
- Status and scope:
  - Performance contracts were signed in February 2023 between the government and three major SOEs: Gambia Port Authority, Gambia National Petroleum Company, and Social Security and Housing Finance Corporation.
- Design features:
  - Contracts include both quantitative and qualitative KPIs.
  - Bonuses for good performance and sanctions for poor performance, including possibility of Board dissolution or CEO dismissal.
- Coverage and plans:
  - Following these contracts, four out of a total of thirteen SOEs are currently under performance contracts.
  - The authorities plan to expand further the use of performance contracts.

### Public Financial Management (PFM) and anti-corruption measures
- PFM Act:
  - The revision of the PFM Act was approved by the Cabinet in March 2023.
  - Objective: consolidate recent progress in budgetary processes and address gaps on budget preparation, implementation, transparency and audit as well as on contracting debt.
- Anti-corruption bill:
  - The anti-corruption bill has advanced to the consideration stage and could be approved during the next sitting of the National Assembly in late May-June 2023.
  - The bill will create an anti-corruption commission to strengthen governance and will reinforce the assets declaration process.
- Other governance-related reforms:
  - Relaunching consultation on the draft constitution.
  - Preparatory work for implementation of the Janneh Commission recommendations related to crimes perpetrated by the former regime.

*Source: Annex I. Renewed Momentum on Structural Reforms (1gmbea2023001).*

### 5. The ECF arrangement was appropriate for the Gambia and the level of access was

### 5. The ECF arrangement was appropriate for the Gambia and the level of access was

### Appropriateness and access adjustments
- The ECF was judged appropriate given the country’s fragility stemming from several years of economic mismanagement that led to high debt vulnerabilities and protracted balance of payment needs.
- Original access level: SDR35 million (56.3 percent of quota).
- Access increased twice to address exogenous shocks, bringing total access to SDR70.55 million (or 113.4 percent of quota).
- The Gambia also obtained US$85 million from the August 2021 SDR allocation to address the external shock and strengthen its external position.
- The IMF contributed to about half of the program financing, increasing the country’s exposure to the IMF.
- Structural reforms were calibrated to capacity constraints and supported by extensive technical assistance from the IMF and other development partners.

### Challenges ahead and rationale for successor program
- Multiple shocks have reversed pre-pandemic poverty reduction:
  - Poverty ratio increased from 48.6 percent (2015 household survey) to 53.4 percent (2020 poverty assessment survey).
- Persistent inflationary pressures and a funding squeeze driven by a tight domestic bond market.
- Debt deferrals expire in 2025, increasing urgency to reduce debt vulnerabilities.
- A successor program is expected to:
  - Catalyze grant financing for social and infrastructure needs.
  - Support structural reforms to enhance revenue mobilization and reprioritize spending.
  - Contribute to fiscal consolidation to support monetary policy in reducing inflation.

### Program performance and implementation challenges
- Reviews and conditionality:
  - Program subject to bi-annual reviews.
  - Met five out of six quantitative performance criteria and three out of four indicative targets at end-December 2022.
  - Continuous QPC on non-accumulation of external arrears was breached due to NAWEC’s delays in honoring obligations to ITFC driven primarily by high fuel costs.
- Structural benchmarks:
  - Two out of three structural benchmarks for end-February 2023 were met (performance contracts of SOEs and GRA’s internal affairs unit).
  - The PFM Act approval SB was completed in mid-March (prior action) after Cabinet scheduling constraints delayed approval.
- Fiscal execution and financing:
  - Net domestic borrowing kept below the program ceiling by about 0.7 percent of GDP.
  - Overall fiscal financing fell short of projections due to non-materialization of MegaBank sale, leading to large payment floats at end-December 2022 (including IPCs for road construction).
  - Public debt remained broadly unchanged from end-2021 to end-2022 at about 84 percent of GDP.

### Recent economic developments and macrofinancial indicators
- Growth and activity:
  - Economic growth estimated at 5 percent in 2022.
  - CBG’s composite index of economic activity (CIEA) strengthened by 4.9 percentage points in 2022 and is now 2.6 percentage points above pre-pandemic levels (Q1 2020).
  - Tourist arrivals in 2022 increased by 83 percent relative to 2021 but remain below pre-pandemic levels.
- External sector and reserves:
  - Workers’ remittance inflows declined from US$544 million in 2021 to US$507 million in 2022.
  - Exchange rate: dalasi depreciated by about 10 percent between September 2022 and January 2023, closing the wedge with the parallel market rate.
  - CBG became a net FX buyer since January 2023 with cumulative net purchases of $6.1 million (total purchase of $10.4 million against total sales of $4.3 million) over January-February 2023.
- Inflation and monetary policy:
  - Inflation accelerated to 14.8 percent (y-o-y) in March 2023.
  - CBG raised its policy rate by 100 basis points to 14 percent in February 2023; this was the 4th increase since end-2021.
- Banking sector and credit:
  - Banks’ excess reserves fell from 14.2 percent of reserve money at end-2021 to 4.8 percent at end-2022.
  - Capital adequacy ratio: 24.8 percent at end-December 2022.
  - Liquidity ratio: 63.7 percent at end-December 2022.
  - NPL ratio: 4.6 percent in December 2022.
  - Private sector credit growth: 25 percent in 2022 (compared to 20.7 percent in 2021).
    - Distribution of private credit: building and construction 21 percent; trade and tourism 18.1 percent; agriculture 13.1 percent.

### Macroeconomic outlook and risks
- Growth projections:
  - Real GDP growth projected at 6 percent in 2023 (after 5 percent in 2022).
  - Growth projected to peak at 6.3 percent in 2024, before stabilizing around 5 percent in the medium term.
- Inflation and reserves:
  - Inflation expected to ease in 2023 due to restrictive monetary policy and projected decline in key commodity prices.
  - Forex reserves (in months of imports) projected to gradually decline in the medium term due to lower official transfers and private remittances and higher debt service after expiration of debt deferrals in 2025.
- Downside risks:
  - Protracted war in Ukraine could jeopardize tourist arrivals and intensify inflationary pressures.
  - High inflation and slower growth in advanced economies could exert depreciation pressures on the dalasi and lead to significant falls in workers’ remittances.

### Policy responses, reforms, and measures underway
- Fiscal policy and revenue measures:
  - 2023 fiscal framework anchored on the adopted budget with plans to address emerging pressures.
  - Preliminary Jan–Mar 2023 developments:
    - Tax revenue collection underperformed projections by about 5 percent.
    - Customs and Excise collection exceeded expectations by 13 percent (implementation of ASYCUDA WORLD and creation of a dry port reduced ship unload wait time from two weeks to 5 days).
    - Domestic Tax Department collections (CIT, VAT, domestic excise duties) below target by 12 percent.
    - Non-tax revenue exceeded projections supported by customs processing fees, fuel levy, and Securiport payments.
  - Measures to enhance revenue: improve enforcement through data matching, tax audits, sensitization; enhance coordination between GRA and the new Tax Revenue Department of MoFEA.
  - Expect budget support grants from EU, World Bank, AfDB and Agence Française de Développement; progress reported in implementing reforms to unlock contingent components.
- Expenditure and cash management pressures:
  - Pressures on compensation of employees in social and security sectors; capital development expenditures high due to road and bridge construction; transfer spending pressures (fertilizer subsidies >75 percent already spent).
  - Rising domestic interest payments and dalasi depreciation increasing debt service.
  - Plans to remain within 2023 budget parameters, including the wage bill and overall deficit.
  - Cash management: strict adherence to Cash Management Committee recommendations.
  - Tap unused space of about GMD 800 million or about 0.6 percent of 2023 GDP from 2022 NDB limit to clear end-2022 payment floats and keep cumulative domestic borrowing target for 2022 and 2023 unchanged.
- Privatization and contingent actions:
  - Acceleration of MegaBank privatization: new tender process introduced; privatization expected to be completed by Q2 2023.
- Structural reforms and governance:
  - GPPA procurement act signed; regulations being finalized.
  - SOEs law approved by National Assembly.
  - Anticorruption bill under consideration at National Assembly.
  - Cabinet approved the PFM act; to be submitted to National Assembly.
  - Fund-supported capacity development missions on governance diagnostics, fuel pricing, tax exemptions, international transfer pricing, petroleum fiscal regime, PPP legal framework, parliamentary budget committee strengthening, monetary policy analysis and forecasting, and central bank cybersecurity.

### Program design lessons and recommendations
- Future Fund engagements would focus on:
  - Preserving macroeconomic stability amid high risk of debt distress and declining external buffers.
  - Supporting economic development and building resilience to climate vulnerabilities.
- Program design improvements:
  - Enhance catalytic role of IMF program through increased coordination to ensure timely implementation of budget support reform triggers.
  - Pay attention to pacing and parsimony of reforms to account for limited capacity and political/social constraints.
  - Incorporate adequate flexibility to respond to unexpected exogenous shocks.
  - Provide extensive capacity development to support reform implementation.

*Source: 1gmbea2023001 - 5. The ECF arrangement was appropriate for the Gambia and the level of access was*

### 12.      We will improve revenue collection efforts to reverse the declining tax ratio and

### 12.      We will improve revenue collection efforts to reverse the declining tax ratio and

### Revenue mobilization and tax administration
- Accelerate digitalization through ITAS:
  - ICT needs assessment finalized.
  - User needs assessment of ITAS started.
  - Currently hiring a firm for the implementation of the ITAS.
  - Developing the Compliance Risk Management strategy.
- Streamline corporate income tax, duty waiver exemption, and tax incentives under the GIEPA Act:
  - GRA will dishonor all tax exemptions for SICs not compliant with returns filing requirements and those granted without the presence of the entities in accordance with the recently revised GIEPA regulations.
  - Strengthen enforcement and participation in the tax incentive committee to ensure tax exemptions comply with the existing legal framework.
- Reduce profit shifting and enhance tax arrears management:
  - Working with IMF technical assistance to adjust the IVAT Act 2012 to provide greater ring-fencing against transfer pricing abuses.
  - Build on the cleaned tax registry and cleansing of taxpayer ledgers to improve tax arrears management.
- Strengthen customs border and inland controls:
  - Border and inland controls mandate, standard operating procedures, and policy developed, reviewed, validated, and submitted for management approval to enhance post-clearance audit and risk management reforms.
- Internal assurance and integrity mechanism:
  - GRA internal affairs unit, reporting directly to the Commissioner General, is fully functional.
  - The unit investigated and concluded five integrity cases in 2022.
  - Published gift policy, whistleblower policy, and an investigation procedure manual.
- Cleanse taxpayer registration ledger for small and medium taxpayers:
  - Tax offices preparing uploading of the clean tax registry to GAMTAXNET.
  - Completion in September 2022 of ledger cleansing for the large tax unit.
  - Several medium tax units were upgraded to large tax units; plan to reconcile their ledgers.
- Continue progress on digital and revenue solutions:
  - Signed three public private partnership contracts for implementation of the Cargo Tracking System, the Single Window Solution at the Seaport, and the Revenue Mobilization Solution for excisable goods, telecom services, and fuels to avoid tax leakages.
  - Rolled-out the enhanced GAMTAXNET to all tax offices across the country.
  - Completed the midterm review of GRA’s Corporate Strategic Plan (2020-24) in January 2023.

### Public debt and fiscal framework
- Public debt remains sustainable, but risks of external and overall debt distress remain high.
- Commitments to anchor public debt on a downward path include:
  - Implementing a strong medium-term fiscal framework.
  - Bolstering domestic revenue mobilization.
  - Executing previous revenue-related commitments, including the sale of assets under the Janneh Commission, the privatization of Megabank, and strengthening bridge toll collection.
  - Strictly adhering to the agreed external borrowing plan.
  - Ensuring SOEs and PPPs do not give rise to fiscal risks and contingent liabilities, including roll-out of performance contracts.
  - Building strong external buffers in preparation for upcoming expiration of debt deferrals.

### Monetary and exchange rate policies
- Policy rate and inflation stance:
  - Monetary Policy Committee increased the policy rate by 100 basis points in February 2023 to 14 percent.
  - Cumulative rate increase of 400 basis points since the beginning of the tightening cycle in May 2022.
  - Inflation forecast to remain in double digits for the greater part of 2023; gradual tightening approach assessed as appropriate.
  - Target inflation level: 5 percent in the medium term.
- Foreign exchange market operations:
  - From January to February 2023, the CBG intervened on both sides of the market, buying an equivalent of US$10.4 million whilst selling US$4.3 million.
  - CBG is currently a modest player in the domestic FX market and will let demand and supply fundamentals determine the exchange rate of the Dalasi while informing the public and authorized participants of policy changes through formal letters.

### Financial sector resilience and supervision
- Financial inclusion and NFIS interventions (five measures):
  - Designed templates for Mobile Money Operators (MMOs) to gauge penetration of digital financial services.
  - Promoted agency financial services at scale to bridge inclusion imbalance.
  - Board approved Islamic microfinance guidelines.
  - Hired four consultancy firms to train women groups on digital financial services; develop a gender-sensitive consumer protection framework; and disaggregate the remittance database to capture gender, purpose, and location.
  - Organized an NFIS workshop and invited stakeholders to join working groups.
- Bank stress testing:
  - Credit risk identified as main vulnerability.
  - September 2022 results: a 400 percent rise in NPL would cause one small bank to become insolvent.
  - December 2022 results: insolvency of two banks with a 400 percent rise in NPL from 14 percent.
  - Adopted a Risk Based Supervision Framework and rolled out corporate governance, risk management and outsourcing guidelines.
- Credit information and CRB:
  - Banks making timely submissions and querying the CRB regularly despite technical challenges.
  - National Credit Reference Taskforce (MOFEA, Ministry of Trade, CBG) working to establish a robust credit reference system to include NBFIs.
- IFRS 9 and expected credit loss (ECL) capacity building:
  - IFRS unit commenced work with an AFRITAC West 2 TA mission to review and update the Financial Reporting Guideline 2013 to include minimum requirements for the three stages of impairment of loans on a collective and individual basis.
  - Continuous capacity building needed for CBG supervisors and banks.
- Non-bank financial sector oversight:
  - Non-bank sector broadly solid despite high NPLs in some finance companies.
  - CBG expanded AML/CFT supervision to include NBFIs.

### PFM, SOEs, governance and anti-corruption
- Performance contracts with SOEs:
  - Performance contracts signed with three additional SOEs including GNPC, GPA, and SSHFC in February 2023.
  - Plan to sign performance contracts with three more SOEs by end of 2023.
  - Full roll-out of performance contracts to all SOEs planned for 2024.
  - MoFEA to monitor performance contracts annually and send detailed reports to the Executive.
- SOE bill and oversight:
  - SOE bill approved in March 2023 by the National Assembly to create an SOE Commission for oversight and regulation of SOEs.
- PFM bill and Anti-corruption bill:
  - PFM bill reviewed, validated, and approved by Cabinet in March 2023; to be shortly submitted to the National Assembly.
  - Anti-corruption bill submitted to the National Assembly; expected to be approved by end-June 2023. With passage, plan to set up the anti-corruption commission and revamp the assets declaration framework.
- PPP bill and national PPP policy:
  - PPP bill developed, validated, and shared with the Ministry of Justice for review and submission to Cabinet.
  - Developing a national policy on PPP with Fund technical support; will finalize PPP regulations after bill approval.
- Investment prioritization and GSRB:
  - Investment selection framework to be strictly enforced for new domestically financed investments and to screen PPP candidate projects for alignment with national development strategy and containment of contingent liabilities.
- GIABA recommendations and AML/CFT:
  - Action plan prepared to implement GIABA mutual evaluation recommendations.
  - Recommendations include increasing staff size of Financial Intelligence Unit and preparing a strategic plan (2023-2027).
  - An AML/CFT amendment bill drafted and under review to align with domestic laws.
- Program-Based Budgeting (PBB) and planning:
  - PBB implementation slow; Fund assessment in December 2022 produced a TA report whose recommendations are being incorporated.
  - Ministries will review and update Strategic Plans to align with RF-NDP; SPs will form the basis of PBB.
  - U.S. Treasury expected to provide technical advisors to help develop templates for the annual budget process.
  - Working with AFRITAC West 2 to operationalize gender budgeting, limited progress to date.
- Governance diagnostic and audits:
  - Finalized regulations of the Procurement Act 2022 and Cabinet approval of the new PFM Bill 2023 as steps to address governance diagnostic mission preliminary issues.
  - Mission report will be published.
  - Stage two COVID-19 audit report submitted and discussed at the National Assembly; to be published once cleared by the National Assembly.

### Poverty reduction, gender, climate and infrastructure
- Recovery-Focused National Development Plan (RF-NDP):
  - RF-NDP being finalized; financing strategy being prepared and preliminary consultations with development partners planned ahead of a Roundtable conference.
- Energy and electrification projects:
  - Laid foundation stone for construction of a 23-megawatts solar plant and an eight megawatts energy storage system in February 2023.
  - Project cost: US$27 million; co-financed by the World Bank and the European Investment Bank.
- Programme for Accelerated Community Development (PACD):
  - Rural electrification component at an advanced stage with an additional seven communities to be supported.
- Business environment and Women Enterprise Fund:
  - Resumed national business council meetings chaired by the Vice President.
  - Women Enterprise Fund (WEF) provided financial literacy training to over 30,000 women and girls and loans to over 600 women groups.

### Capacity development and technical assistance
- Continued engagement with the IMF for TA in:
  - Revenue administration, tax policy, public financial management, macroeconomic statistics, debt management, monetary policy design, and bank supervision capacity.
  - Provision of technical assistance, including resident experts, to facilitate in-depth diagnostics.
  - Received draft reports from recent governance diagnostic mission and fuel price mechanism mission.

### Program monitoring and institutional capacity
- Strengthen reform monitoring:
  - Reform monitoring committee to be strengthened and meeting frequency increased to ensure major policy decisions and reform commitments are discussed and macroeconomic implications assessed before recommendation to Cabinet.

### Quantitative targets and Technical Memorandum of Understanding (TMU) highlights
- TMU purpose:
  - Sets out definitions of quantitative targets and structural benchmarks to monitor performance under the ECF-supported program through June 2023.
  - Describes reporting requirements and adjustors for quantitative targets.
- Net Domestic Borrowing (NDB) of the Central Government:
  - Definition: change in net claims on the Central Government by the domestic monetary sector plus the change in the discounted value of domestic government securities held by the non-monetary sector; covers changes in other net claims and government arrears on domestic debt service obligations.
  - 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 the balances of the project accounts listed in Table 1, and (iii) the face value of government securities issued to increase the CBG’s capital to the statutory level in the CBG Act.
  - Adjuster: If the 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, the net domestic borrowing ceilings in 2023 will be adjusted downwards by the amount of the privatization proceeds from the quarter in which the proceeds are received by the Treasury.

*Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1gmbea2023001.pdf*

### 3.      Supporting material: Reporting on net domestic borrowing will form part of the

### 3.      Supporting material: Reporting on net domestic borrowing will form part of the consolidated budget report described in ¶32 below.

### B. Net Domestic Assets of the Central Bank
- Definition: Net domestic assets of the CBG = reserve money − net foreign assets of the CBG.
- Reserve money = currency issued by the CBG (currency in circulation) + deposits of commercial banks at the CBG.
- Net foreign assets = foreign assets − foreign liabilities; foreign assets and foreign liabilities = claims on nonresidents and liabilities to nonresidents, respectively.
- Program monitoring conversion rates (end-of-period market exchange rates prevailing at end-October 2020) used in calculation of net domestic assets of the CBG:
  - 51.84 GMD/USD
  - 1.17 USD/EUR
  - 1.30 USD/GBP
  - 0.92 CHF/USD
  - 1.41 USD/SDR
  - 104.58 JPY/USD
- Foreign assets/liabilities in other currencies: converted into U.S. dollars at prevailing end-of-period market exchange rates for end-October 2020, then into dalasi at the rate listed above.
- Note: These are accounting exchange rates only and should not be construed as projections.
- Supporting material: Net domestic assets of the central bank will be transmitted as part of the balance sheet of the CBG (compiled based on the TMU rates) on a monthly basis within four weeks of the end of each month.
- For analytical purposes, the balance sheet of the CBG compiled on a current-rate basis will also be submitted.

### C. Net Usable International Reserves of the Central Bank of The Gambia
- Definition: Net usable international reserves (NIR) of the CBG = usable reserve assets − reserve liabilities.
- Usable reserve assets: readily available claims on nonresidents denominated in convertible foreign currencies; include CBG holdings of SDRs, foreign currency cash, foreign currency securities, deposits abroad, and the country’s reserve position at the IMF.
- Exclusions from usable reserve assets: assets that are pledged, collateralized, or otherwise encumbered; claims on residents; claims in foreign exchange arising from derivatives in foreign currencies vis-à-vis domestic currency (futures, forwards, swaps, options); precious metals; assets in nonconvertible currencies; illiquid assets (including capital shares in international organizations).
- Reserve liabilities: all foreign exchange liabilities to residents and nonresidents, including commitments to sell foreign exchange arising from derivatives (futures, forwards, swaps, options), and all credit outstanding from the IMF, but excluding liabilities to the IMF’s SDR Department.
- For program monitoring, foreign assets and liabilities will be converted at the exchange rates listed in ¶5 above.
- Supporting material: A detailed reserve statement with end-month data on net usable international reserves of the CBG will be transmitted within seven days of the end of each month.

### D. New External Debt Payment Arrears of the Central Government
- Definition: External debt payment arrears = external debt obligations of the central government not paid when due in accordance with contractual terms (taking into account any contractual grace periods).
- Exclusions for program purposes:
  - (i) financial obligations for which the creditor has accepted in writing to negotiate alternative payment schedules before the relevant payment;
  - (ii) arrears on claims which the government has represented as being disputed;
  - (iii) arrears on claims that cannot be settled due to international sanctions;
  - (iv) arrears on trade credits, except arrears on payments due to the International Islamic Trade Finance Corporation (ITFC).
- Policy target: Non-accumulation of new external debt payment arrears by the central government is a target to be observed continuously.
- Supporting material: An accounting of non-reschedulable external arrears (if any) by creditor countries, with detailed explanations, will be transmitted monthly within four weeks of the end of each month. The accounting will include, separately, arrears owed by the Central Government and other public sector entities to Paris Club, non-Paris-Club, private, pluri-lateral and multilateral creditors.

### E. New Non-Concessional External Debt Contracted or Guaranteed by the Central Government
- Definition: Target covers new non-concessional external debt contracted or guaranteed by the Central Government denominated in any currency other than the Gambian dalasi. Applies to debt as defined in ¶8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements attached to Executive Board Decision No. 15688-(14/107), as amended, and to commitments contracted or guaranteed for which value has not been received.
- Guarantee definition: Any explicit legal or contractual obligation of the central government to service a debt owed by a third-party debtor (payments in cash or in kind).
- A debt is considered contracted when conditions for its entrance into effect have been met, including approval by the National Assembly.
- Exclusions: Loans or purchases from the IMF; concessional debts as defined below; any debt with maturity of one year or less.
- Assessment: This performance criterion will be assessed on a continuous basis.
- Concessionality definition and calculation (¶14):
  - Debt is concessional if grant element ≥ 35 percent, calculated as (PV of debt − nominal value) / nominal value.
  - PV of debt at contracting = discounting future stream of payments of debt service due on this debt.
  - For variable-rate debts (benchmark rate + fixed spread), PV calculated using program reference rate + fixed spread (basis points) specified in debt contract.
  - Program reference rate for six-month USD LIBOR = 2.42 percent and will remain fixed for duration of the program.
  - Spread of six-month EURIBOR over six-month USD LIBOR = -250 basis points.
  - Spread of six-month JPY LIBOR over six-month USD LIBOR = -250 basis points.
  - Spread of six-month GBP LIBOR over six-month USD LIBOR = -150 basis points.
  - For debts with grant element equal or below zero, PV = nominal value of the debt.
  - Discount rate used = unified discount rate of 5 percent set forth in Executive Board Decision No. 15248-(13/97).
- Supporting material: A comprehensive record, including a loan-by-loan accounting of all new concessional and non-concessional debt contracted or guaranteed by the Central Government with detailed explanations, will be transmitted quarterly within four weeks of the end of each quarter.
- MoFEA requirement: Forward within four weeks of the Central Government contracting or guaranteeing any new external loan the loan’s terms and conditions including interest rate, grace period, maturity, interest, fees, and principal payment schedule with all annexes.

### F. New Concessional External Debt Contracted or Guaranteed by the Central Government
- Definition: Target covers new concessional external debt contracted or guaranteed by the Central Government denominated in any currency other than the Gambian dalasi. Concessionality as defined in ¶16.
- For borrowing packages with both loan and grant components to meet concessionality requirement (grant element of 35 percent), only loan components count toward the borrowing limit.
- Supporting material and data provision: Refer to ¶17 and ¶18.

### G. Outstanding Stock of External Public Debt with Original Maturity of One Year or Less
- Definition: Stock of outstanding external public debt with original maturity of one year or less, owed or guaranteed by the public sector. Public sector = Central Government, regional governments, and other public agencies, including the central bank.
- Exclusions: Trade credits are excluded, including ITFC credits.
- Supporting material: A comprehensive record of all external debt with original maturity of less than one year owed or contracted by the public sector, with detailed explanations, will be transmitted quarterly within four weeks of the end of each quarter.

### H. Tax Revenue
- Definition: Indicative target = taxes and duties collected by the Domestic Taxes Department and Customs and Excises Department of the Gambia Revenue Authority (GRA).
- Tax revenue = sum of revenues collected against all the tax codes outlined in Text Table 1 (Customs and Excise; Domestic Taxes). Nontax revenue (licensing fees, fines, levies collected by GRA) excluded. Levies collected by GRA on behalf of other organizations excluded (National Education & Technology Training Levy, AU Levy, ECOWAS Levy).
- Supporting material: A monthly report on revenue collected by the GRA will be transmitted within four weeks of the end of each month.

### I. Central Bank Credit to the Central Government at Non-Market Terms
- Definition: Target refers to consolidated balance on the Treasury Main Account, Consolidated Revenue Fund, and other revenue accounts. Covers all gross claims on the Central Government on the balance sheet of the central bank with terms (maturity and yield) materially different from market terms for Treasury bills and bonds around time of acquisition. Also covers overdue payments of principal and interest on Central Government securities held by the central bank.
- Assessment: This performance criterion will be assessed at the end of each month.
- Supporting material: Reporting on new central bank credit to the government at nonmarket terms will form part of the monetary sector data described in ¶34 and ¶35 below.

### J. Poverty-Reducing Expenditures
- Definition: Poverty-reducing expenditures = expenditures financed out of The Gambia Local Fund (GLF) on:
  - Agriculture and Natural Resources;
  - Education;
  - Health;
  - Nutrition, Population and HIV-AIDS;
  - Infrastructure Program;
  - Social Fund for Poverty Reduction;
  - Implementation and Monitoring of Poverty Reduction Programs;
  - Support to Cross-Cutting Programs;
  - ICT Research and Development;
  - Decentralization and Local Government Capacity Building;
  - Governance and Civil Service Reform Program.
- Includes COVID-19 spending including those implemented through the COVID-19 project accounts.
- Supporting material: A monthly report on poverty-reducing expenditures will be transmitted within four weeks of the end of each month.

### Other Data Requirements and Reporting Standards (K–P)

K. Prices
- Monthly disaggregated consumer price index, including weights for each major category, with January 2020 = 100, transmitted within four weeks of the end of each month.

L. Government Accounts Data
- Monthly consolidated Central Government budget report (analytical table) on budget execution for the month and cumulatively from the beginning of the year, transmitted within four weeks of the end of each month. Report covers:
  - (i) revenue data by major items (taxes on income, profits, capital gains; domestic taxes on goods and services; taxes on international trade and transactions; other taxes; non-tax revenue);
  - (ii) external grants by type (budget support grants, project grants);
  - (iii) details of recurrent expenditure (goods and services, interest payments, subsidies and other current transfers);
  - (iv) details of capital expenditure and net lending (externally financed capital expenditure, expenditure from the Gambia Local Fund, net lending);
  - (v) the overall balance, the primary and the basic balance;
  - (vi) details of budget financing (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
- Balance sheet of the CBG, prepared on the basis of current and program exchange rates, transmitted monthly within four weeks of the end of each month. 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.
  - Transmission will include the individual balances on the government accounts listed in Table 1.
- Consolidated balance sheet of commercial banks and a monetary survey (consolidation of accounts of the CBG and commercial banks), including foreign currency deposits held by residents with commercial banks, transmitted within four weeks of the end of each month.
- Daily data on reserve money 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 amounts offered and issued, net issuance, over/under subscription, and yields (interest rates) of the various instruments transmitted weekly within five business days of the end of each week.
- Data on treasury bills and CBG bills outstanding (face value and discounted value, distribution by bank and non-bank holders) transmitted monthly within six weeks of the end of each month.
- Daily data on the interbank money market (interest rates, maturities, volumes) transmitted weekly within five business days of the end of each week.

O. External Sector Data
- CBG will forward data on transactions in official reserves within four weeks of the end of each month.
- Daily interbank market exchange rates (simple average of daily weighted average buying and selling rates) transmitted weekly within five business days of the end of the week.
- Weekly interbank market exchange rates (simple average of weekly weighted average buying and selling rates) transmitted monthly within seven days of the end of the month.
- CBG’s monthly average and end-month exchange rates, including those for all currencies in which foreign assets and liabilities are denominated, transmitted within seven days after the end of each month.
- Daily data on foreign exchange intervention by the central bank transmitted weekly within five business days of the end of each week.
- A detailed reserve statement with end-week data on net usable international reserves of the CBG transmitted weekly within five business days of the end of each week.
- CBG will forward monthly data on the volume of transactions (purchases, sales, total) in the foreign exchange market by each major group of participants (CBG, commercial banks, foreign exchange bureaus) in dalasi within seven days of the end of each month.

P. Public Enterprises’ Data
- MoFEA will forward within eight weeks of the end of each quarter, data on monthly cash flow of NAWEC, GNPC, GAMTEL, GAMCEL, GCAA, SSHFC, and NFSPMC.

*Source: Excerpt from IMF program documentation for The Gambia (supporting material and reporting requirements).*

### 43.      MoFEA will forward within eight weeks of the end of each quarter, data on the stock

### 43.      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.

### Quarterly reporting requirement
- 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.

### Project accounts excluded from NDB calculation (Table 1)
- ACCOUNT NUMBER — PROJECT ACCOUNT NAME (selection as listed)
  - 1101004067 NATIONAL AGRICULTURAL LAND & WATER MANAGEMENT DEV. PROJECT (NEMA)
  - 1103002218 BUILDING RESILIENCE TO RECURRING FOOD INSECURITY IN THE GAMBIA IDB COMPONENT
  - 1101005064 AGRICULTURAL VALUE CHAIN PROJECT (GCAV)
  - 1101004689 BUILDING RESILIENCE AGAINST FOOD & NUTRITION INSECURITY IN THE SAHEL PROJECT.
  - 1101004483 GAMBIA COMMERCIAL AGRICULTURE VALUE CHAIN PROJECT.
  - 1101004201 FOOD & AGRICULTURE SECTOR DEV. PROJECT. FASDEP
  - 1103001613 BILINGUAL EDUCATION SUPPORT PROJECT
  - 1101003606 DEV. OF THE UNI. OF THE GAMBIA PROJECT.
  - 1101003709 AFRICA CENTRE OF EXCELLENCE (ACE)
  - 1101000832 RURAL WATER & SANITATION PROJECT
  - 1103001754 TRANS GAMBIA CORRIDOR PROJ.
  - 1103000685 GLOBAL FUND MALARIA GRANT
  - 1101003864 GEF PROJ. IMPLEMENTATION IN THE GAMBIA UNIDO/GEF 5 PROJ. MNGMNT. OFFICE
  - 1101004304 IFMIS ADDITIONAL FINANCING PROJ.
  - 1101004988 INST. SUPPORT ECON/FIN GOV (ISEFG) III PROJ.
  - 1101004902 NDEMBAN ULTRA MODERN TVET CENTRE PROJ.
  - 1201200228 UNICEF PRIMARY. EDUC. PRJ
  - 1201200252 ENERGY INFRASTRUCTURE (ROC)
  - 1201200371 IDA 3RD EDUC. PHASE 11 GLF
  - 1201200399 PROJ. IMPL.MNGMT A/C PIMA
  - 1201200451 WORLD BANK DEV. POLICY OP ACCO
  - 1201200491 IFMIS PHASE II
  - 3201200403 INST. SUPPORT ECON/FIN GOV A/C
  - 3201200486 IFMIS II
  - 3201200290 GLOBAL FUND/ MALARIA
  - 9201200436 GOLBAL FUND/HIV

### Data reporting requirements (Table 2) — responsible institutions and deadlines (selection of entries and exact timing)
- T-bills auction data, Inter-banks rates & other accompanying data & tables — Frequency: Weekly — Reporting Deadline: 7 days after week-end
- Project accounts data — Frequency: Weekly — Reporting Deadline: 7 days after week-end
- International reserves and Foreign & Domestic Assets data (NIR, NFA & NDA) — Frequency: Weekly — Reporting Deadline: 7 days after week-end
- Foreign exchange liquidity forecasts statement/report — Frequency: Weekly — Reporting Deadline: 7 days after week-end
- Commercial banks' balance sheets — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Commercial banks' Forex net open position statement/report — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- CBG balance sheet (including NDA) — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- CBG reserves statement/report — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Statement/report on CBG credit to Gov. at non-market interest rates; and Gov.'s overdue payments to CBG — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Statement/report of transactions in official reserves — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Financial Soundness Indicators — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Commercial banks' income statements — Frequency: Quarterly — Reporting Deadline: 30 days after quarter-end
- Balance of payments (BOP) — Frequency: Quarterly — Reporting Deadline: 30 days after quarter-end
- Stock of outstanding public debt of maturity not exceeding 1 year — Frequency: Quarterly — Reporting Deadline: 30 days after quarter-end
- Statement/report on concessional & non-concessional debts contracted or guaranteed by government — Frequency: Quarterly — Reporting Deadline: 30 days after quarter-end
- Statement of Government Operations (SGO) — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Poverty-reducing expenditure data — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Consolidated Central Gov. budget execution — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- SOE cash flow statements (i.e. 13 SOEs) — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- External debt reports — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Statement of external payment arrears by Central Government & SOEs — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Staff Monitored Program (SMP) implementation matrix — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Monthly Revenue Report — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Oil volumes and tax collected on oil imports — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Revenue collection by tax type — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Tax exceptions\duty waivers — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Consumer price index (CPI) — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Producer price index (PPI) — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Data on exports (by product type, quantity, country, etc.) — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Data on imports (by product type, quantity, country, etc.) — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Gross domestic product (GDP) — Frequency: Annually — Reporting Deadline: 90 days after year-end
- Crop field cultivation per hectare — Frequency: Quarterly — Reporting Deadline: 90 days after year-end
- Crop yield — Frequency: Quarterly — Reporting Deadline: 90 days after year-end
- Livestock population by region — Frequency: Quarterly — Reporting Deadline: 90 days after year-end
- Tourists arrivals by nationality — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Out-of-pocket tourists expenditures — Frequency: Monthly — Reporting Deadline: 30 days after month-end
- Responsible institutions listed: Gambia Tourism Board (GTB); Central Bank of The Gambia (CBG); Ministry of Finance & Economic Affairs (MoFEA); Gambia Revenue Authority (GRA); Gambia Bureau of Statistics (GBoS); Ministry of Agriculture (MoA)

### Debt sustainability analysis — headline risk ratings and summary findings
- Risk of external debt distress: High
- Overall risk of debt distress: High
- Granularity in the risk rating: Sustainable
- Application of judgment: No
- Summary findings:
  - The Gambia’s overall and external debt distress risk ratings remain high and public debt continues to be deemed sustainable.
  - Under the updated macro framework, there remain breaches of the indicative thresholds for the PV of external debt-to-exports, external debt service-to-exports and external debt service-to-revenue.
  - Breaches primarily reflect continued weaknesses in projected exports in the early years and rising debt service commitments in the medium term.
  - The PV of overall debt-to-GDP ratio remains on a downward sloping path and drops below its benchmark of 55 percent of GDP by 2025, underpinned by fiscal consolidation, reliance on grants and concessional loans, and support from development partners.
  - Downside risks include the protracted war in Ukraine and the path of the COVID-19 pandemic.

### Public debt coverage and contingent liabilities design (Text Table 1)
- Public sector coverage for the DSA includes: central government, central bank and government-contracted debt pertaining to State-owned enterprises (SOEs).
- SOE debt linked to trade credit from the Islamic Trade Finance Corporation (ITFC) is accounted in government debt (includes NAWEC and GNPC).
- Contingent liabilities test parameters:
  - SoE's debt (guaranteed and not guaranteed by the government): 2.0 percent of GDP
  - PPP: 0.00 percent of GDP (35 percent of PPP stock; PPPs estimated marginal)
  - Financial market shock (default): 5 percent of GDP
  - Total (2+3+4+5): 7.0 percent of GDP

### Recent debt developments (key statistics and composition)
- Total public debt to GDP: about 84 percent as of end-2022
- External debt to GDP: about 52 percent as of end-2022
- Composition of PPG external debt:
  - Around 68 percent owed to multilateral creditors
  - Bilateral creditors: 29 percent
  - Commercial creditors: 3 percent
- Approximately 30 percent of PPG external debt is owed to the IMF and MDBs; about 70 percent is owed to a combination of various creditors from the Middle East.
- Outstanding external loans contracted by the Government for SOEs amounted to 16.6 percent of GDP at end-2022.
- Outstanding debt to ITFC amounted to 1.1 percent of GDP at end-2022.
- The outstanding external debt stock and related debt service (Text Table 2, selected figures):
  - Total debt (2022, in US$ millions): 1,669.3 — (100.0 percent total debt) — 83.7 percent of GDP
  - External (2022, US$ millions): 1,029.3 — 61.7 percent total debt — 51.6 percent of GDP
  - Multilateral creditors (2022, US$ millions): 701.5 — 42.0 percent total debt — 35.2 percent of GDP
  - IMF (2022, US$ millions): 129.5
  - World Bank (2022, US$ millions): 127.2
  - Bilateral creditors (2022, US$ millions): 300.0 — 18.0 percent total debt — 15.0 percent of GDP
  - Commercial creditors (2022, US$ millions): 27.7 — 1.7 percent total debt — 1.4 percent of GDP
  - Domestic debt (2022, US$ millions): 640.1 — 38.3 percent total debt — 32.2 percent of GDP
  - Nominal GDP (2022, US$ millions): 2,132.5

### Debt service and undisbursed loans (selected figures)
- Cumulative overall external debt service between 2022-2029: US$652 million (compared to US$620 million during the fifth ECF review)
  - Of total debt service: Amortization: $562 million; Interest: $90 million
- Undisbursed loans: US$250 million in December 2022 (compared to US$298 million in end-2021)

### Macroeconomic environment and assumptions (selected points and exact figures)
- Economic recovery and inflation:
  - Real GDP growth: estimated at 4.4 percent in 2022
  - Tourist arrivals in 2022 increased by 83 percent relative to 2021
  - Inflation: 13.7 percent (y-o-y) in December 2022; 14.8 percent (y-o-y) in March 2023
- Fiscal outcomes:
  - Overall fiscal deficit in 2022: 4.9 percent of GDP
  - Overall fiscal deficit expected in 2023: 2.7 percent of GDP
- Financing needs and domestic debt instrument mix:
  - Average gross financing needs projected at around USD 339 million over the next two years
  - Assumed instrument distribution for new domestic debt over next five years: 80 percent via T-bills, 15 percent via 3-year bonds, remaining via 5-year bonds
- Interest rate context:
  - Average interest rate on treasury bills: 2.67 percent at end-December 2021; 8.76 percent in November 2022; 10.49 percent in December 2022
- FX reserves:
  - Gross foreign exchange reserves were US$454.7 million at end-2022

*Prepared by the staffs of the International Monetary Fund and the International Development Association — May 25, 2023.*

### 5.1 months of imports, compared to US$ 424.6 million projected in the previous DSA. Reserves

### 1gmbea2023001 - 5.1 months of imports, compared to US$ 424.6 million projected in the previous DSA. Reserves

### Reserves and import coverage
- Reserves are projected at US$471.5 million in 2023 (or about 4.9 months of imports).
- Earlier reference: 5.1 months of imports, compared to US$ 424.6 million projected in the previous DSA.

### Realism of the macroeconomic framework
- The realism of the macroeconomic framework is confirmed based on several metrics.
- Projected fiscal adjustment for the next three years is in the top quartile of the distribution of approved Fund-supported programs for LICs since 1990, underpinned by:
  - (i) projected phasing out of revenue and spending measures related to COVID-19 and the war in Ukraine;
  - (ii) completion of large infrastructure projects related to the OIC conference;
  - (iii) revenue mobilization measures;
  - (iv) development partners’ disbursements.
- Contribution of government capital to real GDP growth is conservative and remains in the order of historical magnitudes.
- Baseline projection deviates at times from growth paths under different fiscal multipliers, but projected rebound in growth is considered reasonable given development partners’ support and strong macroeconomic policies (including under the IMF-supported program).
- Drivers of projected medium-term debt-creating flows for public debt are comparable to those underlying historical outturns.
- Residuals in the forecast years for the external and public DSAs include contributions of real exchange rate movements, factors affecting debt changes not captured by debt-creating flows (i.e., project grants), and adjustment for coverage between fiscal accounts and DSAs.

### Revised external borrowing plan (volume of new debt, US$ millions)
- Total debt contracted (2020–23): 207 (2023 proj)
- Concessional debt (2020–23): 192 (2023 proj)
  - Multilateral debt (2020–23): 135 (2023 proj)
    - Of which: Port expansion (2020–23): 50 (2023 proj)
  - Bilateral debt (2020–23): 57 (2023 proj)
- Nonconcessional debt (2020–23): 15 (2023 prog and proj)
  - Note: The nonconcessional debt is part of a concessional financing package for the port expansion.
- Use of debt financing (Infrastructure): 207 (2023 proj)
  - Of which: Port Expansion: 56 (2023 proj)

### Selected macroeconomic indicators (2021–2027) — highlighted series (exact values)
- Real GDP Growth (percent), Current DSA:
  - 2021: 4.3
  - 2022: 4.4
  - 2023: 5.6
  - 2024: 6.3
  - 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: 25.9
  - 2023: 30.9
  - 2024: 38.6
  - 2025: 7.1
  - 2026: 6.3
  - 2027: 6.4
  - 15-year average: 9.2
- Imports of goods and services growth (percent), Current DSA:
  - 2021: 7.3
  - 2022: 23.4
  - 2023: 19.2
  - 2024: 9.6
  - 2025: 6.0
  - 2026: 3.6
  - 2027: 5.5
  - 15-year average: 5.7
- Current account deficit (percent of GDP), Current DSA (includes worker's remittances and grants):
  - 2021: 0.1
  - 2022: 6.0
  - 2023: 11.9
  - 2024: 8.9
  - 2025: 9.5
  - 2026: 8.6
  - 2027: 8.0
  - 15-year average: 1.9
- Public investment (percent of GDP), Current DSA:
  - 2021: 6.2
  - 2022: 8.4
  - 2023: 9.1
  - 2024: 8.2
  - 2025: 8.7
  - 2026: 8.2
  - 2027: 8.4
  - 15-year average: 7.8
- Overall fiscal deficit (includes grants), Current DSA:
  - 2021: 4.6
  - 2022: 4.9
  - 2023: 2.7
  - 2024: 2.0
  - 2025: 0.9
  - 2026: 0.5
  - 2027: 0.6
  - 15-year average: 1.3

### Debt carrying capacity, classification, and thresholds
- Debt carrying capacity classification: Medium (CI score 2.91, same as previous DSA).
- CI components and contributions (selected exact entries):
  - CPIA: coefficient 0.385; 10-year average value 2.974; contribution 1.15 (39%)
  - Real growth rate (in percent): coefficient 2.719; 10-year average 5.146; contribution 0.14 (5%)
  - Import coverage of reserves (in percent): coefficient 4.052; 10-year average 37.091; contribution 1.50 (52%)
  - Import coverage of reserves^2 (in percent): coefficient -3.990; 10-year average 13.757; contribution -0.55 (-19%)
  - Remittances (in percent): coefficient 2.022; 10-year average 13.816; contribution 0.28 (10%)
  - World economic growth (in percent): coefficient 13.520; 10-year average 2.898; contribution 0.39 (13%)
- Applicable external debt burden thresholds (public and publicly guaranteed external debt):
  - PV of debt-to-GDP ratio: 40 (percent)
  - PV of debt-to-exports ratio: 180 (percent)
  - Debt service-to-exports ratio: 15 (percent)
  - Debt service-to-revenue ratio: 18 (percent)
  - Total public debt benchmark (PV of total public debt in percent of GDP): 55

### External DSA baseline findings
- Under the baseline scenario:
  - PV of external debt-to-exports breaches the threshold level of 180 in 2023, then falls below and declines thereafter.
  - Debt-service-to-exports ratio breaches the threshold level of 15 in 2023, and again between 2025-28; overall a continuous 4-year (and 5-year overall) breach.
  - External debt service-to-revenue ratio breaches the threshold level of 18 between 2023–28, before falling below the threshold thereafter.
  - PV of external debt-to-GDP remains within the threshold level of 40 for the entire forecast horizon.
- Reasons for breaches: lower export growth in the near-term and higher debt service commitments in the medium-term.

### External DSA stress test findings
- Standardized stress tests used; combined contingent liabilities test assumes a shock of 7.0 percent of GDP (5 percent of GDP for financing sector shock and 2.0 percent of GDP for non-guaranteed SOEs debt).
- Under stress scenarios:
  - PV of debt-to-GDP breaches 40 in 2024 and falls below in 2027.
  - PV of debt-to-exports breaches 180 in 2023 and remains above for the remainder of the forecast horizon.
  - Debt-service-to-exports breaches 15 in 2023 and remains above for the remainder of the forecast.
  - Debt-service-to-revenue breaches 18 in 2025 and remains above till 2031.
  - For PV of debt-to-exports and debt service-to-exports ratios: exports shock is most severe.
  - For PV of debt-to-GDP and debt service-to-revenue ratios: combination shock is most severe.

### Public DSA findings
- Baseline scenario:
  - PV of total public debt-to-GDP breaches benchmark level of 55 between 2023–24, but falls within the benchmark level in 2025 and declines thereafter.
  - PV of debt-to-revenue and debt service-to-revenue are on a declining trend for the entire forecast horizon.
- Stress scenario:
  - PV of total public debt-to-GDP remains above the benchmark until 2028.
  - Non-debt flows shock is the most extreme for PV of total public debt-to-GDP ratio under stress.
- Assessment: Overall public debt position assessed at high risk of debt distress but remains sustainable.
  - Rationale for sustainability: continued downward path underpinned by fiscal consolidation, reliance on grants and concessional loans, and development partner support; authorities implementing debt management policy to reduce roll-over risks and lengthen maturity.
  - Key downside risks noted.

### Risks, vulnerabilities, and mitigation
- Overall assessment: The Gambia’s external and overall debt are sustainable but remain at a high risk of debt distress.
- Downside risks include:
  - Protracted war in Ukraine (pressure on inflation and foreign exchange).
  - Renewed waves of COVID-19 infections (weighing on recovery and budget).
  - Uncertainty over donor support disbursements (ability to meet triggers and donor planning).
  - Uncertainty in medium- and long-term remittance inflows.
  - Climate change risks (e.g., major flooding in July 2022).
- Quantified downside scenario:
  - Growth could fall by about 2.0 percentage points below the baseline in the near term.
  - Fiscal deficit would widen, increasing financing needs and pushing PV of total public debt to fall below the benchmark level of 55 two years later than under the baseline.
  - Foreign exchange reserves would come under pressure, creating challenges to external debt servicing capacity.
- Mitigating factors:
  - Authorities implementing measures expected to bolster domestic revenue mobilization in the near and medium term.
  - Private remittance inflows projected to remain above pre-pandemic levels (note: remittances rose from an annual average of about US$150 million during 2015-19 to about US$485 million during 2020-22 and are projected to slightly decline but remain above pre-pandemic levels).
  - Policies supporting foreign exchange reserves.
  - Authorities implementing a debt management policy to reduce roll-over risk and lengthen maturities.
- Data and execution risks:
  - Data revisions, availability of concessional financing for infrastructure, and potential decline in donor support could affect future assessments.
  - Need to bolster data collection and reconciliation for debt and external sector statistics; strengthen inter-agency coordination and data sharing on public debt and grants.
  - Execution of large public investment projects (Port of Banjul extension, Bertil Harding highway) should remain within external borrowing plan ceilings; deviations could pose risks to the debt outlook.
- External support:
  - The World Bank will continue to support debt management, SOEs, and public investment management under the planned WB Public Administration Modernization Project (PAMP, P176924) with complementary reform actions through pipeline Development Policy Financing operations and SDFP.

*Source: 1gmbea2023001 - 5.1 months of imports, compared to US$ 424.6 million projected in the previous DSA. Reserves*

### 17.      They agreed with the thrust of the analysis and acknowledged the challenges it presents.

### 17.      They agreed with the thrust of the analysis and acknowledged the challenges it presents.

### Overview
- The COVID-19 pandemic, the consequences of the war in Ukraine, and large infrastructure investment needs are contributing to upwards pressures on the debt stock.
- The expiration of the debt service deferral period and the ensuing rise in debt service commitments from 2025 pose additional challenges.
- Authorities have implemented measures to decrease the overall debt burden and mitigate the persistent high risk of debt distress, and remain committed to reducing debt vulnerabilities by exercising continued restraint in new borrowing and implementing a robust medium-term fiscal framework.
- For longstanding external arrears, authorities are making progress with Libyan authorities to reconcile debt amounts and are reaching out to Venezuelan authorities to restart discussions regarding arrears.

### IDA SDFP Policy Performance Actions (PPAs) and ongoing PPAs
- As part of IDA’s Sustainable Development Finance Policy (SDFP) Policy Performance Actions (PPAs) for FY22:
  - The Gambia approved a three-year public investment program (PIP) for selected priority sectors: health, education, agriculture, infrastructure, energy, and environment, to rationalize public investment and anchor debt sustainability.
  - Ensured new borrowing remained within the ceilings of the external borrowing plan.
- Ongoing PPAs (FY23) focus on:
  - (i) Improving debt transparency by publishing the annual public debt bulletin for 2022, including a table on government guarantees extended to all SOEs.
  - (ii) Improving fiscal and debt sustainability by preparing and publishing the first Fiscal Risk Statement (FRS).
  - (iii) Enhancing debt sustainability by ensuring that The Gambia does not enter into any contractual obligations for new external PPG non-concessional debt in FY23, except if the non-concessional debt limit is adjusted by the World Bank to: (a) reflect any material change of circumstances, or (b) ensure coordination with the IMF, in particular with adjustments in the IMF Debt Limit Policy (DLP).

### Key sustainability findings and indicators (selected values preserved exactly as in source)
- External debt (nominal), percent of GDP:
  - 2020: 50.2
  - 2021: 49.8
  - 2022: 53.0
  - 2023: 46.4
  - 2024: 42.6
  - 2025: 39.1
  - 2026: 36.4
  - 2027: 34.2
  - 2028: 32.1
  - 2033: 24.6
  - 2043: 15.2
- Of which: public and publicly guaranteed (PPG) external debt, percent of GDP:
  - 2023: 45.5
  - 2033: 24.6
  - 2043: 15.2
- Identified net debt-creating flows (selected years, percent of GDP):
  - 2023: 4.4
  - 2024: 1.7
  - 2025: 2.8
  - 2026: 2.4
  - 2027: 2.0
  - 2033: -2.7
- Non-interest current account deficit (percent of GDP):
  - 2023: 11.4
  - 2024: 8.1
  - 2025: 9.2
  - 2026: 8.3
  - 2027: 7.7
  - 2033: 2.0
- Net FDI (negative = inflow), percent of GDP:
  - 2023: -4.7
  - 2033: -3.7
- Endogenous debt dynamics (percent of GDP):
  - 2023: -2.3
  - 2024: -1.9
  - 2025: -1.9
  - 2026: -1.5
  - 2027: -1.4
  - 2033: -1.0
- Residual (percent of GDP):
  - 2023: -11.1
  - 2024: -5.5
  - 2025: -6.2
  - 2026: -5.1
  - 2027: -4.2
  - 2033: 1.6
- Sustainability indicators (selected):
  - PV of PPG external debt-to-GDP ratio (selected projection values):
    - 2023: 35.0
    - 2024: 32.7
    - 2025: 30.1
    - 2026: 28.0
    - 2027: 25.6
    - 2028: 23.3
    - 2033: 13.9
    - 2043: 8.5
  - PV of PPG external debt-to-exports ratio (selected):
    - 2023: 318.0
    - 2024: 244.2
    - 2025: 179.6
    - 2026: 168.0
    - 2027: 153.2
    - 2028: 139.8
    - 2033: 71.1
    - 2043: 48.3
  - PPG debt service-to-exports ratio (selected):
    - 2020: 3.7
    - 2023: 22.8
    - 2024: 14.3
    - 2025: 16.4
    - 2026: 17.8
    - 2033: 6.7
    - 2043: 3.2
  - PPG debt service-to-revenue ratio (selected):
    - 2020: 2.2
    - 2023: 25.2
    - 2024: 18.9
    - 2025: 20.3
    - 2026: 21.1
    - 2033: 9.0
    - 2043: 3.9
- Gross external financing need (Million of U.S. dollars):
  - 2023: 252.4
  - 2024: 171.5
  - 2025: 219.4
  - 2026: 211.5
  - 2027: 203.5
  - 2028: 200.4
  - 2033: -15.1
  - 2043: -430.6

### Key macroeconomic assumptions (selected exact values)
- Real GDP growth (in percent):
  - 2020: 0.6
  - 2021: 4.3
  - 2022: 4.4
  - 2023: 5.6
  - 2024: 6.3
  - 2025: 5.8
  - 2026–2029: 5.0 (each year)
  - 2033: 5.0
  - 2043: 3.5
  - Average (Actual/Projections): 5.3
- GDP deflator in US dollar terms (change in percent):
  - 2023: 2.1
  - 2024: 3.9
  - 2025: 2.0
  - 2026: 1.0
  - 2027: 1.3
  - 2033: 3.7
- Effective interest rate (percent):
  - 2023: 1.0
  - 2024: 1.8
  - 2025: 0.9
  - 2026: 0.9
  - 2027: 0.9
  - 2033: 0.7
- Growth of exports of G&S (US dollar terms, in percent):
  - 2023: 30.9
  - 2024: 38.6
  - 2025: 7.1
  - 2026: 6.3
  - 2027: 6.4
  - 2033: 7.4
  - Average (Actual/Projections): 14.4
- Government revenues (excluding grants, in percent of GDP):
  - 2020: 14.5
  - 2021: 14.3
  - 2022: 12.0
  - 2023: 12.1
  - 2024: 12.7
  - 2025: 13.5
  - 2026: 14.1
  - 2027: 14.5
  - 2028: 14.8
  - 2033: 14.7
  - Average (Actual/Projections): 14.5
- Aid flows (in Million of US dollars):
  - 2020: 153.3
  - 2021: 51.3
  - 2022: 119.7
  - 2023: 185.9
  - 2024: 180.5
  - 2025: 194.6
  - 2026: 209.3
  - 2027: 221.9
  - 2028: 230.2
  - 2033: 272.8
  - 2043: 316.3

### Stress tests, bound tests, and sensitivity analysis (high-level)
- Stress-test approach notes:
  - The most extreme stress test is the test that yields the highest ratio in or before 2033.
  - All additional financing needs generated by the shocks under the stress tests are assumed to be covered by PPG external MLT debt in the external DSA.
  - Default terms of marginal debt are based on baseline 10-year projections.
- Selected sensitivity outcomes for PV of PPG external debt-to-GDP ratio (percent):
  - Baseline 2023: 32.7; 2024: 30.1; 2025: 28.0; 2026: 25.6; 2027: 23.3; 2028: 21.1; 2033: 13.9
  - Bound test B6 (Combination of B1-B5) 2024: 43.2; 2025: 46.8; 2026: 43.7; 2033: 25.6
- Selected sensitivity outcomes for PV of PPG external debt-to-exports ratio (percent):
  - Baseline 2023: 244.2; 2024: 179.6; 2025: 168.0; 2026: 153.2; 2027: 139.8; 2028: 126.6; 2033: 71.1
  - Bound test B3 (Exports) 2024: 361.1; 2025: 542.9; 2026: 503.4
- Debt service-to-exports ratio (baseline and scenarios, percent):
  - Baseline 2023: 22.8; 2024: 14.3; 2025: 16.4; 2026: 17.8; 2027: 17.3; 2028: 17.5; 2033: 6.7
  - Bound test B3 (Exports) 2024: 25.6; 2025: 41.8; 2026: 46.2
- Public debt (baseline, percent of GDP) selected values from public DSA:
  - Public sector debt 2020: 85.9; 2021: 83.5; 2022: 83.9; 2023: 72.8; 2024: 69.0; 2025: 64.0; 2026: 59.7; 2027: 55.5; 2028: 51.6; 2033: 40.0; 2043: 27.0
  - Identified debt-creating flows (public sector, percent of GDP) 2023: -5.2; 2024: -4.8; 2025: -4.7; 2026: -4.1; 2027: -3.8; 2033: -0.9
  - Primary deficit (public sector, percent of GDP) 2023: 0.6; 2024: -1.0; 2025: -1.6; 2026: -1.7; 2027: -1.2; 2033: 0.7
  - PV of public debt-to-GDP ratio (selected projection values): 2023: 69.8; 2024: 60.4; 2025: 57.6; 2026: 53.6; 2027: 49.6; 2028: 45.2; 2033: 29.5; 2043: 20.4

### Policy implications and authorities’ planned actions (as stated)
- Continue restraint in new borrowing to keep debt vulnerabilities in check.
- Implement a robust medium-term fiscal framework to reduce debt burdens.
- Improve debt transparency (publication of public debt bulletin and Fiscal Risk Statement).
- Coordinate with development partners (World Bank, IDA) to ensure borrowing limits and DLP adjustments are aligned.
- Continue negotiations to resolve longstanding external arrears (engagement with Libyan and Venezuelan authorities).

*Source: Statement by Mr. Nakunyada, Executive Director for The Gambia and Mr. Cham, Senior Advisor to the Executive Director to The Gambia; IMF staff estimates, projections, and Debt Sustainability Analysis tables and figures (excerpts reproduced).*

### Introduction

### Introduction

### Program performance
- Five out of six quantitative performance criteria (QPCs) at end-December 2022 were met, including the ceiling on net domestic borrowing (NDB).
- The continuous QPC on external arrears was temporarily breached due to delayed settlement of the national utility company debt service obligations caused by treasury challenges related to high fuel prices.
- Authorities’ corrective measures for the utility: increased tariffs by about 30 percent between March-April 2023; mitigated revenue leakages; increased collections by rolling out prepaid meters.
- Three out of four indicative targets (ITs) at end-December 2022 were met, including the IT on poverty spending (met with a comfortable margin).
- The IT on the ceiling on net domestic assets of the central bank was missed due to an unanticipated and large exchange rate depreciation.
- Two out of three structural benchmarks (SBs) for end-February 2023 were met; the third SB (Cabinet approval of a new PFM act) was completed with a delay in mid-March 2023.
- Authorities request Executive Directors’ support to complete the sixth and last review under the ECF arrangement and a waiver of Nonobservance of a performance criterion.

### Recent economic developments and outlook
- Real GDP projections:
  - 4.4 percent in 2022.
  - 5.6 percent in 2023 (largely due to strong performance in the agriculture and construction sectors).
  - 6.3 percent in 2024.
  - Stabilizing at 5 percent in the medium term.
- Tourism: arrivals registered an 80 percent increase in 2022, but sector growth remains below pre-pandemic levels.
- Inflation developments:
  - Increased from 14.8 percent in March 2023 to 17.4 percent in April 2023, driven by external shocks.
  - Inflation is expected to ease in 2023 due to monetary policy tightening and projected moderation in key commodity prices.
- External sector:
  - Current account deficit expected to deteriorate in 2023 due to increased imports supporting private and public construction projects.
  - International reserves declined from 4.8 to 4.0 months of import cover between March and April 2023.
  - Stable remittance inflows are expected to help shore up external reserves and stabilize the exchange rate.
- Downside risks: protracted war in Ukraine, high inflation, subdued external demand, high debt service costs, and climate vulnerabilities.

### Fiscal policy and debt sustainability
- Authorities’ commitments and measures:
  - Anchor the 2023 fiscal framework on the adopted budget through fiscal consolidation while developing plans to address emerging pressures.
  - Contain allowances within the approved wage envelope and reprioritize spending.
  - Strengthen public financial management and enhance cash management via strict adherence to recommendations of the Cash Management Committee.
- Risks to spending: compensation of employees in education and health sectors, rising capital development expenditures and transfers.
- Revenue performance:
  - First quarter 2023 tax revenue shortfalls, but Customs and Excise collections exceeded expectations due to ASYCUDA WORLD implementation and establishment of a dry port.
  - Measures to enhance revenue: data matching, tax audits, public awareness campaigns, coordination between the revenue authority and the Tax Revenue Department, ITAS digitalization, streamlining corporate income tax, duty waiver exemptions, tax incentives under GIEPA Act, reduce profit shifting, and enhance tax arrears management.
  - Strengthen customs border and inland controls; enhance internal assurance and integrity mechanisms; cleanse taxpayer registration ledger for small and medium taxpayers.
  - Signed PPP contracts; completed mid-term review of the Corporate Strategic Plan in January 2023; extending GAMTAXNET to all tax offices.
- Public debt strategy:
  - Implementing a strong medium-term fiscal framework to place public debt on a downward path by bolstering domestic revenue mobilization.
  - Executing revenue-related commitments including sale of assets under the Janneh Commission and privatization of Megabank.
  - Strengthening bridge toll collection and adhering to the agreed external borrowing plan.
  - Mitigating fiscal risks from contingent liabilities of SOEs and PPPs by committing SOEs to performance contracts and bolstering external buffers in preparation for the expiration of debt deferrals.

### Monetary, exchange rate, and financial sector policies
- Monetary policy:
  - Central Bank of The Gambia (CBG) tightened monetary policy; MPC increased the policy rate by 200 basis points to 16 percent in May 2023.
  - Growth of monetary aggregates decreased significantly in 2022 and is expected to continue trending down in 2023.
  - Reserve money and bank reserves declined, indicating a reduction in excess liquidity from August to December 2022.
  - CBG will continue to closely monitor inflation and stand ready to recalibrate monetary policy as needed.
- Exchange rate and FX management:
  - Authorities operate under a free-floating exchange rate regime and have taken steps to allow market forces in the FX market.
  - The wedge between official and parallel market rates closed since end-January 2023.
  - CBG has been a net FX buyer since January 2023 and has been building external reserve buffers.
  - To address FX demand pressures during the lean tourism period and absence of timber export earnings, efforts are being made to facilitate trade with other ECOWAS member countries to enhance FX inflows.
- Financial sector soundness and supervision:
  - Financial sector remains solid with ample capital and liquidity buffers and low NPLs, though authorities remain attentive to emerging vulnerabilities.
  - CBG actions: implement the National Financial Inclusion Strategy; conduct bank stress testing; require reporting of debtor information to Credit Reference Bureau (CRB); enhance IFRS 9 knowledge among supervisors and banks.
  - Enhance oversight of non-bank financial institutions (NBFIs), particularly microfinance centers (MFCs).
  - Implement recommendations from GIABA assessment: prepared an action plan including increasing Financial Intelligent Unit staff and preparing a strategic plan (2023-2027).
  - Drafted AML/CFT amendment bill currently under review to align with domestic laws to preserve corresponding banking relationships and restore banking system stability.

### Structural reforms
- Recovery-Focused National Development Plan (RF-NDP):
  - RF-NDP being finalized; authorities preparing a financing strategy and plan to consult development partners ahead of a Roundtable conference later this year.
- Energy and infrastructure:
  - Laid foundation stone for construction of a 23-megawatts solar plant and an eight megawatts energy storage system co-financed by the World Bank and the European Investment Bank for electricity restoration and modernization.
- Community development and inclusiveness:
  - Continue Programme for Accelerated Community Development (PACD); collaborate with local communities to enhance access to land for agricultural investment.
  - Revamped national business council meetings; May 2023 meeting chaired by the President.
  - Women Enterprise Fund (WEF): provided literacy training to over 30,000 women and girls and loans to over 600 women.
- Governance and SOE reform:
  - Enforcing performance contracts (PCs) with SOEs; PCs signed with three SOEs in February 2023; plan to sign PCs with three more SOEs and roll out PCs to all SOEs by 2024.
  - SOEs bill approved by the National Assembly.
- Public financial management and anti-corruption:
  - Cabinet approved the PFM bill in March 2023; submitted to the National Assembly.
  - Anti-corruption bill submitted to the National Assembly with approval expected by end-June 2023; plan to set up an anti-corruption commission and reinforce assets declaration.
  - Developed PPP bill validated by stakeholders and shared with the Ministry of Justice for review and submission to Cabinet; developing national PPP policy with IMF technical support and will finalize PPP regulations once PPP bill is approved.
  - Implementing Gambia Strategic Review Board (GSRB) and investment prioritization to enforce investment selection framework and screen PPP candidate projects to limit contingent liabilities.
- Program-based budgeting (PBB) and capacity building:
  - Making progress on PBB despite capacity constraints in MDAs; MDAs to review and update Strategic Plans to align with RF-NDP.
  - Develop templates for the annual budget process with US Treasury support; working with AFRITAC West 2 to operationalize gender budgeting.
- Procurement, PFM, and audit transparency:
  - Finalizing regulations of the Procurement Act 2022 and seeking Cabinet approval of the new PFM Bill 2023.
  - Completed stage two of the COVID-19 audit report which was submitted and discussed at the National Assembly and will be published soon.
- Climate change and green development:
  - Published the US$4 billion Long-Term Climate-Neutral Development Strategy to achieve net zero by 2050.
  - Implementing policies compatible with the 1.5°C Paris Climate Agreement.
  - Approved the Green focused National Development Plan (2023-2027).
  - Beneficiary of the West Africa Coastal Areas Resilience Investment Project with US$246 million financed by the World Bank to strengthen coastal resilience.
  - West African Power Pool selected consultants to provide Transaction Advisory Services to support development of a Regional Solar Park.

### Conclusion and policy intentions
- Authorities have continued reform implementation despite multiple shocks, delivering critical reforms that brought the ECF arrangement to its final review.
- The Fund’s support has been important in restoring macroeconomic stability.
- Authorities have requested a successor financing arrangement to help catalyze additional donor support and address remaining structural impediments.
- Authorities look forward to continued Fund technical and policy support to help realize their growth and development aspirations.

*Source: Introduction (1gmbea2023001).*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1gmbea2023001.pdf_