## 1gmbea2025002-print-pdf

## Source details

**Canonical URL:** [1gmbea2025002-print-pdf](https://www.imf.org/-/media/files/publications/cr/2025/english/1gmbea2025002-print-pdf.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2025/english/1gmbea2025002-print-pdf.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2025/english/1gmbea2025002-print-pdf.pdf.json)

---

### Executive summary and program status
- Economic momentum remains strong, and inflation is slowly coming down.
- Program implementation:
  - All but one quantitative performance criterion (QPCs) and all indicative targets (ITs) for end-December 2024 were met.
  - The QPC on net domestic borrowing (NDB) was missed by about 0.3 percent of GDP (GMD 564 million).
  - Of seven structural benchmarks (SBs), four were met on schedule and three were missed; two missed SBs (NAO Bill and GIEPA Act) are requested to be rephased to end-September 2025 and one missed SB on arrears stocktaking to be modified and rephased to end-December 2025.
- Executive Board actions and financing:
  - Board approved waivers of nonobservance of the end-June 2024 floor on the domestic primary balance and the end-December 2024 ceiling on NDB, based on corrective actions taken.
  - Completion of the third review would result in a disbursement of the equivalent of SDR 12.44 million (20 percent of quota), bringing IMF financial support under the arrangement to SDR 37.31 million (about 59.98 percent of quota).
- Staff recommendation:
  - Support completion of the third ECF review, waivers for the end-December 2024 QPC on NDB, modifications of performance criteria, and approval of a new RSF arrangement.

### Macroeconomic outlook and key risks
- Growth and inflation projections:
  - Real GDP estimated at 6 percent in 2024.
  - Real GDP projected to expand by 5.7 percent in 2025 and stabilize around 5 percent over the medium term.
  - Headline inflation peaked at 18.5 percent in September 2023; 10.2 percent (y-o-y) at end-2024; 9.1 percent by end-March 2025.
  - Inflation projected to converge to the CBG’s target of 5 percent by 2026.
- External and reserve outlook:
  - Exchange rate vis-à-vis the US dollar depreciated by about 9.7 percent during 2024.
  - The wedge between the official and parallel exchange rates hovered around 1-  2 percent in recent months, compared to a peak of above 10 percent in mid-2022.
  - Gross international reserves: US$533.5 million at end-2024; projected to remain above 4 months of prospective imports over the medium term.
- Balance of risks (tilted to the downside):
  - Intensification of global geopolitical and trade tensions, commodity price volatility, possible global slowdown, election-related domestic pressures (elections scheduled for 2026), and climate shocks.
  - Climate exposure significant: low elevation, reliance on rain-fed agriculture, top ten exposure to sea level rise globally.

### Recent economic developments and key indicators
- Growth and sectors:
  - Real GDP growth: "The Gambian economy grew on average by 7.2 percent in the first three quarters of 2024." Real GDP growth estimated at 6 percent in 2024.
  - Tourism: Tourist arrivals increased by 3.9 percent relative to 2023 in one summary and by 9.9 percent in another series; services exports and travel income increases are documented across tables.
  - Remittances: US$709.4 million in 2024 (remittances series and text tables).
- Monetary policy:
  - CBG policy rate maintained at 17 percent since the September 2023 Monetary Policy Committee meeting (cumulative 700 basis points increase since March 2022).
- Monetary and banking indicators (end-2024):
  - Banks’ capital adequacy ratio: 28.5 percent.
  - Banks’ liquidity ratio: 76.5 percent.
  - Non-performing loans (NPLs): 15.8 percent at end-September 2024; 14.6 percent by end-December 2024.
  - System-wide provisioning levels: 122 percent.
  - Credit to the private sector: 24 percent (y-o-y).
  - Banks’ excess reserves: about 7.8 percent of reserve money.
- Selected macro series (2022–30 highlights from Table 1):
  - GDP at constant prices series includes: 5.5 4.8 5.8 6.0 5.9 5.7 5.1 5.0 5.0 5.0 5.0 (2022–30).
  - Consumer prices (average): 11.5 17.0 13.9 11.6 9.7 9.3 6.7 5.0 5.0 5.0 5.0.
  - Public debt: 83.9 76.8 71.8 73.5 65.6 68.0 61.9 56.8 52.2 47.5 44.4.

### Fiscal performance, composition, and adjustments
- 2024 outturns (Text Table 1, percent of GDP):
  - Revenue: 2024 2nd Review Proj. 20.2; 2024 Prel. 20.0.
    - Domestic revenue: 2024 2nd Review Proj. 13.2; 2024 Prel. 13.2.
    - Taxes: 2024 2nd Review Proj. 10.3; 2024 Prel. 10.2.
    - Grants: 2024 2nd Review Proj. 7.0; 2024 Prel. 6.8; o/w Budget support: 1.9 / 1.9.
  - Expenditures: 2024 2nd Review Proj. 22.9; 2024 Prel. 23.7.
    - Expenses: 13.6 / 14.1.
    - Net acquisition of nonfinancial assets: 9.3 / 9.6.
  - Net lending (+)/borrowing (–): 2024 2nd Review Proj. -2.7; 2024 Prel. -3.8.
  - Memorandum — Domestic primary balance: 2024 2nd Review Proj. 0.7; 2024 Prel. 0.4.
- Fiscal narrative:
  - Fiscal performance in 2024 weaker than anticipated despite strong revenue collection; overall deficit estimated at 3.8 percent of GDP (exceeded projections by 1.1 percentage points).
  - Causes: transfers of third-party revenues not reflected in budget, unbudgeted support to NAWEC, OIC summit pressures, faster execution of foreign-financed capital projects.
  - Sizable unpaid commitments carried over to 2025 (about GMD 660 million or 0.3 percent of GDP).
  - A large statistical discrepancy emerged and appears structural; authorities working with STA ahead of fourth review.
- 2025 fiscal framework (Text Table 2, percent of GDP; two columns presented):
  - Revenue: 22.7 23.7.
  - Domestic revenue: 14.7 15.1.
  - Expenditures: 24.0 24.6.
  - Net lending (+)/borrowing (–): -1.3 -0.9.
  - Memorandum — Domestic primary balance: 1.4 1.0.
- Projected revenue yields from selected 2025 measures (Text Table 3, Percent of GDP):
  - Expansion of PIT base through wage increase: 0.1.
  - Export levy on scrap metal: 0.1.
  - Other tax policy measures: 0.1.
  - Impact of administrative improvements: 0.1.
  - Introduction of social security contribution: 0.2.
  - Africa50 asset recycling tranche: 1.8.
- Spending adjustments and pressures (Text Table 4):
  - MDA’s 2024 unpaid commitments ≈ GMD 660 million (0.3 percent of GDP) carried to 2025.
  - Expected earmarked revenue transfers ≈ GMD 1.6 billion (0.8 percent of GDP); planned investments in roads and vehicle procurements amounting to about 0.7 percent of GDP postponed to 2026.
  - Emergency transfer to help NAWEC meet arrears to Karpower ≈ GMD 1.4 billion (0.7 percent of GDP) in May; financed through World Bank budget support with temporary bridge financing from CBG until disbursement.
  - Unfunded expenditure pressures total: 1.1 percent of GDP.
- Fiscal strategy actions:
  - Authorities plan to offset carryovers and unbudgeted transfers by restraining non-priority spending in 2025 and to save any revenue overperformance to build fiscal buffers.
  - Prior action: cabinet approval of adjusted 2025 budget allocations to compensate for new unfunded spending pressures.

### Public Financial Management, arrears, and SOE reforms
- PFM priorities and SBs:
  - Adopt Domestic Revenue Mobilization Strategy (SB for end-June 2025).
  - Develop database of rental property (SB for end-June 2025).
  - Submit tax expenditure statement (SB for end-December 2025).
  - Review and modernize VAT (proposed SB for end-June 2026).
  - Update PFM Act aligned with IMF TA (SB for end-December 2025).
  - Institutionalize comprehensive domestic arrears reporting and develop timebound arrears reporting and clearing strategy (modified SBs rephased to end-December 2025 / end-June 2025).
  - Extend IFMIS to four multilateral-donor projects and all government-funded projects implemented after January 1, 2025 (SB for end-September 2025).
  - Align Chart of Accounts with GFS 2014 and publish manual (SB for end-September 2025).
- SOE oversight and measures:
  - As of April 2025, eight performance contracts signed; new NAWEC performance contract negotiated with ambitious KPIs.
  - NAWEC: contract with Karpower not to be extended; increase domestic generation and higher imports as substitutes; hire private operator for thermal plants; reduce transmission and distribution losses in line with performance contract.
  - Partial or full privatization of GAMCEL expected to be completed by end-March 2026 (SB).
  - Authorities to assign higher KPI weight to SOEs that have not published audited financial accounts to induce publication.

### Monetary policy, exchange rate, and financial sector resilience
- Monetary stance and tools:
  - Current policy stance described as "appropriately tight" and should be maintained (MEFP ¶16).
  - Policy instruments: monetary policy rate, issuance of CBG bills, deposit window, reserve requirement ratio; policy to be data-dependent and forward-looking.
- Exchange rate and FX policy:
  - Authorities committed to pursue an exchange rate that fully reflects market forces (MEFP ¶17).
  - Finalize and approve forex intervention policy by June 2025; limit FX interventions to alleviating excess volatility and disorderly conditions.
  - Issue identified: two-day lagged official exchange rate and simple average formula gives rise to multiple currency practice (MCP); CBG to eliminate this by finalizing a new electronic FX data collection system.
- Financial stability and supervision:
  - Recommended: strengthen risk-based supervision, monitor concentration risks, early intervention, capacity building, and establish a robust credit reference bureau by end-2025.
  - Sovereign exposure highlighted as vulnerability; adopt Basel frameworks with initial focus on Pillar 1 of Basel II.
  - Minimum regulatory capital commitments: augment banks’ minimum regulatory capital by GMD100 million by end-December 2025 (SB), and by another GMD100 million each year thereafter to reach GMD500 million by end-2027.
- Central Bank financial position and lending:
  - CBG will cease providing financial support to public entities; existing loans by CBG to general government entities are guaranteed by central government.
  - Future CBG lending to government entities only for cash flow purposes, at market terms, and not beyond 10 percent of the previous year’s tax revenue as per law.
  - CBG Board to approve amendments to the CBG Act aligning with IMF safeguards; cabinet approval and submission to National Assembly to follow.

### RSF proposal, reform measures, and staff views
- RSF access and design:
  - Staff proposes an 18-month arrangement under the RSF with access of 75 percent of quota (SDR 46.65 million) to support long-term balance-of-payments and macroeconomic stability.
  - RSF reform measures center on five pillars: (1) legal framework and enabling institutional environment, (2) green PFM, (3) climate data and transition taxonomy, (4) enhancing adaptation and resilience, and (5) the energy transition.
  - Disbursements to be used as budget support, substituting more expensive financing and creating policy space for climate investments; disbursements equally split among nine RMs over three reviews.
- Selected RM highlights and target dates (RM1–RM9):
  - RM1 (Climate Change Law): Draft and cabinet adoption — Target Date: March 2026; TA provider: WB.
  - RM2 (Fiscal risks / Green PFM): Methodology for fiscal risks from natural disasters — Target Date: March 2026; TA: IMF.
  - RM3 (Project appraisal climate criteria): Early December 2025; TA: IMF.
  - RM4 (Transition taxonomy and climate data): CBG to adopt taxonomy and climate data repository — Target Date: March 2026; TA: IMF/GCA.
  - RM5 (Small farmers insurance regulations): Target Date: September 2025; TA: IMF.
  - RM6 (Coastal zoning updates): Target Date: September 2026; TA: WB.
  - RM7 (Groundwater licensing regulations): Target Date: September 2026; TA: AFD/GCA.
  - RM8 (Carbon taxation / fuel excise conversion): Include in 2026 budget — Target Date: January 2026; TA: IMF. New tax should be US$5 per tonne more ambitious than existing taxes; preliminary estimate suggests 0.1 percent of GDP additional revenue.
  - RM9 (Electricity cost recovery): Review and plan to achieve full cost-recovery by end-2030; Target Date: September 2026; TA: IMF. Preliminary estimate: a 35 percent tariff increase would be necessary to achieve cost-recovery (subject to change with Karpower contract non-extension).
- Staff supports completion of the third ECF review, the waiver on NDB, modifications of performance criteria, and new RSF arrangement.

### Program conditionality, monitoring, and safeguards
- Prior action and waiver:
  - Prior action: cabinet approval of adjusted 2025 budget allocations to offset new unfunded spending pressures (status: Met).
  - Waiver requested and supported for the end-December 2024 QPC on NDB based on corrective measures.
- Program monitoring:
  - ECF and RSF performance monitored semi-annually via QPCs, ITs, SBs, and reform measures.
  - End-June and end-December 2025 QPCs on NDB, domestic primary balance, and end-December QPC floor on net international reserves adjusted to reflect late 2023 CBG dividend receipt, temporary NAWEC financing, and expected RSF disbursement.
  - New SBs added: submit shortlist of Anti-Corruption Commissioners to National Assembly by end-June 2025; publication of arrears payment schedule by end-March 2026; VAT review by end-June 2026.
- Safeguards:
  - Progress on 2024 safeguards assessment recommendations slow; vulnerabilities remain in CBG autonomy and governance.
  - CBG ceased quasi-fiscal activities and is winding down legacy ones; authorities requested Fund TA to assist drafting CBG Act amendments per safeguards recommendations.

### Debt sustainability, DSA findings, and financing
- DSA headline findings:
  - Public debt deemed sustainable over medium term but overall and external debt distress risks remain high.
  - PV of total public debt projected to decline below the benchmark of 55 percent of GDP in 2026.
  - External debt service-to-revenue ratio breaches its threshold over the medium term, highlighting external debt liquidity risk.
- Key DSA metrics and projections (selected exact figures):
  - Total public debt (percent of GDP): 83.9 (2022); 76.8 (2023); 71.8 (2024); 73.5 (2024 in certain tables); baseline public sector debt path declines to 13.3 by 2045 in Public Sector DSA table.
  - PV of PPG external debt-to-GDP (selected): 2025 = 34.8; 2026 = 33.2; 2027 = 32.5.
  - External debt (nominal percent of GDP) series includes: 53.0 (2022); 50.0 (2023); 47.6 (2024); 43.5 (2025); 42.2 (2026).
  - With proposed RSF access, Fund exposure metrics: outstanding credit to the IMF would peak at 7.8 percent GDP in 2026; annual debt service to the Fund would increase from 2.1 to 5.6 percent of revenue (2025–2030) and from 11.3 to 30.3 percent of debt service; total Fund credit outstanding as percent of gross international reserves would peak at 42.4 percent in 2026.
- Recommended policy emphasis to reduce debt vulnerabilities:
  - Rely on grants and highly concessional loans.
  - Implement strong medium-term fiscal framework and bolster domestic revenue mobilization.
  - Limit non-concessional external borrowing and closely monitor SOE and PPP contingent liabilities.
  - Build external buffers ahead of expiration of debt service deferrals in 2024.
- Financing assurances and burden sharing:
  - ECF program fully financed with firm commitments for next 12 months.
  - Disbursement of SDR 12.44 million following third review will help fill BOP financing gap; SDR 4.98 million to be on-lent for budget support.

### Climate risks, agriculture, and resilience priorities
- Climate vulnerability and impacts:
  - The Gambia highly vulnerable to sea level rise and climate-related natural disasters; about one third of population lives below 10 meters above sea level; Greater Banjul area has around 1.4 million residents (60 percent of total population) and is at sea level.
  - 2022 flashflood direct damages ≈ $82 million (~3.8 percent of 2022 GDP).
  - 2021 NDC estimates US$316 million required to fulfill mitigation and adaptation objectives.
  - Agriculture accounts for about half of total employment and over 22 percent of GDP; about 80 percent of agriculture is rain-fed.
- Agriculture-specific risks and projections:
  - Simulations indicate agricultural losses from severe droughts could increase three to fourfold compared to historical losses (example: 1-in-10-years drought historical ≈ $5 million loss vs projected ≈ $21 million under RCP8.5).
  - Food insecurity rising; food imports increase to compensate for lost output.
- Adaptation instruments and social protection:
  - Disaster risk financing instruments include $20 million Catastrophe Drawdown Option (2024–2027) and drought insurance coverage of $3.76 million under Africa Risk Capacity with 50 percent co-financing from AfDB.
  - Social registry completed December 2024; cash transfer programs RISE and Family Strengthening Program cover 17,000 households and 2,150 individuals respectively, with planned expansions in 2025 to cover about 10 percent of population.
  - Index-based insurance pilot covers 3,000 small farmers; regulations needed to scale.
- RSF role for climate:
  - RSF-supported measures expected to strengthen legal/institutional framework, green PFM, climate data and transition taxonomy, adaptation measures (insurance, zoning, water licensing), and energy transition (carbon taxation and electricity tariff reform).
  - DIGNAD model simulations show frontloading climate-resilient infrastructure investment and improving public investment efficiency can largely mitigate negative impacts of natural disasters on growth and debt, but high upfront costs require accompanying fiscal reforms and revenue mobilization.

### Policy recommendations and staff advice (summary)
- Fiscal:
  - Adhere to fiscal consolidation and 2025 targets; restrain non-priority spending, protect social outlays; enhance revenue collection (DRMS, VAT reform, rental property database, PIT/CIT/VAT capacity).
  - Institutionalize comprehensive arrears reporting and clearing framework; publish payment schedules for arrears.
- Monetary and FX:
  - Maintain tight, data-dependent monetary policy to bring inflation to 5 percent by 2026; finalize and transparently apply forex intervention policy; eliminate MCP via electronic FX data collection.
- Financial sector:
  - Strengthen risk-based supervision, adopt Basel Pillar 1, raise bank capital as committed, monitor NPLs and concentration risks, establish credit reference bureau by end-2025.
- Structural and governance reforms:
  - Accelerate PFM, SOE management, anti-corruption commission appointments, digitalization of business registration, land policy adoption, and SOE performance contracts and privatizations (GAMCEL by end-March 2026).
- Climate and RSF sequencing:
  - Implement RSF reforms across five pillars with TA support; sequence technically demanding reforms with early TA; use RSF to catalyze donor coordination and climate finance mobilization.
- Capacity development:
  - IMF TA to support revenue administration, PFM, statistics, forex and monetary operations, financial supervision, SOE oversight, and climate-related project appraisal and taxonomy work; coordinate with World Bank, GCA, AFD, and other partners.

*Source: Excerpts from "The Gambia — Third Review under the Extended Credit Facility; Executive Summary and selected sections" and related MEFP/annexes in 1gmbea2025002-print-pdf (June 2, 2025).*

### 8.1 percent by end-April 2025. The outlook is subject to significant downside risks stemming

### THE GAMBIA — THIRD REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT, REQUESTS FOR A WAIVER OF NONOBSERVANCE OF A PERFORMANCE CRITERION, MODIFICATIONS OF PERFORMANCE CRITERIA, AND FINANCING ASSURANCES REVIEW, AND REQUEST FOR AN ARRANGEMENT UNDER THE RESILIENCE AND SUSTAINABILITY FACILITY

### Executive summary and program status
- Economic momentum remains strong, and inflation is slowly coming down.
- Program implementation is mixed:
  - All but one quantitative performance criterion (QPCs) and all indicative targets (ITs) for end-December 2024 were met.
  - The QPC on net domestic borrowing (NDB) was missed by about 0.3 percent of GDP.
  - Of seven structural benchmarks (SBs), four were met on schedule and three were missed; two missed SBs (NAO Bill and GIEPA Act) are requested to be rephased to end-September 2025 and one missed SB on arrears stocktaking to be modified and rephased to end-December 2025.
- The Executive Board approved the authorities’ request for waivers of nonobservance of the performance criterion on the end-June 2024 floor on the domestic primary balance and the end-December 2024 ceiling on net domestic borrowing, based on corrective actions taken.
- Completion of the third review would result in a disbursement of the equivalent of SDR 12.44 million (20 percent of quota), bringing IMF financial support under the arrangement to SDR 37.31 million (about 59.98 percent of quota).

### Macroeconomic outlook and risks
- The outlook is subject to significant downside risks stemming from global uncertainty and large downside risks, particularly owing to global geopolitical tensions and uncertainty.
- Exposure to climate risks is significant, primarily through The Gambia’s low elevation and reliance on rain-fed agriculture.
- Authorities have requested support under the Resilience and Sustainability Facility (RSF) to support the climate agenda and complement the ECF in strengthening long-term macroeconomic stability and resilience.

### Recent economic developments and key indicators
- Real GDP growth:
  - Real GDP is estimated to have expanded by 6 percent in 2024.
- Tourism and remittances:
  - Tourist arrivals increased by 3.9 percent relative to 2023.
  - Remittance inflows remained strong.
- Inflation:
  - Headline inflation peaked at 18.5 percent in September 2023.
  - Headline inflation reached 10.2 percent (y-o-y) at end-2024.
  - Headline inflation further fell to 9.1 percent by end-March 2025.
- Monetary policy:
  - The Central Bank of The Gambia (CBG) has maintained its policy rate at 17 percent since the September 2023 Monetary Policy Committee meeting.
  - This follows a cumulative 700 basis points increase since March 2022.
- Fiscal performance (Text Table 1, Percent of GDP):
  - Revenue: 2024 2nd Review Proj. 20.2; 2024 Prel. 20.0
    - Domestic revenue: 2024 2nd Review Proj. 13.2; 2024 Prel. 13.2
    - Taxes: 2024 2nd Review Proj. 10.3; 2024 Prel. 10.2
    - Non-tax: 2024 2nd Review Proj. 2.9; 2024 Prel. 2.9
    - Grants: 2024 2nd Review Proj. 7.0; 2024 Prel. 6.8
      - o/w. Budget support: 2024 2nd Review Proj. 1.9; 2024 Prel. 1.9
  - Expenditures: 2024 2nd Review Proj. 22.9; 2024 Prel. 23.7
    - Expenses: 2024 2nd Review Proj. 13.6; 2024 Prel. 14.1
    - Net acquisition of nonfinancial assets: 2024 2nd Review Proj. 9.3; 2024 Prel. 9.6
    - Foreign financed: 2024 2nd Review Proj. 7.6; 2024 Prel. 8.1
    - Gambia local fund: 2024 2nd Review Proj. 1.7; 2024 Prel. 1.5
  - Net lending (+)/borrowing (–): 2024 2nd Review Proj. -2.7; 2024 Prel. -3.8
  - Financing: 2024 2nd Review Proj. 2.7; 2024 Prel. 4.2
    - Net incurrence of liabilities: 2024 2nd Review Proj. 2.7; 2024 Prel. 4.2
      - Domestic: 2024 2nd Review Proj. 1.7; 2024 Prel. 2.6
      - Foreign: 2024 2nd Review Proj. 1.0; 2024 Prel. 1.7
  - Statistical discrepancy: 2024 2nd Review Proj. 0.0; 2024 Prel. -0.5
  - Memorandum item — Domestic primary balance: 2024 2nd Review Proj. 0.7; 2024 Prel. 0.4
- Fiscal narrative:
  - Fiscal performance in 2024 was weaker than anticipated despite strong revenue collection.
  - Current spending exceeded plans due to transfers of third-party revenues not reflected in the budget, unbudgeted support to NAWEC, uncontained pressures from the OIC summit, and faster execution of foreign-financed capital projects.
  - The overall deficit is estimated to have exceeded projections by 1.1 percentage points, reaching 3.8 percent of GDP.
  - Sizable unpaid commitments were carried over to 2025.
  - A large statistical discrepancy emerged and appears structural; the authorities are resolving it ahead of the fourth review with STA technical assistance.

### Policy discussions and recommendations
- Fiscal policy:
  - Authorities plan to offset the carryover of 2024 spending commitments and unbudgeted transfers by restraining non-priority spending in 2025.
  - Adhering to fiscal consolidation and fiscal targets for 2025 is vital for reducing fiscal risks and ensuring debt sustainability.
  - Enhancing revenue collection to build additional fiscal buffers is critical.
  - Improving public financial management (PFM) to prevent domestic arrears and better control multi-year commitments will support fiscal discipline and accountability.
  - It is essential to limit fiscal risks from state-owned enterprises (SOEs) and public-private partnerships (PPPs).
  - Authorities propose a prior action for the third review to adopt by the cabinet adjusted 2025 budget allocations to compensate for new unfunded spending pressures.
- Monetary and exchange rate policy:
  - The Central Bank’s tight and data-dependent monetary policy is appropriate and should ensure that inflation converges to the medium-term target.
  - The foreign exchange market is functioning smoothly following the new foreign exchange policy implementation, and it is crucial to maintain an exchange rate that reflects market forces.
  - The central bank’s commitment to cease direct financial support to public entities is a welcome measure to protect its balance sheet.
  - Strengthening regulatory capacity and risk-based supervision is essential to preserve financial sector stability.
- Structural and governance reforms:
  - Progress with structural reforms is necessary to enhance governance and improve the business environment, promoting private sector development and job creation.
  - Implementation of recommendations from the recent governance diagnostic and prompt appointment of an anti-corruption commission are essential.
  - Structural reforms to be pursued and accelerated include domestic revenue mobilization, PFM, SOE management, governance, and the business environment.
- Climate and RSF sequencing:
  - Steadfast implementation of the authorities’ climate agenda under the newly approved RSF arrangement will complement the ECF in bolstering economic resilience and reducing balance of payment risks.
  - The RSF is expected to foster tighter coordination among domestic stakeholders and development partners.
  - It will be important to carefully sequence reforms under both arrangements, supported by targeted capacity development.

### RSF proposal and staff views
- Staff proposes an 18-month arrangement under the RSF with access of 75 percent of quota (SDR 46.65 million) to support efforts to strengthen long-term balance-of-payments and macroeconomic stability.
- Reform measures under the RSF center on five pillars: the legal framework and enabling institutional environment, green PFM, climate data and transition taxonomy, enhancing adaptation and resilience, and the energy transition.
- Staff supports:
  - Completion of the third ECF review and the associated financing assurances review.
  - The authorities’ requests for waivers of non-observance of the end-December 2024 QPC on NDB based on corrective measures taken.
  - The modifications of performance criteria and a new arrangement under the RSF.

*Source: The Gambia — Third Review under the Extended Credit Facility; Executive Summary and selected sections (June 2, 2025).*

### 6. The foreign exchange (forex) market is functioning smoothly (MEFP ¶6   and Text Figure

### 6. The foreign exchange (forex) market is functioning smoothly (MEFP ¶6 and Text Figure 2)

### Forex market developments and external position
- Exchange rate vis-à-vis the US dollar depreciated by about 9.7 percent during 2024.
- The forex policy introduced in 2023 continues to bear fruit.
- The wedge between the official and parallel exchange rates hovered around 1-  2 percent in recent months, compared to a peak of above 10 percent in mid-2022.
- Developments supporting foreign currency supply: increase of tourist arrivals, private remittances inflows, and high donor support.
- These factors have helped stabilize foreign currency supply and alleviate severe forex shortages experienced in the recent past.
- Foreign reserves outperformed targets at end-2024.
- Staff estimates that The Gambia’s external position in 2024 is moderately weaker than the level implied by medium-term fundamentals, attributable to an elevated current account deficit and high public expenditures.
- Note: The parallel exchange rate is illegal under The Gambia’s law.

### Banking sector resilience and risks
- Banks’ capital adequacy ratio: 28.5 percent at end-2024.
- Banks’ liquidity ratio: 76.5 percent at end-2024.
- Non-performing loans (NPLs):
  - Increased to 15.8 percent at end-September 2024, from 3 percent at end-2023, due to exposure to one major player in the manufacturing sector.
  - Restructuring of the facility and engagement with the borrower returned the exposure to performance; NPLs declined to 14.6 percent by end-December 2024.
- System-wide provisioning levels: 122 percent at end-2024.
- Credit to the private sector: 24 percent (y-o-y) at end-2024.
- Banks’ excess reserves declined to about 7.8 percent of reserve money at end-2024.

### Program performance (MEFP ¶8)
- Quantitative performance criteria (QPCs) and indicative targets (ITs):
  - Six out of seven QPCs for end-December 2024 were met.
  - All four ITs for end-December 2024 were met.
  - The adjusted ceiling on net domestic borrowing (NDB) was missed by GMD 564 million ( 0.3 percent of GDP) due to spending pressures accumulated during the year.
- Structural benchmarks (SBs):
  - Four out of seven SBs for end-December 2024 were met.
  - Missed SBs (with test dates end-December 2024 and end-March 2025) related to adoption by cabinet of the National Audit Office (NAO) Bill and the GIEPA Act, and completion/publication of a report of the central government’s domestic arrears and unsettled commitments at end-2024.
  - The GIEPA Act and NAO Bill have been finalized; approval proposed to be rephased to end-September 2025 for cabinet review.
  - A report on arrears was prepared by end-March but assessed incomplete; the SB is proposed to be modified and rephased to end-December 2025 for a comprehensive exercise.

### Outlook and risks
- Real GDP projections:
  - Real GDP is projected to expand by 5.7 percent in 2025, supported by continuous recovery in the tourism sector and good performance of the agricultural and construction sectors.
  - Over the medium term, growth is expected to stabilize around 5 percent.
- Inflation: projected to converge towards the CBG’s target of 5 percent by 2026, reflecting tight domestic monetary policy and expected decline in food and energy prices.
- Fiscal: authorities target a fiscal deficit of 0.4 percent of GDP over the medium term, accompanied by a steady decline in public debt.
- Balance of risks (tilted to the downside):
  - Intensification of global geopolitical and trade tensions, commodity price volatility, and a possible global slowdown could reduce tourist arrivals and remittances, lowering growth and increasing inflationary, exchange rate, and forex pressures.
  - Domestic risks: persistently high prices could lead to socio-political tensions and fiscal pressures, exacerbated by elections scheduled for 2026.
  - Climate risks: more frequent natural disasters and shifts in rainfall patterns could damage infrastructure and livelihoods, adversely affecting inflation, growth, and external balances.
  - MCC compact program expected for late 2025 is unlikely to materialize.
  - Direct impact of changes in US tariffs is estimated to be minor given exports to the US in 2024 were less than 1 percent of total exports.

### Policy discussions and fiscal strategy actions
- Policy focus areas: (i) recent fiscal performance and redesign of the 2025 fiscal strategy to reduce debt vulnerabilities; (ii) fostering price stability and a well-functioning forex market; (iii) strengthening financial stability; (iv) advancing structural reforms on SOEs and governance to support growth; (v) building climate resilience.
- 2025 fiscal strategy redesign (MEFP ¶11):
  - Authorities taking steps to align 2025 fiscal targets with the agreed program, including addressing pending 2024 spending commitments, providing additional support to NAWEC, and accounting for transfers of earmarked revenue not previously included in the budget.
  - Overall fiscal deficit projection revised down by 0.4 percent of GDP given receipt of the 2023 CBG dividend and slightly lower expected foreign capital spending.
  - Prior action for review: cabinet will approve expenditure reductions to compensate for new unfunded spending pressures (carry-over unpaid commitments and unbudgeted transfers).
  - Authorities will develop a strategy to institutionalize arrear reporting and clearing framework and adopt measures to address shortcomings that led to accumulation of unpaid commitments (modified SB for end-June 2025).
  - Domestic T-bill placements expected to continue playing an important role in financing the deficit after expiration of external debt service deferrals.
- Revenue measures and projections (Text Table 2 and Text Table 3):
  - Text Table 2 (2025 fiscal estimates, Percent of GDP):
    - Revenue: 22.7 23.7
    - Domestic revenue: 14.7 15.1
    - Taxes: 10.7 10.7
    - Non-tax: 4.0 4.3
    - Grants: 7.9 8.6
    - o/w. Budget support: 1.2 1.9
    - Expenditures: 24.0 24.6
    - Expenses: 14.8 15.7
    - Net acquisition of nonfinancial assets: 9.2 8.9
    - Foreign financed: 7.7 7.6
    - Gambia local fund: 1.5 1.3
    - Net lending (+)/borrowing (–): -1.3 -0.9
    - Financing: 1.3 0.9
    - Net incurrence of liabilities: 1.3 0.9
    - Domestic: 2.3 2.0
    - Foreign: -1.0 -1.1
    - Statistical discrepancy: 0.0 0.0
    - Memorandum item — Domestic primary balance: 1.4 1.0
  - Projected revenue yields from selected 2025 measures (Text Table 3, Percent of GDP):
    - Expansion of PIT base through wage increase: 0.1
    - Export levy on scrap metal: 0.1
    - Other tax policy measures: 0.1
    - Impact of administrative improvements: 0.1
    - Introduction of social security contribution: 0.2
    - Africa50 asset recycling tranche: 1.8
- Spending adjustments and expenditure pressures (Text Table 4):
  - To accommodate MDA’s 2024 unpaid commitments of about GMD 660 million (0.3 percent of GDP) carried over to 2025, 2025 budget allocations will be adjusted and controlled.
  - Expected earmarked revenue transfers of about GMD 1.6 billion (0.8 percent of GDP) will be accommodated by savings from reduced capital expenditures and transfers to public entities; planned investments in roads and vehicle procurements amounting to about 0.7 percent of GDP will be postponed to 2026.
  - Emergency transfer to help NAWEC meet arrears payments to Karpower amounting to about GMD 1.4 billion (0.7 percent of GDP) in May will be financed through World Bank budget support and require temporary bridge financing from the CBG to the government until disbursement.
  - Unfunded expenditure pressures total: 1.1 percent of GDP.
- Contingency planning and fiscal buffers:
  - Authorities plan to save any revenue overperformance over the year to create fiscal buffers.
  - If additional pressures materialize, authorities will delay non-priority spending while protecting priority social outlays.
  - Phase-out of Karpower as NAWEC supplier and efficiency improvements are expected to improve NAWEC’s financial outlook and reduce budget risks (¶17).

### Public financial management, SOEs, and structural reforms
- PFM reforms (MEFP ¶13):
  - Adopt Domestic Revenue Mobilization Strategy (SB for end-June 2025).
  - Revised GIEPA Act by cabinet (SB for end-December 2024, proposed rephased to end-September 2025).
  - Develop database of rental property (SB for end-June 2025).
  - Submit tax expenditure statement (SB for end-December 2025).
  - Review and modernize VAT (proposed new SB for end-June 2026).
- Enhanced PFM measures (MEFP ¶13–14):
  - Update and modernize the PFM Act in line with IMF TA recommendations (SB for end-December 2025).
  - Ensure comprehensive domestic arrears reporting aligned with IMF TA; develop timebound strategy to institutionalize arrears reporting and clearing (SB for end-March 2025, proposed modified and rephased to end-December 2025; modified SB for end-June 2025).
  - Require MDAs to present quarterly IFMIS cash-plan updates and implement a 'maximum deviation' rule (SB for end-December 2025); extend IFMIS to four multilateral-donor projects and to all government-fund projects implemented after January 1, 2025 (SB for end-September 2025).
  - Align Chart of Accounts with GFS 2014 and publish Chart of Accounts and manual on MoFEA's website (SB for end-September 2025); prepare fully costed 2026 budget envelope including transfers linked to earmarked revenues.
- SOE oversight and performance (MEFP ¶14):
  - As of April 2025, eight performance contracts signed; new NAWEC performance contract negotiated with ambitious KPIs.
  - Authorities to assign higher KPI weight to SOEs that have not published audited financial accounts to induce publication.
  - NAWEC reforms: contract with Karpower not to be extended; production to be substituted by increased domestic generation and higher imports to reduce cost and need for tariff compensation; hire private operator for thermal plants; reduce transmission and distribution losses in line with performance contract.
  - Partial or full privatization of GAMCEL expected to be completed by end-March 2026 (SB for end-March 2026).

### Debt sustainability and recommendations
- DSA update (MEFP ¶15):
  - The Gambia’s public debt is deemed sustainable over the medium term, but risks of external and overall debt distress remain high.
  - PV of total public debt is projected to decline below its benchmark of 55 percent of GDP in 2026.
  - External debt service-to-revenue ratio breaches its threshold over the medium term, underscoring heightened external debt liquidity risk.
- Recommended policy focus to reduce debt vulnerabilities:
  - Focus on grants and highly concessional loans.
  - Implement a strong medium-term fiscal framework.
  - Bolster domestic revenue mobilization.
  - Closely monitor and strictly adhere to agreed limits on external borrowing.
  - Carefully mitigate potential fiscal risks and contingent liabilities stemming from SOEs and PPPs.
  - Build strong external buffers to meet debt service payments after expiration of debt service deferrals in 2024.

*Source: Excerpt from the IMF document "1gmbea2025002-print-pdf", section 6 and related text figures and tables.*

### 17. The current monetary policy stance

### 17. The current monetary policy stance

### Monetary policy stance and recommendations
- The current monetary policy stance "is appropriately tight and should be maintained (MEFP ¶16)."  
- Rationale for maintaining tight policy:
  - Recent moderation of headline inflation to single digits, but global uncertainty and potential domestic inflation risks justify continued tightness.
  - Aim to bring inflation back down to the CBG’s medium-term target of 5 percent.
- Policy approach:
  - Keep policy tight and data-dependent with forward-looking analysis.
  - Monitor and address remaining excess liquidity in the banking system.
  - Use an appropriate combination of policy tools: the monetary policy rate, the issuance of CBG bills, the use of the deposit window, and changes in the reserve requirement ratio.

### Exchange rate and foreign exchange (FX) policy
- Authorities’ commitment: pursue an exchange rate that fully reflects market forces (MEFP ¶17).
- Staff encourages continued implementation of the forex policy introduced in 2023 to prevent shortages and wedges with the parallel market.
- Key operational deadlines and constraints:
  - Finalize and approve the forex intervention policy by June 2025.
  - Limit FX market interventions to alleviating excess market volatility and addressing disorderly conditions from temporary shocks.
- Identified issue:
  - The Gambia’s use of a two-day lagged official exchange rate and simple average formula gives rise to a multiple currency practice (MCP) that predates the current ECF arrangement.
  - The CBG is expected to eliminate this practice by finalizing a new electronic FX data collection system.
  - The electronic FX data collection system will allow calculation of official exchange rates in a timelier manner and collect transaction-level data (transaction exchange rate and daily high and low exchange rates).

### Strengthening financial stability
- Vigilance and supervisory reforms (MEFP ¶18):
  - The CBG remains vigilant to vulnerabilities while advancing regulatory and supervisory reforms.
  - Staff welcomes efforts to resolve the recent increase in banks’ NPLs, including placing affected banks under enhanced supervision.
- Recommended supervisory measures:
  - Strengthen application of risk-based supervision through capacity building.
  - Close monitoring of concentration risks and early intervention as necessary.
  - Establish a robust credit reference bureau by end-2025.
- Sovereign exposure and capital framework:
  - The sector’s significant direct sovereign exposure is a vulnerability.
  - Adopt the Basel Capital Frameworks, with initial focus on implementation of Pillar 1 of Basel II.
- Minimum regulatory capital requirements for banks (CBG commitments):
  - Augmentation of banks’ minimum regulatory capital by GMD100 million by end-December 2025 (SB for end-December 2025).
  - Augment by another GMD100 million each year thereafter to reach a total level of capital of GMD500 million by end-2027.

### Central Bank financial position and lending to public entities
- Authorities commit to preserving the CBG’s financial position (MEFP ¶19).
- CBG will cease providing financial support to public entities; CBG Board will approve amendments to the CBG Act aligning with IMF safeguards, followed by cabinet approval and submission to the National Assembly.
- All existing loans extended by the CBG to general government entities are guaranteed by the central government.
- Future lending:
  - CBG will provide lending to government entities only for cash flow purposes, at market terms, and not beyond 10 percent of the previous year’s tax revenue as per law.

### Governance reforms and inclusive growth
- Anti-corruption and governance strengthening (MEFP ¶20):
  - Authorities published a plan to implement recommendations from the governance diagnostic.
  - Submit to the National Assembly a shortlist of anti-corruption commissioners selected through a transparent, merit-based vetting committee (proposed new SB for end-June 2025).
  - A revised draft law on AML/CFT has been submitted to the cabinet to align with Financial Action Task Force standards.
  - Contingent on external support, the Ministry of Justice will compile and publish the Laws of The Gambia in hard copy and online formats through end-2024 by end-2025, and Law Reports to follow by 2026.
- Structural reforms to improve business environment (MEFP ¶22):
  - Set up a digital platform for business registration (SB for end-June 2025).
  - Cabinet to adopt a land policy to facilitate and secure access to land and finance (SB for end-September 2025).
  - Establishment of credit reference bureau should enhance access to finance.
  - Target: provide access to the formal financial system for 70 percent of the adult population by 2025, including vulnerable groups, women, and youth.

### Building resilience to climate change and RSF pillars
- Climate vulnerability context:
  - The Gambia is a fossil fuel-based economy highly vulnerable to climate-related natural disasters and gradual climate change (Annex III and 2023 Selected Issues Paper).
  - Domestic fossil fuel imports equal 12.5 percent of GDP in 2024.
  - The Gambia imports about 75 percent of its electricity from Senegal.
  - A 2022 drought is estimated to have cost around 3.8 percent of GDP while food imports increased to compensate for lost output.
  - Agriculture, tourism, and fishing are particularly vulnerable; women are heavily reliant on agriculture.
  - About 80 percent of agriculture is rain-fed.
  - The Gambia ranks among the top ten countries most exposed to sea level rise globally.
- Energy and adaptation investments:
  - Operational: a 23MW solar plant in Jambur.
  - Expected contracted capacity: new solar capacity of 50MW and dual fuel capacity of 30MW expected to be contracted by late 2026.
- Financing needs and capacity gaps:
  - The 2021 Nationally Determined Contribution (NDC) estimates US$316 million is required to fulfill mitigation and adaptation objectives.
  - IMF TA has identified areas needing more progress: incorporate climate aspects into project appraisal, reduce fossil fuel dependency, improve coastal resilience, promote sustainable water consumption, increase instruments for vulnerable farmers, and improve waste management.
- RSF arrangement and five pillars (Annex IV, MEFP ¶24-28):
  - Objective: support climate and macroeconomic resilience while reducing prospective BOP risks.
  - Proposed reform measures (RMs) organized around five pillars, taking into account capacity, fiscal space, financing challenges, political economy, and TA support. The most technically challenging RMs are backloaded with early TA for support.
  - Pillar 1 — Legal framework and enabling institutional environment:
    - RM1: Draft the Climate Change Bill, ensure cabinet adoption; include climate finance, data collection and sharing, linkages with National Disaster Act, and mechanisms for reporting, monitoring, and evaluation.
  - Pillar 2 — Green PFM:
    - RM2: Develop methodology for identifying fiscal risks associated with natural disasters; publish and apply starting with the 2027 Medium-Term Economic and Fiscal Framework to be prepared by June 2026.
    - RM3: Incorporate climate mitigation and adaptation criteria in project appraisal and selection for all projects funded by national budget and donors; include climate provisions in PPP Bill review.
  - Pillar 3 — Climate data and transition taxonomy:
    - RM4: CBG to adopt a transition taxonomy and establish a climate data repository publicly available; issue supervisory guidelines for banking sector to incorporate climate-related risks and share timelines for guideline adoption.
    - Ministry of Finance to develop a climate finance strategy to attract climate-related capital and analyze existing instruments.
  - Pillar 4 — Climate adaptation:
    - RM5: Adopt necessary insurance regulations to encourage private sector participation, including index-based insurance schemes for agriculture and possible premium subsidies via development partner partnerships.
    - RM6: Update zoning regulations to address coastal erosion and sea level rise, including setback and no-development zones, building on vulnerability assessments and considering trade-offs (mangrove conservation, tourism, sand mining).
    - RM7: Ensure adequate and sustainable use of water resources by better controlling access to groundwater, regulating abstraction and impoundment through licensing procedures.
  - Pillar 5 — Energy transition:
    - RM8: Align existing fuel excises with carbon content and increase excise tax by at least US$5 per tonne of CO2; preliminary estimates suggest this would generate 0.1 percent of GDP in additional revenue; index the carbon-based excise to inflation.
    - RM9: Enhance electricity price signals to promote efficient consumption and alleviate NAWEC’s fiscal burden; preliminary estimates suggest a 35 percent increase in the tariff would be necessary to achieve cost-recovery (though required increase could be lower considering Karpower’s contract will not be extended).
      - Context: emergency funding amounting to 0.8 percent of GDP in 2024 was required to avoid independent power producers halting supply.
    - Both RM8 and RM9 will leverage the universal coverage in the social registry to identify vulnerable populations and use digital payments to deliver support; TA will assess distributional impacts and government commits additional budget resources for compensation via Nafa cash transfer program or the Family Strengthening Program.

*Source: 17. The current monetary policy stance, 1gmbea2025002-print-pdf.*

### 28. ECF modalities:

### 28. ECF modalities:

### Prior action and waiver request
- Prior action: The third review includes a prior action on the ad hoc option by cabinet of adjusted 2025 budget allocations to offset new unfunded spending pressures to help achieve the fiscal consolidation envisaged under the ECF arrangement.
- Waiver request: Authorities request, and staff supports, waivers for the nonobservance of the end-December 2024 QPC on the NDB on the basis of corrective measures including:
  - policy actions to address spending pressures in 2025 (¶13);
  - modify budget allocations (PA);
  - improve arrears reporting and prevent arrears build-up (¶16);
  - address NAWEC’s financing needs (¶17);
  - efforts to reconcile monetary and fiscal accounts.
- Staff assessment: Despite the nonobservance of the QPC, staff assesses that the program goals remain achievable under prudent fiscal management.

### Program conditionality: quantitative targets and structural benchmarks
- Quantitative Performance and Indicative Targets:
  - End-June and end-December 2025 QPCs on net domestic borrowing and the domestic primary balance and the end-December QPC floor on net international reserves have been adjusted to reflect:
    - the late receipt of the 2023 CBG dividend,
    - temporary financing for NAWEC,
    - the expected disbursement under the RSF.
  - End-March and end-June 2026 QPCs and ITs have been set for the sixth ECF arrangement review.
- Structural Benchmarks (SBs):
  - Modified and postponed:
    - SBs on the GIEPA Act and NAO Bill proposed to be postponed from end-December 2024 to end-September 2025 to complete the review by cabinet.
    - SB on arrears stocktaking proposed to be modified and postponed from end-March 2025 to end-December 2025 to allow for a comprehensive exercise aligned with the IMF’s forthcoming TA recommendations and including participation of the NAO and MoFEA’s Internal Audit.
    - SB on developing a timebound strategy to institutionalize the arrears reporting and clearing framework proposed to be modified to ensure arrears reporting is properly institutionalized and to allow a proper auditing of arrears before developing the arrears clearance strategy.
  - New SBs:
    - One SB added for the fourth review: submitting to the National Assembly a shortlist of candidates for the positions of Anti-Corruption Commissioners by end-June 2025.
    - One SB for the fifth review: publication of a payment schedule for arrears identified in the NAO and Internal Audit’s report by end-March 2026.
    - One SB for the sixth review: undertaking a thorough review of VAT with a view to modernizing its design and operation and improving its revenue productivity by end-June 2026.

### 29. RSF modalities
- Eligibility: The Gambia meets the RSF eligibility based on its per capita GNI, as part of Group A for the purpose of interest charges.
- Proposed access:
  - Staff proposes access at 75 percent of quota (SDR 46.65 million).
  - This is determined based on staff’s assessment that:
    - (i) the proposed package is ambitious in light of the country’s starting position and implementation capacity, and
    - (ii) the country authorities have shown strong commitment to implementing a successful RSF.
- Duration and Phasing:
  - Duration aligned with the remainder duration of the ECF arrangement with expectation that reforms will be deepened beyond the program.
  - RSF disbursements will be used as budget support and substitute more expensive financing, creating policy space for supporting climate-related investments and reforms to enhance longer-term macro-economic resilience to natural disaster shocks.
  - Disbursements will be equally split among the nine RMs expected to be completed over three reviews.

### 30. Program monitoring
- Program performance for both the ECF and RSF will be monitored on a semi-annual basis through:
  - QPCs,
  - ITs,
  - SBs,
  - reform measures.

### 31. Program risks and mitigation measures
- Key risks:
  - Intensification of regional conflicts and global commodity price volatility could:
    - put pressure on the exchange rate and forex,
    - undermine the government’s fiscal strategy,
    - compromise debt sustainability.
  - Potential global slowdown and disruption in trade may hinder tourist arrivals and export receipts.
  - Domestic risks: limited capacity, high costs of living, and the upcoming election in 2026 may constrain reform implementation and introduce resistance to further fiscal consolidation.
- Mitigation advised by staff:
  - Bolster domestic revenue mobilization.
  - Embrace spending restraint while targeting resources to the most vulnerable.
  - Strengthen internal and external policy buffers.

### 32. Capacity to repay and Fund exposure metrics
- Staff view: The Gambia’s capacity to repay the Fund remains adequate despite high risks.
- With the proposed RSF access:
  - The Gambia’s outstanding credit to the IMF would peak at 7.8 percent GDP in 2026.
  - Annual debt service to the Fund would increase from 2025-2030 from 2.1 to 5.6 percent of revenue and from 11.3 to 30.3 percent of debt service.
  - Total Fund credit outstanding as a percent of gross international reserves would peak at 42.4 percent in 2026.
- Context: Most Fund exposure metrics are significantly higher than the PRGT comparator group with total debt service to the Fund as percent of revenue above the 75th percentile.
- Risk mitigants:
  - The Gambia’s good track record of timely repayment of Fund obligations.
  - Authorities’ commitment to reforms as demonstrated by revenue mobilization and prior action to reduce expenditures.
  - Continued donor support and a comfortable level of reserves.

### 33. Burden sharing and financing assurances
- The ECF program is fully financed with firm commitments for the next 12 months and good prospects for the remainder of the program period.
- The disbursement of SDR 12.44 million following completion of the third ECF program review will help fill the BOP financing gap; SDR 4.98 million will be on-lent for budget support.

### 34. External arrears
- Authorities engaged in discussions with Libya on a disputed loan; latest meeting held in October 2023.
- Regarding arrears to Venezuela, a virtual meeting was held in August 2024 to discuss resumption of negotiations for paying the outstanding debt.

### 35. Safeguards
- Progress in implementing the 2024 safeguards assessment recommendations has been slow.
- Remaining vulnerabilities: strengthen the CBG’s autonomy, governance arrangements, and address capacity challenges; legal reforms introduced in 2018 did not address all vulnerabilities.
- CBG actions:
  - Ceased quasi-fiscal activities (an IT under the program) and is winding down legacy ones.
  - Authorities have requested Fund TA to assist in drafting amendments to the CBG Act in line with safeguards assessment recommendations, including the provision regarding dividend transfers to the government.
- Staff engagement: Staff continues to engage with the authorities.

### 36. Capacity development and collaboration with partners
- IMF TA will continue supporting ECF program objectives in:
  - revenue administration, tax policy, spending efficiency, public financial management, macroeconomic statistics production and dissemination, forex and monetary policy operations, financial supervision, oversight of SOEs, and governance.
- RSF-related TA: help integrate climate adaptation and mitigation criteria in project appraisal guidelines and identify transmission channels through which natural disasters affect key macroeconomic variables.
- Capacity building for climate-related reforms: climate data, transition taxonomy and bank supervision, reforms of insurance regulations, carbon tax and energy pricing.
- Coordination and partnerships:
  - Fund staff will coordinate closely with the World Bank throughout RSF implementation.
  - Staff have tapped expertise from the Global Center on Adaptation (GCA) in areas such as climate data, green taxonomy and water.
  - Other partners such as the French Development Agency (AFD) stand ready to support the RSF reform agenda.

### Staff appraisal: macroeconomic outlook, program performance, and policy advice
- Macroeconomic outlook:
  - Economic growth remains resilient, and inflation has started to decline.
  - Growth supported by construction and tourism; inflation projected to decline gradually; forex market continues to function smoothly, supported by the forex policy introduced in 2023.
  - Outlook subject to large downside risks from global geopolitical developments.
- Program performance under the ECF arrangement:
  - Mixed, reflecting fiscal slippages and slow progress on structural reforms.
  - Six out of seven QPCs and all ITs for end-December were met.
  - The QPC on NDB was missed due to spending pressures accumulated during the year.
  - Four out of seven SBs were met.
  - SBs on the GIEPA Act and the NAO Bill proposed to be postponed to end-September 2025; SB on arrears stocktaking proposed to be modified and rescheduled for end-December 2025.
  - Staff advised authorities to move ahead promptly with critical reforms and welcomed their request for technical assistance to improve fiscal reporting.
- Policy advice and priorities:
  - Fiscal policy:
    - Staff welcomes authorities’ commitment to 2025 fiscal targets; authorities plan to compensate for carry-over 2024 spending commitments and unbudgeted transfers by restraining non-priority budgetary spending.
    - Important to further strengthen revenue collection to build additional fiscal buffers.
    - Maintain consolidation efforts and limit fiscal risks from SOEs and PPPs.
    - Recent steps to strengthen NAWEC’s financial sustainability are welcome and should be pursued vigorously.
    - Protect vulnerable populations through expansion and better targeting of social programs.
  - Public Financial Management:
    - Strengthening PFM is key to fiscal discipline and accountability.
    - Continue efforts to prevent domestic arrears accumulation and gain better control of multi-year commitments.
    - Improve budgeting process, expenditure controls, cash management, and efficiency of public spending.
  - Monetary and exchange rate policy:
    - Maintain a tight monetary policy and pursue a market-determined exchange rate.
    - CBG encouraged to remain vigilant to ensure inflation converges to the CBG’s medium-term target.
    - Pursue an exchange rate that fully reflects market forces and ensure smooth functioning of the forex market by swiftly approving and transparently applying the new forex intervention policy.
    - Avoid recurrence of wedges between the official and parallel exchange rates.
  - Financial sector resilience:
    - CBG needs to closely monitor vulnerabilities while strengthening regulatory capacity and financial position.
    - Recent increase in banks’ NPLs warrants close monitoring.
    - Strengthen risk-based supervision, closely monitor concentration risks, intervene early, and establish a robust credit reference bureau.
    - Cease direct financial support to public entities and amend the CBG Act in line with IMF safeguards recommendations.
  - Structural reforms and governance:
    - Promote private sector development and job creation by facilitating and securing access to land and finance and enhancing public sector governance, efficiency and transparency.

### Climate risks and the role of the RSF
- Climate change risks:
  - High vulnerability to climate-related natural disasters poses major threats to lives, livelihoods, fiscal position, and BOP.
  - Climate change expected to lead to significant economic losses and worsen macroeconomic indicators.
- RSF role and expectations:
  - RSF-supported reform measures aim to enhance resilience by strengthening legal and institutional environment, green PFM, climate data and transition taxonomy, adaptation and resilience, and the energy transition.
  - Achieving commitments will require substantial financial resources and extensive capacity development support.
  - The RSF is expected to foster tighter coordination among domestic stakeholders and development partners.

*Source: 28. ECF modalities: (1gmbea2025002-print-pdf) — THE GAMBIA, INTERNATIONAL MONETARY FUND*

### 46. Staff supports the completion of the third review under the ECF arrangement and the

### 46. Staff supports the completion of the third review under the ECF arrangement and the associated financing assurances review.

### Program decision and staff position
- Staff supports the completion of the third review under the ECF arrangement and the associated financing assurances review.
- Based on the policy and reform commitments under the MEFP and the planned corrective actions, staff supports the authorities’ request for:
  - the waiver of non-observance of the end-December NDB QPC;
  - the proposed modifications of performance criteria; and
  - a new 18-month arrangement under the RSF.

### Recent economic developments (high-level findings from Figures and captions, 2014–24)
- Economic activity strengthened, supported by construction sector and continued recovery of tourism.
- Public debt declined, as fiscal indicators improved despite internal and external pressures.
- Inflation is easing but remains elevated, reflecting the deceleration in global food and energy prices.
- While private credit broadly stabilized around its post-pandemic high, the stabilization in inflation coincided with a decline in private sector credit growth.
- As the central bank maintained its tightened monetary policy, T-bill rates edged higher in 2024.
- Gross official reserves improved after declining in the first half of 2023.

### Fiscal sector developments (2014–25) — key messages from Figure 2
- Strong domestic revenue collection is expected to continue in 2025, supported by key reform measures.
- While challenging, the 2025 balance target is within reach with strong reform implementation.
- Expenditure restraint, strict cash management and expenditure control are critical to contain spending within available resources.
- The public debt-to-GDP ratio is expected to keep declining.
- The RSF creates long-term policy space and financial buffers.
- Consequently, other fiscal indicators are also expected to strengthen.

### Monetary developments (2016–24) — key messages from Figure 3
- The CBG has maintained a tight monetary policy stance to support the disinflation process.
- Banks' excess reserves remained high in 2024.
- Broad money growth remained at last year's level, driven by increased net foreign assets.
- Reserve money and broad money components show volatility across 2016–2024, with notable contributions from currency in circulation, required reserves, and net foreign assets.

### Medium-term outlook (2020–30) — projections and central tendencies from Figure 4
- Inflation is projected to gradually converge toward the CBG's medium-term target.
- Expenditure restraint and improved tax effort will drive projected fiscal consolidation in the medium term.
- Borrowing needs are expected to decline gradually, and the public debt-to-GDP ratio is projected to come down.
- The external current account deficit is expected to narrow in the medium term.
- Economic growth is expected to stabilize after the recovery takes hold.

### Capacity to Repay (CtR) indicators — comparative context (Figure 5)
- CtR indicators are presented relative to UCT arrangements for PRGT countries, with the Gambia series (GMB PRGT and GMB RST+PRGT) shown alongside medians, interquartile ranges, and comparators for PRGT arrangements approved between 2013 and 2023.
- Notes emphasize treatment of blenders, on-lent amounts, and proxies for international reserves; debt service obligations to the Fund reflect prospective payments, including for the current year.

### Selected economic indicators (Table 1: 2022–30) — selected figures
- GDP at constant prices: 5.5 4.8 5.8 6.0 5.9 5.7 5.1 5.0 5.0 5.0 5.0 (series across 2022–30).
- Consumer prices (average): 11.5 17.0 13.9 11.6 9.7 9.3 6.7 5.0 5.0 5.0 5.0.
- Public debt: 83.9 76.8 71.8 73.5 65.6 68.0 61.9 56.8 52.2 47.5 44.4.
- External current account balance excluding official transfers (percent of GDP): -6.1 -8.2 -7.6 -8.1 -6.5 -5.9 -5.6 -4.6 -4.0 -3.4 -2.3 (2022–30).
- Gross official reserves (millions of US$): 454.7 474.3 483.6 533.5 505.6 575.7 601.9 616.0 631.5 674.4 730.5 (2022–30).
- Nominal GDP (billions of dalasi): 121.1 146.7 173.4 173.7 197.7 197.7 215.0 234.9 257.9 283.7 312.1.

### Central government operations — headline items (Tables 2a, 2b, 3)
- Revenue (millions of local currency, Table 2a): 22,910 29,738 35,022 34,738 44,805 46,863 48,430 48,923 50,899 55,020 59,575 64,425 (series across 2022–30).
- Domestic revenue (percent of GDP, Table 2b): 12.0 12.1 13.2 13.2 14.7 15.1 14.6 14.2 14.3 14.4 14.4.
- Total expenditures (percent of GDP, Table 2b): 24.6 23.8 22.9 23.7 24.0 24.6 23.2 22.1 21.8 21.4 21.0.
- Net lending (+)/borrowing (–) (millions local currency, Table 2a): -6,922 -5,187 -4,674 -6,522 -2,629 -1,798 -843 -962 -1,040 -1,153 -1,231 -1,185.
- Primary balance (percent of GDP, Table 1): -3.6 -1.5 0.1 -0.9 1.6 2.1 2.1 1.8 1.4 1.2 1.1.
- Cumulative central government operations, 2025 (Table 3): Revenue Q1–Q4 (Prel./Proj.) 10,089 18,981 33,264 46,863; Domestic revenue Q1–Q4 7,440 13,752 23,332 29,764; Expenditures Q1–Q4 12,994 24,499 36,625 48,661.

### Monetary accounts — key aggregates (Tables 4a, 4b, 5)
- Broad money (levels, Table 4a): 66,917 72,836 79,542 78,596 85,131 83,953 87,935 91,137 93,757 96,695 97,172 (2022–30).
- Net foreign assets (in millions of U.S. dollars, Table 4a): 504 453 417 495 425 514 526 541 539 567 557.
- Reserve money (levels, Table 4a): 20,928 23,887 25,655 22,556 26,577 27,219 29,353 29,572 30,713 33,917 35,729.
- Broad money growth (percent changes, Table 4b): 7.1 8.8 9.2 7.9 7.0 6.8 4.7 3.6 2.9 3.1 0.5.
- Net international reserves (stocks; millions of U.S. dollars, Table 4b): 325.9 344.9 309.1 402.5 253.7 253.7 241.0 280.3 329.2 548.4 576.4 (2022–30).
- Credit to the private sector (percent of GDP, Table 4b): 9.7 9.0 7.8 9.4 7.2 8.4 8.4 8.4 8.3 8.0 7.6.

### Key policy implications and constraints (implicit in figures and tables)
- Meeting the 2025 fiscal balance target requires strong reform implementation, strict cash management, and expenditure control.
- The RSF is expected to provide long-term policy space and financial buffers, helping to reduce borrowing needs and public debt-to-GDP over the medium term.
- Continued tight monetary policy by the CBG is supporting disinflation, but inflation remains elevated and private credit growth has declined, implying careful calibration of monetary and financial sector policies.
- External balances and reserve trajectories indicate progress but require sustained revenue mobilization, donor/project support, and prudent external financing.

*Source: 1gmbea2025002-print-pdf.*

### 1. Current account

### 1. Current account

### A. Goods and services (US$ millions)
- Goods and services (total): -562.1 -643.8 -667.3 -710.8 -678.9 -640.2 -670.4 -684.1 -697.8 -714.9 -713.3
- Goods (net): -642.4 -884.7 -944.9 -1025.0 -988.4 -983.0 -1030.9 -1081.3 -1136.1 -1199.0 -1255.9
  - Exports, f.o.b.: 51.6 328.1 310.5 363.3 316.3 369.0 382.6 399.1 420.6 445.3 478.0
  - Imports, f.o.b.: -694.0 -1212.7 -1255.4 -1388.3 -1304.7 -1352.0 -1413.5 -1480.4 -1556.7 -1644.3 -1733.9
- Services (net): 80.2 240.9 277.6 314.2 309.5 342.8 360.5 397.2 438.3 484.1 542.7
  - Services exports: 215.8 392.2 433.4 475.1 470.5 506.6 532.3 577.6 628.2 684.4 753.8
    - Of which: Travel income: 154.3 326.7 373.0 435.1 409.7 447.7 471.5 514.7 562.1 614.5 671.8
  - Services imports: -135.5 -151.3 -155.8 -160.9 -160.9 -163.8 -171.8 -180.4 -189.9 -200.3 -211.1

### B. Income (net) (US$ millions)
- Income (net): -31.1 -28.4 -29.7 -1.5 -29.3 -29.3 -29.4 -29.4 -29.4 -29.4 -29.4
  - Income credits: 13.5 12.3 12.9 0.6 12.7 12.7 12.8 12.8 12.8 12.8 12.8
  - Income debits: -44.6 -40.7 -42.5 -2.1 -42.1 -42.1 -42.2 -42.2 -42.2 -42.2 -42.2

### C. Current transfers (US$ millions)
- Current transfers (total): 503.0 545.6 547.6 554.3 558.3 557.2 581.2 607.0 633.0 662.0 693.5
  - Official transfers: 40.0 64.8 47.5 44.8 33.2 52.6 47.0 40.0 40.0 40.0 40.0
  - Remittances: 476.2 482.6 501.9 507.8 527.0 506.5 536.2 569.0 595.1 624.1 655.7
  - Other transfers: -13.2 -1.8 -1.9 -1.9 -1.9 -1.9 -2.0 -2.0 -2.1 -2.1 -2.2

### Current account balances (US$ millions and percent of GDP)
- Current account (excl. official transfers, US$ millions): -130.2 -191.3 -196.9 -206.4 -183.1 -164.9 -165.7 -146.5 -134.2 -122.3 -89.2
- Current account (incl. prospective official transfers, US$ millions): -90.2 -126.5 -149.4 -158.0 -149.9 -112.3 -118.7 -106.5 -94.2 -82.3 -49.2
- Current account (Percent of GDP):
  - Goods and services: -26.3 -27.5 -25.8 -27.7 -24.1 -23.1 -22.7 -21.7 -20.6 -19.6 -18.2
  - Goods (net): -30.1 -37.7 -36.5 -40.0 -35.1 -35.5 -34.9 -34.2 -33.5 -32.9 -32.0
  - Exports, f.o.b.: 2.4 14.0 12.0 14.2 11.2 13.3 13.0 12.6 12.4 12.2 12.2
  - Imports, f.o.b.: -32.5 -51.7 -48.5 -54.2 -46.4 -48.8 -47.9 -46.9 -45.9 -45.1 -44.1
  - Services (net): 3.8 10.3 10.7 12.3 11.0 12.4 12.2 12.6 12.9 13.3 13.8
  - Services exports: 10.1 16.7 16.8 18.5 16.7 18.3 18.0 18.3 18.5 18.8 19.2
  - Services imports: -6.3 -6.5 -6.0 -6.3 -5.7 -5.9 -5.8 -5.7 -5.6 -5.5 -5.4
  - Income (net): -1.5 -1.2 -1.1 -0.1 -1.0 -1.1 -1.0 -0.9 -0.9 -0.8 -0.7
  - Current transfers: 23.6 23.3 21.2 21.6 19.8 20.1 19.7 19.2 18.7 18.2 17.7
  - Current account (excl. official transfers): -6.1 -8.2 -7.6 -8.1 -6.5 -5.9 -5.6 -4.6 -4.0 -3.4 -2.3
  - Current account (incl. prospective official transfers): -4.2 -5.4 -5.8 -6.2 -5.3 -4.1 -4.0 -3.4 -2.8 -2.3 -1.3

### Trends and projections (key observations from series)
- Exports of goods and services (US$ millions): 267.4 720.2 743.9 838.4 786.8 875.6 914.9 976.7 1,048.8 1,129.7 1,231.7
- Imports of goods and services (US$ millions): -829.5 -1364.0 -1411.3 -1549.2 -1465.7 -1515.7 -1585.3 -1660.8 -1746.6 -1844.6 -1945.0
- GMD per U.S. dollar, period average: 56.7 (period average reported)
- Current account deficit narrows as percent of GDP from -6.1 (2022) to projected -2.3 (2030) excluding official transfers, and from -4.2 (2022) to projected -1.3 (2030) including prospective official transfers.

### Capital and financial account (US$ millions and percent of GDP)
- Capital account (US$ millions): 82.7 144.6 132.6 132.6 190.2 187.2 193.7 195.2 197.7 200.3 205.3
  - Percent of GDP: 3.9 6.2 5.1 5.2 6.8 6.8 6.6 6.2 5.8 5.5 5.2
- Financial account (US$ millions): -75.9 -4.7 -10.2 -5.5 -66.2 -59.1 -68.6 -54.4 -64.1 -50.5 -78.2
  - Percent of GDP: -3.6 -0.2 -0.4 -0.2 -2.4 -2.1 -2.3 -1.7 -1.9 -1.4 -2.0
- Key financial account components (US$ millions):
  - Foreign direct investment: 101.2 95.7 106.5 104.7 110.5 114.9 134.0 144.1 162.3 166.5 156.0
  - Portfolio investment: 4.1 4.5 4.9 4.9 5.3 5.3 5.6 6.0 6.4 6.9 7.5
  - Other investment: -181.2 -104.9 -121.6 -115.1 -182.0 -179.3 -208.3 -204.5 -232.9 -223.9 -241.6
- Capital and financial account (US$ millions, combined): 6.8 139.9 122.4 127.1 124.0 128.1 125.0 140.8 133.6 149.8 127.2
- RSF Disbursements (US$ millions): 13.5 47.4 ............ (reported as memorandum/line item)

### Errors and overall balance (US$ millions and percent of GDP)
- Errors and omissions: -26.1 -57.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
- Overall balance (US$ millions): -123.4 -51.4 -74.5 -79.3 -59.1 -36.9 -40.7 -5.7 -0.6 27.5 37.9
  - As percent of GDP (overall balance): -5.8 -2.2 -2.9 -3.1 -2.1 -1.3 -1.4 -0.2 0.0 0.8 1.0
  - Note: "Overall balance does not include prospective budget support and project grants."

### Financing and reserves (US$ millions and months of imports)
- Financing (total): 149.3 108.5 66.3 54.7 37.6 36.9 40.7 5.7 0.6 -27.5 -37.9
- Net international reserves (increase -): 108.3 43.7 18.8 10.0 4.4 -15.7 -6.3 -34.3 -39.4 -67.5 -77.9
- Change in gross international reserves: 75.7 42.4 -9.3 -18.2 -22.0 -42.2 -26.2 -14.1 -15.5 -42.9 -56.1
- Use of IMF resources (net, excl. RSF): 32.6 1.3 28.1 28.2 26.4 26.5 19.9 -20.2 -23.9 -24.6 -21.8
- Prospective donor financing / Budget support grants (US$ millions): 40.0 64.8 47.5 44.8 33.2 52.6 47.0 40.0 40.0 40.0 40.0

- Gross international reserves (excl. RSF, US$ millions): 454.7 474.3 483.6 533.5 505.6 575.7 601.9 616.0 631.5 674.4 730.5
  - Months of next year's imports of goods and services (excl. RSF): 4.0 3.7 4.0 4.2 4.0 4.4 4.3 4.2 4.1 4.2 4.1
- Net international reserves (excl. RSF, US$ millions): 325.9 344.9 309.1 402.5 253.7 253.7 241.0 280.3 329.2 548.4 576.4
  - Months of next year's imports (net int. reserves excl. RSF): 2.9 2.7 2.5 3.2 2.0 1.9 1.7 1.9 2.1 3.4 3.3
- Net international reserves (excl. RSF, w/o SDR allocation, US$ millions): 240.9 259.9 224.1 317.5 168.7 168.7 156.0 195.3 244.2 463.4 491.4
  - Months of next year's imports (w/o SDR allocation): 2.1 2.0 1.8 2.5 1.3 1.3 1.1 1.3 1.6 2.9 2.8
- Gross international reserves (incl. RSF, US$ millions): 454.7 474.3 483.6 533.5 505.6 589.2 662.8 676.9 692.4 735.3 791.4
  - Months of next year's imports (incl. RSF): 4.0 3.7 4.0 4.2 4.0 4.5 4.8 4.7 4.5 4.5 4.5

### External debt service and coverage indicators
- External Debt service (US$ millions): 50.1 69.6 54.5 49.4 83.2 89.3 98.3 104.3 111.5 127.4 110.8
- NIR/External Debt Service (ratio): 6.5 4.9 6.0 7.7 3.8 4.4 4.1 4.0 4.1 4.1 5.5

### External financing needs and sources (Table 7 excerpts, US$ millions)
- Total financing requirement (2024–28): -302.3 -275.4 -283.2 -245.4 -248.5
  - Current account deficit (excl. official transfers): -206.4 -164.9 -165.7 -146.5 -134.2
  - Public debt amortization: -31.5 -61.4 -78.0 -64.6 -75.0
  - Repayment to the IMF: -5.2 -6.9 -13.4 -20.2 -23.9
  - Change in official reserves: -59.2 -42.2 -26.2 -14.1 -15.5
- Total financing sources: 224.2 189.5 202.9 205.4 208.5
  - Capital transfers: 132.6 187.2 193.7 195.2 197.7
  - Foreign direct investment (net): 104.7 114.9 134.0 144.1 162.3
  - Portfolio investment (net): 4.9 5.3 5.6 6.0 6.4
  - Public sector debt financing: 63.8 32.5 45.0 64.0 79.0
  - Other net capital inflows: -81.8 -150.4 -175.4 -203.8 -237.0
- Total financing needs after sources: 78.1 85.9 80.3 40.0 40.0
  - Budget support (grants): 44.8 52.6 47.0 40.0 40.0
  - IMF disbursements: 33.3 33.3 33.3 0.0 0.0
  - RSF Disbursements (memorandum): 13.5 47.4

### Key projected ratios and memorandum items (select)
- Months of next year's imports of goods and services (gross int. reserves excl. RSF): 4.0 3.7 4.0 4.2 4.0 4.4 4.3 4.2 4.1 4.2 4.1
- Exports of goods and services (US$ millions): 503.6 552.4 607.7 667.9 734.3 814.7 878.1 946.9 1,021.9 1,103.8 1,194.1
- Nominal GDP and debt service references appear in later tables but are outside the "1. Current account" detailed rows.

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

### 4. The Gambia:

### 4. The Gambia

### Quantitative Performance Criteria and Indicative Targets for 2024–26: Key Outcomes and Statuses
- Performance criteria (cumulative from beginning of calendar year to end of month indicated; local currency millions, unless otherwise indicated):
  - Net domestic borrowing of the central government (ceiling):
    - Sept. Prog. 2,600; Adj. 3,480; Act. 3,798 — Status: Not Met
    - Mar. Prog. 2,800; Adj. 4,033; Act. 6,354 — Status: Not Met
    - Jun. Prog. 2,700; Adj. 2,980; Act. 3,545 — Status: Not met
    - Dec. Prog. 3,400; Prog. 7,100; Prog. 5,000; Prog. 4,000; Prog. 2,800; Prog. 1,600; Prog. 100
  - Domestic primary balance (cumulative floor):
    - Sept. Prog. -100; Adj. -686; Act. -465; Adj. -1,038 — Status: Not Met
    - Mar. Prog. 1,100; Adj. -133; Act. -536 — Status: Not Met
    - Jun. Prog. 1,040; Adj. 760; Act. 771 — Status: Met
    - Dec. Prog. -700; Prog. -2,600; Prog. 1,800; Prog. 2,700; Prog. 1,900; Prog. 900; Prog. 1,500
  - Stock of net usable international reserves of the central bank (floor, US$ million):
    - Sept. Prog. 280; Adj. 260; Act. 346 — Status: Met
    - Mar. Prog. 282; Adj. 264; Act. 315 — Status: Met
    - Jun. Prog. 309; Adj. 305; Act. 379 — Status: Met
    - Dec. Prog. 298; Prog. 283; Prog. 267; Prog. 285; Prog. 305; Prog. 309; Prog. 302
  - New external payment arrears of the central government (ceiling, US$ million):
    - All reported cells: 0.0 — Status: Met
  - New nonconcessional external debt contracted or guaranteed by central government (ceiling, US$ million):
    - All reported cells: 0.0 — Status: Met
  - Outstanding stock of external public debt with original maturity of one year or less (ceiling, US$ million):
    - All reported cells: 0.0 — Status: Met
  - New concessional external debt contracted or guaranteed by central government (ceiling, US$ million):
    - Sept. Prog. 90; ... Act. 0.0 — Status: Met
    - Mar. Prog. 90; ... Act. 0.0 — Status: Met
    - Jun. Prog. 90; ... Act. 70 — Status: Met
    - Programmed quarterly/annual values: Prog. 90; Prog. 90; Prog. 90; Prog. 90; Prog. 90; Prog. 90; Prog. 90
- Indicative targets:
  - Total tax revenue (floor):
    - Sept. Prog. 8,900; Act. 9,079 — Status: Met
    - Mar. Prog. 13,100; Act. 13,247 — Status: Met
    - Jun. Prog. 17,200; Act. 17,761 — Status: Met
    - Multi-period Prog.: 5,700; 11,100; 16,200; 21,200; 21,200; 5,900; 6,100
  - Monthly ceiling on central bank credit to the government at non-market terms (GMD millions):
    - All reported cells: 0.0 — Status: Met
  - New central bank credit to public entities (ceiling, GMD millions):
    - Reported cells include multiple ellipses and final series: 0.0 (several cells)
  - Stock of net domestic assets of the central bank (ceiling):
    - Sept. Prog. 11,825; Act. 10,847 — Status: Met
    - Mar. Prog. 12,285; Act. 7,722 — Status: Met
    - Jun. Prog. 12,745; Act. 2,770 — Status: Met
    - Multi-period Prog.: 13,216; 13,687; 14,157; 14,628; 14,628; 10,971; 14,907
  - Poverty-reducing expenditure (floor):
    - Sept. Prog. 5,000; Act. 6,149 — Status: Met
    - Mar. Prog. 7,500; Act. 8,907 — Status: Met
    - Jun. Prog. 10,100; Act. 10,507 — Status: Met
    - Multi-period Prog.: 3,000; 6,000; 9,000; 12,000; 12,000; 3,200; 6,400

- Memorandum items (selected exact figures):
  - Budget Support (grants, US$ millions): 8.7; ...; 0.0; ...; 23.1; ...; 3.8; ...; 50.0; 46.0; ...; 0.0; 0.0; 13.2; 33.2; 52.6; 5.5; 13.0
  - Base Money (stock, GMD millions): 21,919; ...; 25,298; ...; 22,261; ...; 22,502; ...; 22,603; 22,556; ...; 22,787; 22,971; 23,155; 23,339; 23,339; 23,642; 23,805
  - IMF disbursements (SDR millions): 16.58; ...; 0.0; ...; 16.6; ...; 16.58; ...; 24.9; 24.9; ...; 0.0; 37.3; 0.0; 65.3; 35.6; 0.0; 93.3

Notes from the table:
- "These criteria apply on a continuous basis."
- "The zero ceiling applies to all outstanding credit (for example, overdrafts and advances) at non-market terms as of the end of each month, excluding the RCF onlending and the 30-year bond held by the CBG."
- "For definitions and related adjustors, see the Technical Memorandum of Understanding (TMU). End-June and End-December are test dates. Targets for end-March and end-September are indicative targets (ITs), except for continuous performance criteria."
- Correction note: "The amounts for 'Prog Mar 2024' and 'Prog Mar 2025' were incorrectly reported in the program approval and first review Staff Reports."

### Prior Action and Structural Benchmarks (Third ECF Review, 2025): Measures, Timing, and Status
- Prior Action:
  - Cabinet approval of adjustments to 2025 budget allocations to compensate for new unfunded spending pressures — Macro rationale: Ensure the budget is consistent with program objectives — Timing: Prior Action — Status: Met
- Structural Benchmarks (selected entries):
  - Domestic Revenue Mobilization (GRA/MOFEA):
    - Adopt by the cabinet a revised GIEPA Act with streamlined tax incentives — Timing: End-December 2024 — Status: Not met (proposed to be rephased to end-September 2025)
  - Public Financial Management (MOFEA and Cabinet):
    - Ensure cabinet approval of the roadmap for implementation of program-based budgeting and initiate roll-out in preparing 2025 draft budget for pilot ministries — Timing: End-December 2024 — Status: Met
    - Prepare a study on rationalizing and consolidating subvented agencies with MDAs — Timing: End-December 2024 — Status: Met
    - NAO and MoFEA’s Internal Audit to complete and publish a report of all existing arrears and unsettled commitments by the central government, in line with IMF recommendations — Timing: End-March 2025 — Status: Not met (proposed to be modified and rephased to end-December 2025)
  - Governance and SOE Reforms (MOFEA):
    - Adopt by the cabinet a revised National Audit Office Act — Timing: End-December 2024 — Status: Not met (proposed to be rephased to end-September 2025)
    - Finalize and enact regulations of the recently passed public procurement and SOEs Acts — Timing: End-December 2024 — Status: Met
    - Complete the expansion of the social registry to Banjul and Kombo areas — Timing: End-December 2024 — Status: Met

### Structural Benchmarks for Fourth–Sixth ECF Reviews (2025–26): Planned Measures and Timing
- Domestic Revenue Mobilization (selected):
  - Create a database of rental property for taxation purposes — Timing: End-June 2025
  - Submit to the cabinet a tax expenditure statement in line with FAD recommendations — Timing: End-December 2025
  - Adopt a domestic revenue mobilization strategy — Timing: End-June 2025
  - Undertake a thorough review of VAT with a view to modernizing its design and operation — Timing: Proposed for End-June 2026
  - Adopt by the cabinet a revised GIEPA Act with streamlined tax incentives — Timing: End-December 2024 (proposed to be rephased to end-September 2025)
- Public Financial Management (selected):
  - Extend the use of IFMIS to 4 multilateral-donor projects and to all government-funded projects implemented after January 1, 2025 — Timing: End-September 2025
  - Adopt by the cabinet a revised PFM Act in line with agreed IMF recommendations — Timing: End-December 2025
  - Require all MDAs to present quarterly updates to their cash plans through IFMIS and implement a 'maximum deviation' rule — Timing: End-December 2025
  - NAO and MoFEA’s Internal Audit to complete and publish a report of all existing arrears and unsettled commitments by the central government (in line with IMF recommendations) — Timing: End-March 2025 (proposed to be modified and rephased to end-December 2025)
  - MoFEA to develop and publish a comprehensive, timebound strategy to institutionalize the arrears reporting and clearing framework — Timing: Modified SB for end-June 2025
  - MoFEA to publish a payment schedule for arrears identified in the NAO and Internal Audit’s report — Timing: Proposed for end-March 2026
  - Ensure Chart of Accounts aligned with GFS 2014 and publish manual — Timing: End-September 2025
- Governance and SOE Reforms (selected):
  - Set up a digital platform for business registration — Timing: End-June 2025
  - Submit to the National Assembly the names of the three anti-corruption commissioners as specified in the Anticorruption Act — Timing: Proposed for end-June 2025
  - Adopt by the cabinet a draft land policy — Timing: End-September 2025
  - Complete partial or full privatization of GAMCEL — Timing: End-March 2026
  - Adopt by the cabinet a revised National Audit Office Act — Timing: End-December 2024 (proposed to be rephased to end-September 2025)
- Financial Sector (CBG and MoFEA):
  - Require the augmentation of banks’ capital by GMD100 million — Timing: End-December 2025

### Reform Measure Matrix and RSF Reform Measures (RM1–RM9): Targets, Timing, TA Providers, and Macro Rationale
- RM1: Climate Change Law
  - MECCNAR to draft and Cabinet to adopt a Climate Change Bill in line with WB recommendations
  - Target Date: March 2026
  - Review Timeframe: RSF 2nd review / ECF 5th review
  - TA provider: WB
  - Prospective BoP risk reduction / rationale: Improved fiscal and external sustainability; enables resilience building and supports budget management; reduces external financing needs; improves impact of other RMs and macro-critical measures.
- RM2: Fiscal risks (Green PFM)
  - MoFEA to develop a methodology for identifying fiscal risks from natural disasters and publish methodology and application results starting with the 2027 Medium Term Economic and Fiscal Framework, in line with IMF TA recommendations.
  - Target Date: March 2026
  - Review Timeframe: RSF 2nd review / ECF 5th review
  - TA provider: IMF
  - Rationale: Improved fiscal and external sustainability.
- RM3: PIM (project appraisal)
  - MoFEA to incorporate climate mitigation and adaptation criteria in guidelines for project appraisal and selection, including donor-funded projects, in line with IMF TA recommendations.
  - Target Date: Early December 2025
  - Review Timeframe: RSF 1st review / ECF 4th review
  - TA provider: IMF
- RM4: Climate data and transition taxonomy
  - CBG to adopt a transition taxonomy and create a climate data repository; issue supervisory guidelines for banking sector incorporating climate-related risks; data and guidelines to be regularly shared with CBG including timelines.
  - Target Date: March 2026
  - Review Timeframe: RSF 2nd review / ECF 5th review
  - TA providers: IMF/GCA
  - Rationale: Financial sector resilience; reduces financial sector losses when climate risks materialize; investment promotion by clarifying exposures.
- RM5: Small farmers insurance (insurance regulations)
  - MoFEA to approve insurance regulations to promote private sector engagement, enable index-based microinsurance schemes, partnerships with climate data providers, guidelines for index triggers, and monitoring/reporting mechanisms when subsidies are provided.
  - Target Date: September 2025
  - Review Timeframe: RSF 1st review / ECF 4th review
  - TA provider: IMF
  - Rationale: Climate adaptation; improved resilience for small farmers.
- RM6: Sea level rise and flooding risk (coastal zoning)
  - Ministry of Land, with Ministry of Fisheries and Water Resources and stakeholders, to update zoning regulations for coastal zones to incorporate climate resilience criteria, setback distances, and no development zones prohibiting infrastructure in high-risk flooding areas.
  - Target Date: September 2026
  - Review Timeframe: RSF 3rd review / ECF 6th review
  - TA provider: WB
  - Rationale: Improves resilience against sea-level rise; reduces reconstruction needs and related fiscal/external costs.
- RM7: Water (groundwater licensing)
  - Ministry of Fisheries and Water Resources to issue regulations for licensing procedures to control groundwater abstraction and impoundment, in accordance with good international practices.
  - Target Date: September 2026
  - Review Timeframe: RSF 3rd review / ECF 6th review
  - TA providers: AFD/GCA
  - Rationale: BOP resilience to shocks; protects water resources.
- RM8: Carbon taxation (fuel excise conversion)
  - MoFEA to convert gasoline and diesel excise tax from an ad-valorem tax to a specific tax aligned by carbon content; new tax should be 5 USD per ton more ambitious than existing taxes, indexed to inflation, included in the 2026 budget; must be complemented with additional funding to the social safety net to protect vulnerable households.
  - Target Date: January 2026
  - Review Timeframe: RSF 2nd review / ECF 5th review
  - TA provider: IMF
  - Rationale: BOP and fiscal resilience; reduces LT reliance on fossil fuel imports; fiscal and external sustainability.
- RM9: Electricity cost recovery
  - MoFEA, the Ministry of Petroleum and Energy and PURA to review electricity cost recovery methodology and tariff compensation mechanism and update them in line with IMF recommendations; based on revised methodology, tariffs to be regularly updated consistent with a plan to achieve full cost-recovery by end-2030; implement first phase of tariff adjustments in line with approved plan; plan to be published and include measures to mitigate impacts on vulnerable households.
  - Target Date: September 2026
  - Review Timeframe: RSF 3rd review / ECF 6th review
  - TA provider: IMF
  - Rationale: Fiscal and external sustainability owing to market price on electricity which reduces the need for external financing.

*Source: 4. The Gambia (chapter content provided).*

### Annex I. Risk Assessment Matrix

### Annex I. Risk Assessment Matrix

### External risks: summary of sources, likelihood, expected impact, and policy responses
- Trade policy and investment shocks.
  - Likelihood: High
  - Expected impact: High. While the direct effect of the US tariffs/trade policy on the Gambia is minor given the low share of trade with the US, income in destinations of exports and origins of tourists will be affected. Tourist arrivals and remittances would decline. Growth would slow down, and foreign exchange pressures would reemerge.
  - Policy response:
    - Diversify economic activities as well as exports destinations and tourists’ origins to reduce vulnerabilities to shocks in a few sectors and dependence on limited groups of countries.
    - Resolve regional trade disruptions to reduce dependence on global trade.
    - Provide targeted support to vulnerable households using the expanded social registry.
- Sovereign debt distress.
  - Likelihood: High
  - Expected impact: Medium. Shrinking development aid from international partners might limit The Gambia's ability to finance vital public services and infrastructure projects. As a result, the government may have to implement abrupt expenditure cuts, affecting social services, health care, education, and infrastructure development.
  - Policy response:
    - Diversify economic activities as well as exports destinations and tourists’ origins to reduce vulnerabilities to shocks in a few sectors and dependence on limited groups of countries.
    - Build adequate fiscal and foreign exchange buffers.
    - Implement structural reforms to support private sector development.
    - Provide targeted support to vulnerable households using the expanded social registry.
- Regional conflicts.
  - Likelihood: Medium
  - Expected impact: High. An escalation or spread of the conflict and other regional conflicts, with the ensuing global commodity price volatility and disruptions of global supply chains could reduce tourist arrivals and remittance inflows, intensify inflationary and forex pressures, and resume large fuel revenue losses.
  - Policy response:
    - Diversify economic activities as well as exports destinations and tourists’ origins to reduce vulnerabilities to shocks in a few sectors and dependence on limited groups of countries.
- Commodity price volatility.
  - Likelihood: High
  - Expected impact: High. Dependence on imported commodities leads to higher volatility in import bill and volume. Higher exchange rate and domestic price volatility will cause social and economic instability. Unpredictable trade values and production costs slow investment and growth.
  - Policy response:
    - Provide targeted support to vulnerable households using the expanded social registry.
    - Strengthen the fiscal oversight of NAWEC.
    - Accelerate implementation of national energy roadmap with the World Bank support, including use of alternative energy production methods.
- Global growth acceleration.
  - Likelihood: Low
  - Expected impact: High. This would positively affect The Gambia’s economy through higher tourist arrivals and remittance inflows. Domestic economic activity would strengthen. The tax base would increase, resulting in improvement in the country’s debt devel.
  - Policy response:
    - Save the higher tax windfall to build adequate fiscal and foreign exchange buffers.
    - Implement structural reforms to support private sector development.
- Climate change (external/global climate risks).
  - Likelihood: High
  - Expected impact: High. Stock of physical and human capital, and thereby, domestic production would be adversely impacted. The number of internally displaced individuals would increase, leading to increased recovery spending and worsened fiscal situation.
  - Policy response:
    - Build resilience to natural disasters.
    - Consider the policy recommendations from the recent technical assistance on Climate Policy Diagnostic and Climate Public Investment Management Assessment.

### Domestic risks: social and governance
- Social discontent and instability.
  - Likelihood: High
  - Expected impact: High. Socio-political uncertainty hurts confidence of economic actors and private investment, delays economic and policy reforms, and weakens institutions.
  - Policy response:
    - Involve CSOs and other stakeholders in the society in policy decisions.
    - Further strengthen governance and anti-corruption reforms, including through implementation of recommendations from the recent governance diagnostic.

### Annex II. External Sector Assessment: overall assessment and implications
- Overall Assessment: Preliminary staff estimates suggest that the external position of The Gambia in 2024 is moderately weaker than the level implied by medium-term fundamentals and desirable policies.
- Drivers of the weaker external position:
  - Elevated current account deficit reflecting high fiscal expenditures and strong growth of the construction sector during the year.
- Projections and key figures:
  - Current account deficit is projected to decline in 2025 and further over the medium term as the fiscal balance is expected to improve, and tourism is expected to continue its robust growth.
  - Net international investment position (NIIP) was estimated to be -75.8 percent of GDP as of 2023.
  - External debt stood at 47.4 percent of GDP in 2024, 1.7 percentage points down from 2023.
  - Reserves level increased in 2024 and is assessed to be adequate for precautionary purposes.
- Potential policy responses:
  - Implementation of the planned fiscal consolidation is crucial for reducing current account deficits and ensuring external sector sustainability.
  - Achieving exchange rate flexibility through a well-functioning foreign exchange market will support The Gambia’s external position.
  - Heightened levels of NIIP and external debt warrant careful monitoring, although the risk of sudden outflows is relatively limited due to the high shares of FDI liabilities and concessional debt.

### Foreign assets and liabilities: position and trajectory
- Background and recent trajectory:
  - NIIP has gradually declined since 2008, reaching approximately -75.8 percent of GDP in 2023.
  - Gross liabilities in 2023 were around 110 percent of GDP, 48 percent of which were debt liabilities.
  - Gross Assets: 38.2 (% GDP) [2023]
  - Debt Assets: 10.6 (% GDP) [2023]
  - Gross Liab.: 110.1 (% GDP) [2023]
  - Debt Liab.: 52.6 (% GDP) [2023]
- Assessment:
  - While the sizable negative NIIP warrants careful monitoring, sustainability is not an immediate concern given the high shares of FDI liabilities and concessional debt.
  - The NIIP is projected to have declined further in 2024, considering the heightened current account deficit in 2024.
  - It is important to minimize non-concessional external borrowing over the medium term to ensure external sustainability within the time horizon.

### Current account: recent outcomes and projections
- Background and recent changes:
  - The current account deficit in 2024 is estimated to have increased to 6.2 percent of GDP from 5.4 percent in the previous year, despite the robust growth of remittances and tourism, as the elevated fiscal expenditures and strong growth of the construction sector led to high import growth.
- Projections:
  - The current account deficit is projected to fall below 5 percent of GDP in 2025 and then will decline further toward around 1-2 percent of GDP over the medium term, in line with the planned fiscal consolidation.
  - Current account deficits over the medium term would be higher than staff’s baseline projections if unfavorable external shocks, such as higher oil prices, or weak growth in tourist origination countries, were to hit the economy.
- EBA-lite assessment:
  - The EBA-lite methodology’s current account (CA) approach produces a current account gap of -1.7 percent of GDP.
  - Cyclically adjusted current account deficit: -5.7% of GDP.
  - Current account norm: -3.9% of GDP.
  - Resulting gap: -1.7% of GDP.

### Real exchange rate: background and assessment
- Background:
  - The real exchange rate slightly appreciated by 1.2 percent in 2024, despite the nominal depreciation, reflecting high inflation above 10 percent.
  - Between January 2023 and December 2024, the real exchange rate appreciated by 8.2 percent.
- Assessment:
  - The CA approach of the EBA-lite model implies an overvaluation of 9.1 percent.
  - The REER model implies an overvaluation of 15.8 percent.
  - Given the historically poor fit of the REER model for The Gambia for the consistency with CA assessment, staff’s assessment of the real exchange rate is grounded on the REER Gap from the CA model estimates.
  - Policy implication: Achieving exchange rate flexibility through a well-functioning foreign exchange market is crucial for ensuring the REER gap will be closed over the medium term.

### Capital and financial accounts: flows and policy measures
- Background:
  - The Gambia’s capital account is estimated to slightly decreased from 6.2 percent of GDP in 2023 to 5.2 percent in 2024, mainly due to lower disbursements of project (i.e., capital) grants.
  - The financial account appeared to be similar to 2023, recording –0.2 percent of GDP, which reflects the continuation of robust FDI inflows.
- Assessment:
  - The risk of sudden and large outflows is limited as most of the inflows are disbursements of concessional debt or direct investments.
  - Policy implication: It is important to build an environment to attract more direct investment.

### FX intervention and reserves level
- Recent reserves and interventions:
  - Gross international reserves increased to US$533.5 million in 2024 from US$474.3 in 2023, reaching 20.8 percent of GDP or 4.2 months of prospective imports.
  - The increase was driven by disbursements from various creditors, including the IMF, during December 2024.
  - More recently, the CBG implemented a net sell intervention of approximately US$ 7 million during the first quarter of 2025.
- Projections and adequacy:
  - Over the medium term, scheduled debt service will drain reserves, while improvements in the current account will help sustain the current level of reserves.
  - Gross international reserves are projected to remain above 4 months of prospective imports, while the ratios are projected to decline to 4.0 months in 2031.
  - Based on the Fund’s ARA-CC approach, the estimated adequate level of reserves is 3.5 months of imports. However, staff assesses that the adequate level of reserves is higher than this estimate given The Gambia’s significant external debt.
  - Staff recommendation: the central bank should hold foreign exchange reserves corresponding to at least 4 months of prospective imports of goods and services.
- Policy guidance on FX intervention:
  - The level of gross international reserves at the end of 2024 is deemed adequate.
  - While FX intervention could be used to address disorderly market conditions and mitigate policy trade-offs when the FX market becomes dysfunctional and exhibits excessive volatility due to large non-fundamental shocks, it is crucial to ensure exchange rate flexibility and smooth forex market operations so that exchange rates can function as shock absorbers for the economy.

### Annex III. Climate Risk Profile: vulnerabilities, impacts, and recent disasters
- Key vulnerabilities and channels:
  - The Gambia is highly vulnerable to both gradual impacts of climate change and increasingly frequent and severe natural disasters.
  - Distinctive topography defined by the Gambia River with low elevation makes the country susceptible to sea-level rise.
  - Increasing salinization and rainfall pattern shifts hurt agricultural productivity, exacerbating deforestation.
  - Droughts and floods are becoming more frequent with severe consequences for food security and fiscal sustainability.
  - The frequency and severity of extreme heat events are escalating.
  - Key sectors vulnerable: agriculture, tourism, and fishing.
- Exposure statistics and projections:
  - Approximately one third of the population lives below 10 meters above sea level.
  - The Greater Banjul area has around 1.4 million residents (60 percent of the total population) and is situated at sea level.
  - Sea-levels could rise by around half a meter by 2050.
  - A one-meter sea level rise scenario could see parts of the capital submerged by 2100.
  - The cost of sea level rise could reach $70 million on average by 2050.
  - First Global Stocktake estimates: full implementation of the latest NDCs would result in global mean temperatures increasing by 2.1-2.8 ºC by 2100; a less ambitious scenario (RCP-7.0) predicts about 1.7-2.6 ºC increase for The Gambia by 2050 and 2.5 to 4.0 ºC by 2100.
- Recent natural disasters and impacts:
  - Since 1950, The Gambia has experienced 33 climate-related disasters, including drought flood, storm and wildfire.
  - The 2011/2012 and 2014/2015 droughts led to a 50 percent decline in crop output, severely threatening food security.
  - The 2022 flashflood resulted from the largest rainfall event recorded in over 30 years in The Gambia; preliminary analysis indicates direct damages amounted to approximately $82 million, or about 3.8 percent of The Gambia’s 2022 GDP.
  - Secondary disasters from inadequate waste management included an oil spill at NAWEC’s Brikama power plants.
- Policy and institutional gaps:
  - The annex highlights progress and gaps on climate adaptation and mitigation policy, gaps regarding public financial management and climate data, and lays foundations for IMF support under the Resilience and Sustainability Facility (RSF).
  - Policy implication: build resilience, strengthen adaptation and mitigation policies, and improve climate-related public financial management and data systems.

*Source: Annex I. Risk Assessment Matrix; Annex II. External Sector Assessment; Annex III. Climate Risk Profile (excerpts).*

### 4. Agriculture is the cornerstone of The Gambian economy and is highly vulnerable to

### 4. Agriculture is the cornerstone of The Gambian economy and is highly vulnerable to climate change including shifting rainfall patterns and rising temperatures

### Agriculture: exposure, impacts, and projections
- The sector accounts for about half of total employment and contributes over 22 percent of GDP.
- Relies on rain-fed production of cereals and cash crops like groundnut, cashews, and rice.
- The three major food items represented 86.2 percent of good exports in 2024.
- Agricultural yields are vulnerable to climate hazards and pose food security challenges (see Figure A3).
- Key risks: rising temperatures, sea level rise, disruptions to the seasonal calendar, dependence on rainfall, loss of agricultural lands due to saline water inclusion, declining land productivity.
- Saline water intrusion reduces productivity of irrigated rice farming; rice has remained the primary food import in recent years.
- Predicted increase in number of hot and dry days will put pressure on rainfed agriculture and amplify the impact of droughts (see Figure A4).
- Data on agricultural losses is often unavailable or anecdotal; simulations show agricultural losses from severe droughts could increase three to fourfold compared to historical losses.
  - Example projections (UNDRR 2019): a drought with 1-in-10-years historical severity caused around $5 million agricultural loss; under RCP8.5 it is projected to cause around $21 million. A 1-in-50-years drought caused $17 million historically and is projected to cause $57 million in the future.
- Uncertainty of income streams affects roughly half the population (farmers) with limited access to financial protection mechanisms, hindering investment and adaptation.
- After years of declining productivity, undernourishment and food insecurity are on the rise.
- Climate change is expected to exacerbate balance of payments challenges by decreasing exports and increasing food imports.

### Water stress, salinization, and irrigation
- Current water stress (total water withdrawal to renewable water availability) is considered low (<10 percent), despite rural drinking water access challenges.
- Projected to increase to medium-high (20-40 percent) towards the latter 21st century under climate change.
- Competing uses for water and salinization may worsen the situation.
- Irrigated area is currently at 20 percent of total grain production (imputed value for 2020 based on Aquastat), but low efficiency of current irrigation leads to inefficient water use (Figure A5).
- Increasing salinization of the Gambia River due to sea level rise threatens to contaminate groundwater aquifers; other drivers include tidal flooding and unchecked borehole drilling.
- Feedback loop: increasing salinity reduces availability of water for human consumption and irrigation, hurts crops not suitable for salty water, and produces deforestation near the river.

### Climate variability, conflict, and migration risks
- Meta-analysis (Burke et al., 2024) finds extreme climate events increase risk of inter-group conflict (+2.5 percent per standard deviation of temperature) and interpersonal violence (+1.9 percent).
- Natural disasters can cause economic disruptions and migration pressures compounded by institutional weaknesses, raising propensity for conflict.
- Cross-border migration issues have started as farmers seek more fertile grazing grounds closer to the Gambia River.

### Macroeconomic channels and fiscal risks
- Sudden shocks to agricultural productivity lead to higher food imports, worsening balance of payments and currency depreciation.
- Road and rail infrastructure exposure: ranks 5th in sub-Saharan Africa at 2 percent of GDP annual expected damage (Koks et al., 2019), affecting connectivity, trade, and growth.
- Human and economic cost related to disasters is high: 2022 flash floods accounted for 3.8 percent of GDP (without accounting for budget virements that crowded out productive expenditure).
- Absence of risk transfer instruments means disaster response and recovery is borne by fiscal resources, adding to debt service and endangering debt sustainability.
- DIGNAD model analysis (Annex V) shows investing in climate-resilient infrastructure could largely mitigate negative impact of natural disasters on growth and debt.
- Safeguarding debt sustainability depends on continued availability of external concessional debt, domestic revenue mobilization, and spending rationalization reforms to close the financing gap.

### Current policies, institutional gaps, and mitigation focus
- National Environmental Management Act of 1994 remains central but lacks a cohesive governance framework for intersectoral coordination and mandatory data sharing across MDAs.
- Roles and interactions among National Climate Change Council, Inter-Ministerial Climate Committee, and Climate Change Secretariat need clarification.
- National Climate Change Policy (2016) and subsequent initiatives (Strategic Program for Climate Resilience; Low Emission Climate Resilient Development Strategy) identified priorities: infrastructure, waste management, water supply, climate-resilient agriculture, coastal management.
- Gambia Climate Vision 2050 lists seven barriers including limited funding, limited capacity, and lack of political will.
- Although The Gambia is responsible for a marginal share of global emissions, the NDC contains more detailed mitigation than adaptation actions (e.g., scaling up renewable energy, decreasing emissions from agriculture, improving waste management).
- 2022 long-term strategy targets five emitting sectors: energy, agriculture, waste management, transport, and LULUCF, aiming for net-zero emissions by 2050 and an electricity sector strategy by 2040 to scale up renewables.
- Implementation of mitigation-focused plans has suffered from lack of financing and limited capacity.

### Building resilience: readiness, coastal management, and institutional capacity
- The Gambia is the 33rd most vulnerable country according to the IMF-Adapted NDGAIN Index; readiness is low compared to most vulnerable countries.
- Progress in readiness: establishment of a National Disaster Agency and rapid assessment methodologies to evaluate damages.
- Gaps persist in governance and policy implementation needed to protect against climate change effects and meet climate ambitions.
- Coastal vulnerability management constrained by outdated land use policies, limited cross-sectoral coordination, limited technical capacity, and insufficient investment in coastal adaptation infrastructure.
- Coastal planning has been ad hoc and project-based; needs integrated, multi-sectoral approach emphasizing no-development zones, managed retreat, relocation, and combination of non-physical (land use regulations, wetland preservation) and physical defenses where warranted.

### Disaster risk financing and social safety nets
- Current disaster resilience instruments: fiscal buffers (line item for unforeseen events), budget reallocations, augmentations, $20 million Catastrophe Drawdown Option for the 2024–2027 period, drought insurance coverage of $3.76 million under African Risk Capacity with 50 percent co-financing from African Development Bank.
- Need to diversify disaster risk management and financing toolkit, especially for highly climate-exposed sectors like agriculture.
- Efficiency improvements: accelerate beneficiary identification, integrate systems, transition fully to mobile payments.
  - During the 2023 drought, community-based targeting for government support took 120 days.
  - Mobile phone penetration was 89 percent in 2020, presenting opportunity for mobile cash transfers.
- Integrate shock-responsiveness into social safety net by linking national social registry with NDMA cash transfer program and damage assessment/community targeting methods.

### Scaling climate-smart agriculture and risk-transfer instruments
- Over half of The Gambia’s population relies on agriculture; a predominant majority of these are women.
- 72 percent of poor and 91 percent of extremely poor households rely on small-scale farming.
- Barriers to scaling: high initial costs, limited access to credit, high interest rates, insufficient incentives, high staff attrition, and incongruent government support for non-climate smart technologies.
- Formal sector lending minimal: commercial banks allocated only 4 percent of their portfolio to agriculture across 2013 and 2018.
- Planned measure: Incentives-based Risk Sharing System for Agricultural Lending (with seed funding from African Development Bank) to de-risk agricultural financing by commercial banks and micro-finance institutions.
- Index-based insurance can accelerate resource availability after disasters and minimize administrative costs; microinsurance is being piloted and regulation is needed to incentivize private sector participation and scale efforts.

### Social protection, coverage gaps, and financing targets
- Social registry completed in December 2024, based on multidimensional asset ownership data, with limited information on exposure to previous climate hazards.
- Two main cash transfer programs: RISE and Family Strengthening Program, covering 17,000 households and 2,150 individuals respectively.
- Both programs expected to increase coverage in 2025: additions of 20,000 households to RISE and 3,000 individuals to Family Strengthening Program.
- With expected expansions, cash transfer programs would cover about 10 percent of the population.
- More than 40 percent of the population lives in poverty (UNDP, 2021).
- National Social Protection Policy 2015-2025 aims to mobilize revenue and allocate 10 percent of GDP to social protection by 2025, requiring sustained efforts and investments.
- Programs are heavily reliant on donor funding due to limited domestic fiscal space and competing priorities.

### Gendered impacts of climate shocks
- Gender inequality is among the highest in Sub-Saharan Africa and impedes macroeconomic outcomes and women's coping capacity.
- Three-quarters of women, compared to 55 percent of men, work in the informal sector (UNCDF 2019); only a quarter of women have access to their own earnings.
- Women more likely engaged in subsistence farming or unpaid care work; more than half of female-headed households live below the poverty line; severity of poverty among female-headed households is twice that of male-headed households.
- Around half of women, compared to a third of men, identified agricultural work as primary occupation (World Bank, 2022).
- Women account for 60 percent of production of staple food rice, which is vulnerable to soil salinization from rising sea levels (UNFCCC 2022).
- Food insecurity increased from 5.6 percent in 2011 to 8 percent in 2016 and to 13.4 percent in 2021 (FAO, European Union and CIRAD, 2022).
- Prevalence of food insecurity: female-headed households 15 percent; male-headed households 13 percent (WFP 2021).

### Water sector legal, technical, and regulatory gaps
- Current legal basis for water resource management dates to 1979 and lacks strong framework for coordination across agencies (Ministry of Fisheries and Water Resources, National Environmental Agency, NAWEC, PURA, local governments).
- Urban water supply fully based on groundwater extraction with infrastructure capacity limitations leading to rationing.
- Unregulated private drilling of boreholes is widespread due to lack of reliable supply.
- Lack of sewage services in urban areas raises health risk concerns.
- Estimates of technical and non-technical water losses range between 20 and 40 percent.
- Limited regulatory framework for private borehole drilling compounds groundwater depletion, sea level rise impacts, health hazards, and salination.
- Policy recommendations: centralize permission to drill boreholes and introduce abstraction fees to reduce health hazards, externalities of groundwater depletion, and improve financial sustainability of the sector.

*Source: 1gmbea2025002-print-pdf - 4. Agriculture is the cornerstone of The Gambian economy and is highly vulnerable to climate change including shifting rainfall patterns and rising temperatures.*

### 18. The Gambia contributes less than 0.01 percent of global emissions, but targeted

### 18. The Gambia contributes less than 0.01 percent of global emissions, but targeted

### Emissions profile and sectoral breakdown
- Emission intensity of GDP: 1,654 tonnes of CO2e per million US$ (The Gambia) versus 560 tonnes (global average).
- Sectoral shares of emissions:
  - Nearly a third from agriculture.
  - 20 percent from land use, land use change and forestry.
  - 18 percent from waste.
  - 13 percent from the power sector.
  - 11 percent from the transport sector.
- Projection and risks:
  - National and IMF estimates project the fastest emission increases in the transport and waste sectors as the country develops.
  - Delaying low-carbon transitions in these sectors will increase total emissions and the cost of the transition.

### Mitigation priorities and co‑benefits
- Even though national contribution to global emissions is less than 0.01 percent, targeted mitigation yields local co-benefits:
  - Lower air pollution and associated health benefits.
  - Lower risk of communicable diseases.
  - Increased resilience to natural disasters.
- Priorities highlighted:
  - Prevent lock-in of fossil fuel–based technologies.
  - Increase the share of renewables to reduce electricity costs, fossil fuel imports, foreign exchange dependence, and BOP and fiscal risks.

### Fiscal instruments, revenue implications, and social safety nets
- Revenue context:
  - Preliminary revenue collection: 10.2 percent of GDP in 2024.
- Carbon pricing scenario:
  - A carbon tax set at $5 per tonne of CO2 equivalent is projected to yield an additional 0.12 percent of GDP in revenue while keeping emissions aligned with the NDC target by 2030.
  - Carbon pricing would incentivize adoption of renewable energy and reduce reliance on imported, fiscally costly fossil fuel generation.
- Social protection and macro considerations:
  - Universal coverage in the social registry and improved digital payment systems provide a basis to strengthen support for vulnerable households.
  - Short-term: social safety nets recommended to support vulnerable populations during transitions; careful inflation monitoring advised.
  - Medium-term: greater reliance on solar power expected to lower energy costs and electricity tariffs.

### Power sector challenges and required reforms
- Key fiscal and operational constraints:
  - High generation costs, substantial transmission and distribution losses, and tariffs that do not cover costs undermine the State-Owned Enterprise (SOE).
  - Technical and non-technical losses are currently at 38 percent.
  - Insufficient maintenance and accumulating SOE debts deter private investment.
  - Reliance on a fossil fuel–based powership has increased costs and emissions.
- Recent and planned investments:
  - A new dam and a 50 MW solar plant funded by the World Bank are expected to lower electricity generation costs.
- Policy actions recommended:
  - Further investments to reduce technical and non-technical losses.
  - Overdue increases in electricity tariffs to encourage efficient energy use.
  - Continue careful monitoring of fiscal pressures as electricity demand increases with expanded household connections.

### Land use, forests, biomass and clean cooking
- Deforestation and land use:
  - Over the past sixty years, The Gambia has lost approximately one third of its forest cover.
  - Forests now occupy 40 percent of total land area.
  - Drivers: agricultural expansion, reliance on biomass for cooking, urbanization, wildfires, saline intrusion.
- Household energy:
  - Biomass accounts for 78 percent of household energy consumption, primarily for cooking.
- Health and adaptation co-benefits:
  - Biomass use increases exposure to PM2.5, PM10, carbon monoxide and nitrogen oxides, raising respiratory and cardiovascular disease incidence.
  - Forest conservation and clean cooking programs can reduce deforestation and protect adaptation co-benefits (reduced flood risk, increased soil fertility).
- Agricultural productivity measures (irrigation, fertilizers, resilient crop varieties) could reduce pressure for agricultural land expansion, delivering mitigation co-benefits.

### Solid waste and wastewater management
- Scale and practices:
  - Over 400,000 tonnes of waste generated annually.
  - Most households burn waste in backyards; open burning linked to severe air, water and soil pollution and increased chronic respiratory and cardiovascular problems, carcinogenic risk and mortality.
- Service and infrastructure gaps:
  - Waste is not systematically collected or transported, causing drainage blockages and illegal dumpsites that increase flooding risk.
  - Greater Banjul Area dumpsites approaching full capacity.
- Legal and institutional context:
  - Existing legislation includes the Waste Management Bill (2007), the Anti-littering Act (2008) and a Plastic Bag Ban (2015), but enforcement is weak and coordination fragmented.
- Recommended actions:
  - Strengthen institutional frameworks, improve waste management systems, and provide incentives for adequate collection and management.

### Climate data, public financial management, and financial sector exposure
- Climate data and planning:
  - Need to improve climate-related data collection, climate modelling, and mainstream climate data use in budget planning and sectoral policy.
  - National Disaster Management Agency (NDMA) improved hazard and physical risk data (including vulnerability assessments on coast and along River Gambia), but medium- to long-term chronic risks remain under-analysed and under-integrated into budget planning.
  - A Monitoring, Reporting and Verification system would improve project business cases, notably in forestry and waste sectors.
- Public financial management:
  - Climate criteria not incorporated into project appraisal and selection.
  - Information on asset-level physical risks, including for SOEs and PPPs, is not systematically collected (with few exceptions supported by development partners).
  - Climate-aware planning lacks full integration with national public investment strategies; land-use and construction regulations are outdated.
  - Identification of climate-related investments and expenditures in the budget is not yet in place.
- Financial sector size and data gaps:
  - Total financial sector assets: GMB 96.2 billion GMD at end-June 2024, representing about 55.6 percent of GDP.
  - Banking system accounts for about 85 percent of total financial sector assets.
  - Lack of systematic data on how physical and transition risks translate into financial sector risk.
  - Central Bank collects loan type per sector and balance sheet data but has not cross-referenced these with historical hazards or prospective hazard risk.
- Insurance and regulatory gaps:
  - Insurance market nascent; index-based insurance pilot supported by Africa Risk Capacity and AfDB.
  - Lacks regulatory framework to encourage private sector participation in insurance; rules needed for issuance of index-based insurance, reporting and monitoring.
  - Consideration needed for subsidization arrangements where development partners or NGOs subsidize premiums for vulnerable populations due to fiscal cost of insuring small farmers.
- Priorities identified:
  - Develop a transition taxonomy and guidelines for climate risk disclosure.
  - Strengthen synergies between insurance providers and climate-data institutions.
  - Build regulatory frameworks and technical capacity to enable private participation.

### Climate finance needs, flows, and barriers
- Financing needs:
  - According to the 2021 NDC, The Gambia requires approximately $316 million to fulfill its climate objectives — about three quarters for resilience. (All of the financing is conditional on international support.)
- Current flows and composition:
  - Almost three-quarters of climate finance during 2019-2020 came from international donors.
  - Donor contributions in 2021 and 2022: $176 million in climate-related development finance.
  - Between 2018 and 2022, approximately 60 percent of financial flows were directed towards adaptation goals; the remainder focused on mitigation.
  - Sectoral targeting: energy received around 70 percent of international mitigation finance between 2018 and 2022; agriculture was the second most targeted mitigation sector. Adaptation financing concentrated on disaster prevention and preparedness, general environment protection, agriculture/forestry/fishing, and water supply & sanitation (these four received three-quarters of adaptation flows).
- Private climate finance:
  - In 2020, out of $84 million of climate finance received, only $1 million was private.
  - The Gambia lags regional peers in private climate finance per capita.
- Instrument-specific constraints:
  - Debt-for-nature or debt-for-climate swaps have high transaction costs and require scale to be viable.
  - Issuance of carbon credits may face credibility issues due to governance constraints.
  - Smaller ticket-size project opportunities limit access to green and sustainable finance; green bonds or sustainability-linked bonds may encounter low demand.
- Recommended actions to mobilize finance:
  - Operationalize national climate-related funds (recently established but not yet financed).
  - Systematically investigate barriers to private climate finance and their interrelations.
  - Explore public and private climate finance channels with improved policy certainty and data.

### Institutional responses and development partner support
- Institutional steps:
  - Capital Market and Security Bill adopted in 2021 provides groundwork for trading securities.
  - A climate finance directorate established within the Ministry of Finance and Economic Affairs to enhance coordination and access to private climate finance; working with the Climate Vulnerable Forum to develop a climate finance strategy.
- Development partner role and resources:
  - Almost three-quarters of international public climate finance flows originate from multilateral donors (World Bank, European Union, European Investment Bank); prominent bilateral donors include France and Japan.
  - The Gambia has accessed the Green Environment Fund, Green Climate Fund, and Adaptation Fund.
  - The World Bank expects to approve the first program in a Development and Policy Financing (DPF) series in late 2025, expected to build on and deepen reform measures under the RSF, such as the Climate Change Bill.

### Gender, vulnerability, and policy inclusion
- Women and climate policy:
  - Government included “gender and climate change” as a policy priority in The Gambia’s National Gender Policy launched in November 2024.
  - The new 10-year policy covers 2025-2034 and builds on earlier frameworks (National Policy for the Advancement of Gambian Women 1999-2009; Gender and Women Empowerment Policy 2010-2020).
  - Aim: mainstream gender perspectives into climate change issues and build resilience among vulnerable communities, particularly women and children.
- Policy gaps and recommendations:
  - Strengthened efforts needed to close macrocritical disparities between men and women across dimensions to ensure equal opportunities and access to resources for climate resilience and stability.
  - Ensure women’s voices are well represented in decisions on climate adaptation and mitigation policies.

*Source: Chapter 18 and Annex III material from the provided IMF content unit.*

### 33. In support of its mitigation goals, The Gambia has accomplished significant projects

### 33. In support of its mitigation goals, The Gambia has accomplished significant projects

### Renewable energy and electricity sector reforms
- Jambur solar power plant: 23MW peak capacity; commenced operations in March 2024; backed by the World Bank, European Union, and the European Investment Bank.
- Gambia Electricity Restoration and Modernization Project (World Bank and European partners): aims to enhance renewable capacity and modernize transmission and distribution infrastructure.
- World Bank support for implementing a feed-in -tariff regulation.
- AfDB: Gambia Electricity Grid Rehabilitation and Extension Project focused on increasing electricity access while maintaining low carbon emissions.
- RSF objectives:
  - Revise the tariff structure and establish a methodology for future revisions to ensure electricity sector sustainability.
- Electricity sector vulnerabilities and statistics:
  - Electricity tariffs below cost recovery and NAWEC’s financial situation can hinder investment in renewable projects.
  - Subsidies in the electricity sector for industrial and residential users are estimated to be about 3.2% of GDP in 2022.
  - Access to electricity: just over 30% of the rural population and 80% of the urban population having electricity access.
  - Over 90% of medium firms face outages, and nearly 80% own a generator.

### Agriculture, water, and resilience programs
- World Bank initiatives:
  - Enhancing agricultural productivity through improved water management and land tenure systems.
  - Support for a feed-in-tariff system (energy linkage noted above).
- AfDB initiatives:
  - Planning de-risking agricultural financing by commercial banks and micro-finance institutions.
  - Improving value-added and resilience of rice value chains.
- FAO project:
  - Mitigating and preventing climate-related local conflicts and enhancing resilience of fisheries to climate change.
- RSF complementarity:
  - Provide predictable income streams for farmers by establishing clear rules for agricultural insurance schemes.
  - Require licensing and monitoring of water resources to contribute to long-term water sustainability—crucial for agriculture.
- Water and irrigation metrics:
  - Agricultural water withdrawal in The Gambia is lower than the regional average.
  - Irrigated agriculture water use efficiency lags behind regional and global standards.

### Coastal and disaster risk management
- European Union: supported GCCA+ project implementing Integrated Coastal Zone Management plan recommendations and drafting the Coastal Zone Management Bill.
- UNEP: ecosystem-based adaptation including mangrove restoration to reduce flood risk.
- GCF and UNDP: improving resilience of coastal infrastructure to sea-level rise and erosion.
- 2022: The Gambia joined the World Bank’s West African Coastal Areas Resilience Investment project.
- Agence Française de Développement: projects to increase production capacity and expand distribution network of the water utility in Banjul.
- UNDP: developing an early warning system to mitigate disaster impacts.
- RSF measures: update zoning regulations around the coasts to enable cohesive coastal activities and complement partner programs.
- Sea level rise projections (relative to 2000 levels):
  - Under a moderate warming scenario with current policies: 0.12-0.41 meters by 2050 and 0.24-1.07 meters by 2100.
- Coastal exposure: Greater Banjul area at sea level hosts over 60 percent of the population.

### Climate emissions, vulnerability, and adaptation indicators
- Emissions by sector: agriculture, water, and services account for 76% of GHG emissions.
- The Gambia contributes only a minor share of global GHG emissions; per capita emissions are low compared to peers in the AFR region.
- NDGAIN (IMF-adapted, 2021): The Gambia is the 33rd most vulnerable country; readiness is moderate compared to AFR peers but low compared to most vulnerable countries.
- Historical climate trends:
  - Average number of hot days per year (max. temp above 35C) has shown a large increase over the past 20 years.
  - Duration of dry spells has increased moderately over time.
- Food security and adaptation:
  - High vulnerability in agricultural yields and capacity poses food security challenges.
- GHG trajectory vs NDC:
  - CPAT forecasts emissions to increase in coming years but broadly aligned with the NDC target; NDC target entails a notable rise in emissions by 2030 compared to 2024.

### Public and private climate finance and development partner priorities
- Public Climate Finance per Capita and Private Climate Finance per Capita (US$) displayed (AfDB Country Focus Report 2023).
- Annex III Table: Selected climate-related priorities supported by development partners (examples):
  - Resilience to natural disasters: develop an early warning system (UNDP); disaster risk diagnostic (Africa Risk Capacity and AfDB); disaster risk financing strategy (World Bank).
  - Vulnerability of small farmers: framework to de-risk agricultural financing (AfDB).
  - Strengthening social protection: establish an adaptive social safety net, including shock-responsiveness (World Bank).
  - Expanding renewable energy: expansion of Jambur solar power plant (World Bank); develop a feed-in-tariff system (World Bank).
  - Closing urban water supply gap: expanding NAWEC’s production and distribution capacity (AFD).

### Fiscal and macro-fiscal analysis using the DIGNAD model
- Model context and calibration:
  - DIGNAD model: two-sector small open economy with traded and non-traded goods, includes natural disasters and investment in standard and adaptation capital.
  - Long-term growth potential remains at 5 percent after natural disasters shocks.
  - Calibration: initial values set to data available at end-December 2024; steady states reflect 2018–2023 historical averages.
  - Public investment efficiency (PIE) in baseline: 0.62 (C-PIMA Update with Climate Module, IMF 2025).
    - SSA average PIE: 0.46 (IMF 2018).
    - Efficiency gap versus best-performing peers: 54 percent.
  - Grants account for 30 percent of the revenue on average between 2018 and 2023.
  - Tax-to-GDP objective: raise from 9 percent in 2022 to 12 percent by 2028 (2025 Budget and 2025–2028 MTEFF).
  - VAT tax collection efficiency (C-efficiency) set at 25.1 (World Bank 2020).
    - Implies about 75 percent of potential VAT revenues could be collected if collection becomes efficient.

- Simulation scenarios (financing split: public domestic and external concessional debt adjust 50:50; external commercial non-concessional borrowing excluded):
  - Baseline scenario:
    - Government invests 1.5 percent of GDP in additional standard public infrastructure each year for five years before the natural disaster.
    - Financing: grants 1.0 percent of GDP and concessional borrowing 0.5 percent of GDP.
  - Adaptation scenario:
    - Government invests 2.0 percent of GDP in climate-resilient public infrastructure each year for five years before the natural disaster.
    - Financing: grants 1 percent of GDP and concessional borrowing 1 percent of GDP.
  - Adaptation & policy scenario:
    - Investment: 2.0 percent of GDP in climate-resilient public infrastructure as above.
    - Reforms: raise public investment efficiency by 20 percentage points.
    - Tax reform: increase VAT tax collection efficiency gradually over five years from 25.1 percent to 35 percent (average level in Sub-Saharan Africa).

- Key simulation findings and policy implications:
  - Frontloading investment in climate-resilient infrastructure largely mitigates the negative impact of natural disasters on growth and debt.
  - High upfront cost of resilient infrastructure can worsen fiscal deficits and debt unless accompanied by fiscal reforms.
  - Supplementing financing gaps with domestic revenue mobilization and spending rationalization helps limit output loss while safeguarding debt sustainability.
  - Increasing public investment efficiency yields more efficient construction and post-disaster reconstruction of public infrastructure.
  - Reforms to improve public investment efficiency and increase tax collection efficiency are key to medium- to long-term debt and macro sustainability for The Gambia.

*Source: IMF staff (content from the provided chapter).*

### Annex V. Figure 1. DIGNAD Simulation Results for Baseline Adaptation Investment and PIE, All-

### Annex V. Figure 1. DIGNAD Simulation Results for Baseline Adaptation Investment and PIE, All- Debt Scenario 2024–2023

### Macroeconomic developments and outlook
- Real GDP growth:
  - "The Gambian economy grew on average by 7.2 percent in the first three quarters of 2024."
  - "Real GDP growth is estimated at 6   percent in 2024."
  - "Real GDP is projected to expand by 5.7 percent in 2025" and "stabilizing around 5 percent in the medium term."
- Inflation:
  - "Inflation peaked at 18.5 percent (y-o-y) in September 2023."
  - "Has been hovering around 10 percent (y-o-y) since June 2024, reaching 10.2 percent (y-o-y) at end-2024 and falling to single digits (9.1 percent, y-o-y) in March 2025."
  - Target: "converge to the CBG’s medium-term target of 5 percent by the end of 2026."
- External sector and reserves:
  - "The wedge between the official and parallel exchange rates has remained around 1-2 percent in recent months, compared to a peak of 10 percent in mid-2022."
  - "Gross reserves outperformed targets at end-December 2024."
  - Reserves projection: "projected to remain at a comfortable level above 4 months of prospective imports in the medium term."
- Fiscal position and outlook:
  - "Overall deficit is estimated to have exceeded projections by 1.1 percentage points, reaching 3.8 percent of GDP" in 2024.
  - "About 0.4 percent of GDP of unpaid commitments were carried over to 2025."
  - Medium-term fiscal target: "We are targeting a fiscal deficit of 0.4 percent of GDP over the medium term, accompanied by a steady decline in public debt."
- Balance of risks: "tilted to the downside" — global commodity price volatility, possible global slowdown, regional conflicts, domestic inflation/social tensions, elections in 2026, climate shocks, and uncertainty over the Millennium Challenge Corporation (MCC) compact expected in late 2025.

### Fiscal policies, measures, and structural reforms
- Fiscal discipline and adjustments:
  - Prior action: "adopt them by the cabinet as a prior action for completion of the third review."
  - Total 2025 budget allocation adjustments: "totaling to 1.1 percent of GDP."
  - Specific reallocations to accommodate 2024 unpaid commitments and earmarked revenue transfers:
    - "MDA’s 2024 unpaid commitments of about GMD 660 million (or 0.3 percent of GDP) carried over to 2025" — 2025 allocations adjusted accordingly.
    - Expected budgetary transfers linked to earmarked revenues: "about GMD 1.6 billion (or about 0.8 percent of GDP)" — reallocations from domestically funded capital expenditures (0.6 percent of GDP); goods and services (0.1 percent of GDP); and net lending (0.1 percent of GDP).
  - Contingency and mitigation:
    - Emergency transfer to NAWEC: "GMD 1.4 billion ( 0.7 percent of GDP) in May" — to be "deficit neutral and financed fully by budget support from the World Bank to be received before year-end and regularized in fiscal accounts."
    - Commitment to "save any revenue overperformance that accrues in the course of the year."
    - Expectation that "phase-out of Karpower as an electricity supplier of NAWEC" will reduce future budget risks.
  - Budget management improvements: "initiate timely preparations for a fully costed 2026 budget envelope that includes all transfers linked to earmarked revenues"; improve baseline budget costing, liquidity and cash management.
  - Statistical improvements: "work with the IMF, including through TA, to do a thorough review of the classification and accounting of government accounts at the central bank ahead of the fourth review."

- Commitment to broader reforms:
  - Revenue administration, public financial management (PFM), management of state-owned enterprises (SOEs), enactment of the Anti-Corruption Act.
  - Constitutional reform process to resume in early summer (for National Assembly discussion).
  - Climate agenda: request for RSF support to strengthen long-term resilience and catalyze climate financing.

### Program performance under the ECF and RSF request
- ECF performance (end-December 2024):
  - "We have met six of seven quantitative performance criteria (QPCs) and all four indicative targets (ITs) for end-December 2024."
  - QPCs met: adjusted floors on net usable international reserves (NIR) and the domestic primary balance; four external debt-related QPCs met (zero-ceiling on non-concessional external debt contracted and guaranteed by the government; zero-ceiling on outstanding stock of external public debt with original maturity less than one year; non-accumulation of external payment arrears; ceiling on new concessional external debt contracted or guaranteed by the government (US$90 million)).
  - QPC missed: "adjusted ceiling on net domestic borrowing (NDB) was missed by GMD 564 million or 0.3 percent of GDP" — waiver requested.
  - ITs: "All ITs for end-December 2024 were met" — floors and ceilings on tax revenue, central bank credit, net domestic asset, and poverty-reducing expenditure met.
  - SBs: "Four out of seven structural benchmarks were met." Missed SBs: adoption by cabinet of the NAO Bill and the GIEPA Act; completion and publication of a report of all existing arrears and unsettled commitments by central government up until December 2024.
    - NAO Bill and GIEPA Act: "finalized and their approval is proposed to be rephased to end-September 2025 to complete cabinet review."
    - Arrears report: "prepared by the deadline but is assessed to be incomplete and the structural benchmark is proposed to be rephased to end-December 2025."
- Requests related to RSF and reviews:
  - Requesting access under the RSF "in a total amount of SDR 46.65 million (75 percent of our quota) to be disbursed as budget support."
  - Request "completion by the IMF Executive Board of the third review of our ECF arrangement and the associated financing assurances review" and waivers for nonobservance of the end-December 2024 QPC on the NDB.
  - Request to "modify the end-June and end-December 2025 QPCs on NDB and the domestic primary balance and the end-December QPC floor on net international reserves" to reflect late central bank dividend, temporary NAWEC financing needs, and expected RSF disbursement.
  - Disbursement implication: completion would allow disbursement of the fourth tranche of the ECF (SDR 12.44 million) and its partial on-lending to the budget (SDR 4.98 million).

### Financial sector and stability
- Banking sector soundness:
  - "Banking sector overall remains well capitalized, liquid, and profitable."
  - NPL dynamics: "Banks’ nonperforming loans (NPLs) increased to 15.8 percent in September 2024, from a low of 3 percent at end-2023" due to exposure to one major manufacturing player.
  - Recovery and provision: "The facility has since been restructured and is back to performance" and "NPL ratio has declined to 14.5 percent at end-December 2024."
  - Prudential measures: "Banks continue to make adequate provisions for non-performing loans, and the central bank’s capital augmentation policy is reinforcing industry stability."
  - Stress tests: "The CBG’s latest stress-testing results suggest that the banking sector remains resilient to potential capital and liquidity shocks."

### Climate, resilience, and financing
- Climate vulnerability and policy:
  - "The Gambia ranks among the top ten countries most exposed to sea level rise globally."
  - Government prioritization of climate change in development strategy covering adaptation and mitigation, with financing needs "far greater than available resources."
  - RSF rationale: "The RSF will support the Government’s reforms designed to enhance our economy’s long-term macroeconomic stability and resilience to climate change while boosting policy space."
  - "The mobilization of additional climate financing will be an area of focus in the context of the RSF in the months and years ahead."

*Source: Annex V. Figure 1. DIGNAD Simulation Results for Baseline Adaptation Investment and PIE, All- Debt Scenario 2024–2023; Attachment I. Memorandum of Economic and Financial Policies (selected excerpts).*

### 12. Strong policies underpin our ambitious goals of domestic revenue mobilization. In

### 12. Strong policies underpin our ambitious goals of domestic revenue mobilization. In

### Domestic revenue mobilization
- Finalizing the Domestic Revenue Mobilization Strategy (DRMS; SB for end-June 2025) to modernize the tax system (including VAT) and balance policy and administrative measures.
- Revenue administration measures:
  - Fully digitalizing VAT collection with smart invoice technology.
  - Progress on revenue assurance for telecoms.
  - Implementation of an Integrated Tax Administration System (ITAS) and e-filing to decrease compliance costs and boost revenue collection.
- Tax incentives and tax expenditure transparency:
  - Adoption of the revised GIEPA Act by cabinet (SB for end-December 2024, proposed to be rephased to end-September 2025) to streamline tax incentives.
  - Submission to cabinet of a tax expenditure statement (SB for end-December 2025) including a tax expenditure inventory and a first quantification of international tax expenditure.
  - Plans to develop in-house capacity to assess PIT, CIT and VAT using data and models.
- Base broadening and VAT reform:
  - Developing a database of rental property (SB for end-June 2025) to expand the tax base and enhance rental tax collection.
  - A proposed new SB for end-June 2026 to undertake a thorough review of the VAT to modernize design and operation and improve revenue productivity.

### Public Financial Management (PFM) strengthening
- Domestic arrears:
  - Rephasing the arrears stocktaking to December 2025 and aligning with forthcoming IMF TA recommendations (SB for end-March 2025, proposed to be modified and rephased to end-December 2025).
  - Develop a timebound strategy to institutionalize arrears reporting and clearing framework (modified SB for end-June 2025) aligned with IMF recommendations; include clear definition of expenditure arrears, reporting framework, criteria for clearing validated arrears, and potential consequences for public officers failing to report arrears.
  - After the rephased arrears stocktaking is completed in December, publish a payment schedule of all arrears including provisions on managing arrear clearance starting with the 2027 budget (proposed new SB for end-March 2026).
- IFMIS and cash planning:
  - Require all MDAs to present quarterly updates to their cash plans through IFMIS and implement a 'maximum deviation' rule (SB for end-December 2025).
  - Extend IFMIS use to four multilateral-donor projects and to all government-fund projects implemented after January 1, 2025 (SB for end-September 2025).
- Chart of Accounts and PFM Act:
  - Ensure Chart of Accounts is entirely aligned with GFS 2014; develop the Chart of Accounts manual and publish both on MoFEA's website (SB for end-September 2025).
  - Revision of the PFM Act cleared by cabinet (SB for end-December 2025) in line with agreed IMF recommendations.

### State-Owned Enterprises (SOE) reforms
- Oversight and performance contracts:
  - As of April 2025, eight performance contracts signed.
  - Negotiated a new performance contract with NAWEC including ambitious KPIs; in 2025 plan to include a KPI with strong weight to ensure publication of audited financial accounts by noncompliant SOEs.
  - Revised procedure for filling SOE board vacancies emphasizing competency and complementary skillsets.
- Electricity sector measures:
  - NAWEC’s Board decided not to renew the contract with Karpower and to source energy from import partners while rehabilitating at least 30MW of local capacity currently out of stream due to lack of maintenance.
  - Designing competitive tenders for a 50MW solar plant and a 30MW dual fuel plant to decrease electricity cost once on stream.
  - Temporary support to finance repayment of NAWEC’s arrears to Karpower in May 2025 was highly exceptional and will be regularized before the end of the year in accordance with the CBG Act.
- GAMCEL privatization:
  - GAMCEL privatization (SB for end-March 2026): a social plan has been developed to reduce staff numbers to make GAMCEL more attractive to private investors.

### Public debt, fiscal consolidation, and borrowing policy
- Public debt remains sustainable but risks of overall and external debt distress remain high.
- DRMS is key to enhance domestic resource mobilization and address the debt-development trade-off.
- Will utilize innovative options such as the Africa50 Asset Recycling Program to finance infrastructure without worsening debt vulnerabilities.
- RSF will strengthen longer-term fiscal and macroeconomic sustainability and resilience to climate-related shocks.
- Commitments on borrowing:
  - Avoid contracting non-concessional borrowing.
  - Keep new concessional borrowing at or below the agreed concessional borrowing limits under the ECF-supported program.
  - Closely monitor and plan progress of projects financed by foreign creditors to maintain external debt sustainability.

### Monetary and exchange rate policies
- Monetary policy stance:
  - Maintain a tight monetary policy to keep inflation on a firm downwards trajectory; any relaxation should be data-driven and conditional on sustained easing of inflation.
  - CBG ready to deploy policy tools including issuance of CBG bills, use of deposit window and reserve requirement ratio to target CBG’s medium-term inflation target of 5 percent.
- Exchange rate policy:
  - CBG committed to pursuing an exchange rate that fully reflects market forces and to continue the forex policy introduced in 2023.
  - Finalizing and publishing by June a forex intervention policy that limits interventions to alleviating excess market volatility.
- Financial sector resilience:
  - Vigilant to elevated levels of banks’ NPLs and will strengthen resilience via risk-based supervision, monitoring of concentration risks, early intervention, establishment of a credit reference bureau, and adoption of the Basel Capital Frameworks with initial focus on implementation of Pillar 1 of Basel II.
  - CBG will require augmentation of banks’ minimum regulatory capital by GMD100 million by end-December 2025 (SB for end-December 2025) and by another GMD100 million each year thereafter to reach a total level of capital of GMD500 million by end-2027.

### Central Bank governance and safeguards
- CBG has ceased financial assistance outside its core mandate to preserve financial autonomy.
- Will enshrine an ex ante legal framework of temporary emergency lending to the government with strict conditions in the CBG Act, to be defined in consultation with IMF staff.
- CBG Board will approve amendments to the CBG Act in line with IMF safeguards recommendations (including the emergency lending framework) under mutual agreement, followed by cabinet approval and submission to the National Assembly.
- Address weaknesses from the 2024 safeguards assessment including internal audit operations, reporting, and Board oversight.

### Governance, transparency, and business environment
- Anti-corruption and governance:
  - Published plan to implement governance diagnostic recommendations in December 2024.
  - Vetting committee finalized a shortlist of candidates for Anti-Corruption Commissioner positions; shortlist to be submitted to the National Assembly (proposed new SB for end-June 2025); appointment of commissioners will follow prompt National Assembly approval.
- Digitalization and public access to information:
  - Moving key public services online, including procurement of birth certificates, passports, and driver licenses.
  - Ministry of Justice will compile and publish the Laws of The Gambia in hard copy and online formats (contingent on external support) through end-2024 by end-2025, and Law Reports to follow by 2026.
  - Government working towards submitting annual financial accounts to the auditor general within three months after the end of the financial year for publication in the Gazette and MoFEA website.
- Business environment reforms:
  - Set up a digital platform for business registration (SB for end-June 2025).
  - Cabinet will adopt a land policy (SB for end-September 2025) to facilitate transparent and fair access to land and finance.

### Reforms to improve resilience to climate change
- RSF-supported IMF arrangement and TA (Climate Policy Diagnostic and C-PIMA) informed five reform areas: institutional framework, green PFM, climate data and green financial sector, enhancing adaptation and resilience, and energy transition; expected significant long-term macroeconomic impacts across real, fiscal and external sectors.
- Climate Change Bill and governance (reform measure 1):
  - Draft a Bill to establish a whole-of-government approach, clarify responsibilities, improve coordination, designate the President as chair of the National Climate Change Council, and include provisions on climate finance, data collection/sharing, linkages to the National Disaster Act, and stakeholder participation (for end-March 2026).
- Fiscal risk methodology and integration (reform measure 2 and 3):
  - Develop a methodology to identify fiscal risks associated with natural disasters and publish its application beginning with the 2027 Medium Term Economic and Fiscal Framework (reform measure 2, for end-March 2026).
  - Incorporate climate mitigation and adaptation criteria into project appraisal and selection processes for Government’s Local Fund (GLF) and donor-funded projects (reform measure 3, for early-December 2025); implement in the 2027 budget cycle and include similar provisions for PPP project selection as part of PPP Bill review.
- Climate data, taxonomy and supervisory guidance (reform measure 4):
  - Develop a climate data repository, a transition taxonomy, and supervisory guidelines for the banking sector (for end-March 2026).
  - CBG to adopt a transition taxonomy, establish a climate data repository including taxonomy-aligned data and dissemination mechanisms, and issue supervisory guidelines for banks to incorporate climate-related risks into risk management frameworks.
  - Develop a climate finance strategy to quantify the gap between current climate finance flows and needs identified in the NDC, and to identify recommended instruments and regulatory/operational steps to access feasible instruments.
- Targeted resilience measures financed by RSF (reform measures 5–7):
  - Agriculture insurance regulations to increase financial inclusion for vulnerable farmers and enable index-based insurance (reform measure 5 for end-September 2025); index-based insurance pilot currently covers 3,000 small farmers.
  - Update zoning regulations to incorporate climate criteria along the coast and the Gambia River, including setback distances and no-development zones (reform measure 6, for end-September 2026).
  - Issue regulations governing licensing procedures for groundwater abstraction and impoundment, establish an accurate measurement system for aquifers, and include coordination mechanisms with NAWEC, PURA and the Ministry of Fisheries and Water Resources (reform measure 7, for end-September 2026).

*Source: 1gmbea2025002-print-pdf - 12. Strong policies underpin our ambitious goals of domestic revenue mobilization. In*

### 28. Despite The Gambia being a very small emitter globally, we aim to implement policies

### 28. Despite The Gambia being a very small emitter globally, we aim to implement policies that will accelerate our energy transition to renewables and cleaner fuels, positively impacting fiscal sustainability and the external sector.

### Energy transition, carbon-based excise, and fuel taxation
- Objective: introduce a carbon-based excise for gasoline and diesel for inclusion in the 2026 budget (reform measure 8, for January 2026), covering the transport sector.
- Design features:
  - Introduce an additional $5 per tonne of carbon to the existing excise.
  - Convert the excise from ad-valorem to specific, aligning taxes per liter explicitly with carbon content and externalities such as air pollution and congestion.
  - Index the new tax to inflation to protect fiscal revenue from erosion over time.
  - Channel part of the additional revenue into cash transfer programs to protect vulnerable households.
- Numeric estimates and targets:
  - Implicit carbon prices estimated at $72.5 per tonne for gasoline and $68 per tonne for diesel (calculated using the April 2025 fuel tax structure and the exchange rate included for fuel price calculations in the same month).
  - Policy aim: explicitly raise carbon prices to $77.5 per tonne and align taxes per liter accordingly.
- Additional note: “The exact numbers might vary by the time IMF TA is provided.”

### Electricity tariff reform and cost recovery
- Objectives:
  - Review and update the cost-recovery methodology for electricity tariffs and the tariff compensation mechanism in line with IMF recommendations.
  - Eliminate the electricity subsidy over time to reduce a large fiscal burden that crowds out development spending.
- Implementation:
  - Tariffs to be regularly updated consistent with a plan to achieve full cost-recovery by end-2030.
  - Implement the first phase of tariff adjustments in line with the approved plan (reform measure 9, for end-September 2026).
  - Publish the plan and include measures to mitigate impacts on vulnerable households.
  - Use part of the fiscal savings to direct additional resources toward protecting vulnerable households and small businesses from higher electricity prices.
- Rationale: allow time for renewable energy projects to come online, thereby decreasing electricity costs and providing strong signals to encourage private investment.

### Capacity development and technical assistance (TA)
- IMF TA will continue to support ECF program objectives across multiple areas, including:
  - Revenue administration, spending efficiency, public financial management, macroeconomic statistics production and dissemination.
  - Tax policy including petroleum fiscal regime modelling.
  - Forex policy, financial supervision, oversight of SOEs, and governance.
  - GDP rebasing project support (a priority).
  - Finalizing the DRMS and streamlining tax exemptions and rental property taxation.
  - Enhancing PFM efficiency through prioritization of investment decisions, improved cash management and projections, including implementation of a maximum deviation rule.
  - Support to meet SBs on arrears: institutionalize arrear reporting and clearing framework; define Terms of Reference for the new audit by NAO and MoFEA’s Internal Audit; finalize a manual for the Chart of Accounts aligned with the 2014 GFS.
- Central Bank of The Gambia (CBG) TA needs:
  - Implementation of Basel II/III frameworks and risk-based supervision, possibly via a renewed resident advisor.
  - Monetary operations: liquidity forecasting, reserve management, and risk management.
  - Consultation on relevant amendments to the CBG Act in line with the 2024 safeguards assessment.
- Other TA collaborators:
  - Resident experts, AFRITAC West 2, IMF-HQ, IMF MCM for green taxonomy and climate data, Global Center on Adaptation for climate data/green taxonomy/water, World Bank for drafting the Climate Change Bill, French Development Agency (AFD) for water, World Bank WACA for coastal resilience.
- Specific RSF-related TA needs:
  - Integrate climate adaptation and mitigation criteria in project appraisal guidelines and templates.
  - Identify transmission channels through which natural disasters affect key macroeconomic variables and provide quantitative analysis for budget inclusion.
  - Support to implement the carbon tax and review electricity cost-recovery methodology and tariff compensation mechanism.

### Program monitoring, reviews, and timelines
- Monitoring framework:
  - ECF and RSF programs subject to concurrent semiannual reviews based on performance criteria, indicative targets, structural benchmarks and reform measures, as set out in the Memorandum and the Technical Memorandum of Understanding.
  - RSF first, second, and third reviews will take place at the time of the fourth, fifth, and sixth reviews under the ECF arrangement, respectively.
- Review schedule and milestones:
  - The fourth ECF program review: based on end-June 2025 targets; expected to be completed on or after September 30, 2025.
  - The fifth ECF program review: based on end-December 2025 targets; expected to be completed on or after March 31, 2026.
  - The sixth (final) ECF program review: based on end-June 2026 targets; expected to be completed on or after September 30, 2026.
- Commitment: take all measures needed to meet quantitative targets and observe structural benchmarks under the ECF program and reform measures under the RSF program.

### Selected reform measures (excerpt from Reform Measure Matrix)
- RM8 (fuel excise reform):
  - MoFEA to convert the gasoline and diesel excise tax from an ad-valorem tax to a specific tax, aligning the rate based on carbon content, in line with Fund recommendations, to be included in the 2026 budget.
  - The new tax should be 5 USD per ton more ambitious than existing taxes, indexed to inflation, and must be complemented with additional funding to the social safety net to protect vulnerable households.
- RM9 (electricity tariffs):
  - MoFEA, the Ministry of Petroleum and Energy and PURA to review the electricity cost recovery methodology and the tariff compensation mechanism and update them in line with IMF recommendations.
  - Based on the revised methodology and compensation mechanism, tariffs would be regularly updated consistent with a plan to achieve full cost-recovery by end-2030, and implement the first phase of tariff adjustments in line with the approved plan.
  - The plan will be published and should include measures to mitigate impacts on vulnerable households.

*Source: 1gmbea2025002-print-pdf - 28. Despite The Gambia being a very small emitter globally, we aim to implement policies*

### 5. The Gambia: Reform Measures U

### 5. The Gambia: Reform Measures Under the RSF

### Pillar I: Legal framework and enabling institutional environment
- RM1: Climate Change Law
  - Action: MECCNAR to draft and Cabinet to adopt a Climate Change Bill in line with WB recommendations, allocating roles and responsibilities over targets clearly among actors, avoiding overlaps, facilitating coordination and mandating data sharing across Ministries, Departments and Agencies for climate-informed policy planning and decision making
  - Target Date: March 2026
  - Review Timeframe: RSF 2nd review / ECF 5th review
  - TA provider: WB
  - Prospective BoP risk reduction: Improved fiscal and external sustainability. Enables resilience building and supports budget management which reduces fiscal and private costs when climate risks materialize, and subsequently, reduces external financing needs. Improves impact of other RMs and macro-critical reforms.

### Pillar II: Green PFM
- RM2: Fiscal risks
  - Action: MoFEA to develop a methodology for identifying fiscal risks from natural disasters and publish the methodology and the results of the application of such methodology starting with the 2027 Medium Term Economic and Fiscal Framework
  - Target Date: March 2026
  - Review Timeframe: RSF 2nd review / ECF 5th review
  - TA provider: IMF
- RM3: PIM
  - Action: MoFEA to incorporate climate mitigation and adaptation criteria in the guidelines for project appraisal and selection process, including for donor-funded projects
  - Target Date: Early December 2025
  - Review Timeframe: RSF 1st review / ECF 4th review
  - TA provider: IMF

### Pillar III: Climate data and transition taxonomy
- RM4: Climate data and transition taxonomy
  - Action: CBG will enhance the climate information architecture by adopting i) a transition taxonomy to properly identify and measure climate-related financial sector risks and opportunities ii) a climate data repository, including climate-related risk and opportunities information and taxonomy-aligned data along with a collection and dissemination mechanism. The CBG will also issue supervisory guidelines for the banking sector, based on the adopted taxonomy, to incorporate climate-related risks to their risk management framework.
  - Target Date: March 2026
  - Review Timeframe: RSF 2nd review / ECF 5th review
  - TA providers: IMF/GCA
  - Prospective BoP risk reduction: Financial sector resilience. Reduces financial sector losses when climate risks materialize, lowering recapitalization needs for banks. Investment promotion. Clarifying climate-related exposures attracts investments by reducing uncertainty.

### Pillar IV: Climate adaptation
- RM5: Small farmers insurance
  - Action: MoFEA to approve insurance regulations to promote private sector engagement in the market. Regulations must take into account the unique climate considerations in The Gambia and should establish a framework that facilitates development of instruments such as index-based microinsurance schemes, fosters partnerships between prospective insurers and climate data providers, sets forth clear guidelines for index triggers, and outlines effective monitoring and reporting mechanisms.
  - Target Date: September 2025
  - Review Timeframe: RSF 1st review / ECF 4th review
  - TA provider: IMF
- RM6: Sea level rise and flooding risk
  - Action: Ministry of Land, working with the Ministry of Fisheries and Water Resources and all relevant stakeholders, to update the zoning regulations focused on coastal zones so they incorporate climate resilience criteria, including the full range of adaptation options, such as setback distances and no development zones (explicitly prohibiting infrastructure)
  - Target Date: September 2026
  - Review Timeframe: RSF 3rd review / ECF 6th review
  - TA provider: WB
- RM7: Water
  - Action: The Ministry of Fisheries and Water Resources to issue regulations for licensing procedures that will effectively control groundwater abstraction and ... (text continues in source)
  - Target Date: September 2026
  - Review Timeframe: RSF 3rd review / ECF 6th review
  - TA providers: AFD/GCA

### Pillar V: Energy transition
- RM8: Carbon taxation
  - Action: MoFEA to convert the gasoline and diesel excise tax from an ad-valorem tax to a specific tax, aligning the rate based on carbon content, in line with Fund recommendations, to be included in the 2026 budget. The new tax should be 5 USD per ton more ambitious than existing taxes, indexed to inflation
  - Target Date: January 2026
  - Review Timeframe: RSF 2nd review / ECF 5th review
  - TA provider: IMF
- RM9: Electricity cost recovery
  - Action: MoFEA, the Ministry of Petroleum and Energy and PURA to review the electricity cost recovery methodology and the tariff compensation mechanism and update them in line with IMF recommendations. Based on the revised methodology and compensation mechanism, tariffs would be regularly updated consistent with a plan to achieve full cost-recovery by end-2030, and implement the first phase of ...
  - Target Date: September 2026
  - Review Timeframe: RSF 3rd review / ECF 6th review
  - TA provider: IMF

### Cross-cutting reform measures — Expected macro and BoP effects
- Improved fiscal and external sustainability:
  - Reduces fiscal costs when climate risks materialize and the need for external financing; reduces import demand for reconstruction, and facilitates a quick recovery of growth and net exports.
  - BOP and fiscal resilience to shocks and increased economic growth by:
    - Increasing agricultural productivity and sustainability, reducing food imports, including after shocks. May also increase food exports.
    - Channeling infrastructure investment to zones that are less climate-exposed reduces the need for frequent reconstruction and associated imports, fiscal costs, and external loans/debt service. It also facilitates resilient transport needed for trade.
  - Reduces long-term reliance on fossil fuel imports whose prices are volatile. Fiscal and external sustainability owing to market price reflection on electricity which reduces the need for external financing.

---

### Attachment II. Technical Memorandum of Understanding (TMU) — Key monitoring definitions and adjustors

### General scope
- Purpose: Sets out understandings between The Gambian authorities and IMF staff regarding definitions of quantitative targets and structural benchmarks to monitor performance under the ECF-supported program through January 2027. Covers monitoring elements of the RSF-supported program. Unless otherwise specified, all quantitative performance criteria (PCs) and indicative targets (ITs) evaluated in terms of cumulative flows from the beginning of the period.

### A. Cumulative Floor on the Central Government Domestic Primary Balance
- Definition of central government: institutions covered under the state budget; includes central administration, public institutions and other entities financed through the budget; includes ministries, departments, and agencies; excludes local and regional governments and public enterprises.
- Definition of domestic primary balance: measured above-the-line and defined in accordance with the monthly consolidated Central Government budget report on budget execution (Statement of Government Operations) for the month and cumulatively from the beginning of the year. Calculated by subtracting expenses (except interest payment) and domestically financed capital expenditures from domestic revenue. Domestic revenue recorded on a cash basis and includes tax revenues and non-tax revenues. Revenues exclude transfers from the central bank (except dividends payments), interest income from intra-public sector holding of securities and debt obligations, proceeds from sale of financial assets, and special drawing rights (SDRs) allocated by the Fund or received bilaterally from other IMF members.
- Adjuster: The cumulative floor on the central government domestic primary balance targets will be adjusted downward by the excess of the dalasi equivalent of the total budget support grants received in that period relative to the program forecasts specified in the table below.
- Supporting material: Reporting on the domestic primary fiscal balance will form part of the consolidated budget report described in ¶39.

### B. Net Domestic Borrowing of the Central Government
- Definition: Net domestic borrowing (NDB) defined as the change in net treasury position at the Central Bank of the Gambia (CBG), the government bond (30-year bonds) held by the CBG, and the stock of securities (T-bills, T-bonds, Sukuk, NAWEC Bond) held by banks and the non-monetary sector. Net treasury position covers the sum of balances of the treasury main account (TMA), the consolidated revenue account, the revenue accounts, the special deposit accounts (T-bills, T-bonds and Sukuk) accounts, and any other accounts that receive central government revenue or pay central government spending (currently the special deposit account, Gambia Africard revenue account, Senegambia bridge toll facility, and Covid 19 recovery project, with the list to be updated at every program review) and are not encumbered or earmarked for extrabudgetary entities such as The Gambia Road Fund account.
- Exclusions: (i) on-lending of the IMF credits to the budget and lending to the Treasury of any portion of the SDR general allocation, (ii) changes in the balances of other deposits accounts (including project accounts), and (iii) the face value of government securities issued to increase the CBG’s capital to the statutory level enshrined in the CBG Act.
- Adjuster: NDB targets adjusted upward by the shortfall of the dalasi equivalent of the total budget support grants received in that period relative to program forecasts. The upward adjustment to compensate for shortfall may not exceed GMD 1 billion at each quarter of 2025 and 2026. The NDB targets will also be adjusted to account for any potential delay in disbursements under the ECF-supported and RSF-supported programs.
- Program Forecasts of External Budget Support Grants in 2025-2026 (Cumulative flow in millions of US dollars): March 2025: 0; June 2025: 0; September 2025: 13.2; December 2025: 52.6; March 2026: 5.5; June 2026: 13.0
- Supporting material: Reporting on net domestic borrowing will form part of the consolidated budget report described in ¶39 and the IMF weekly data produced by the Central Bank.

### C. Net Domestic Assets of the Central Bank
- Definition: Net domestic assets (NDA) of the CBG defined as the difference between reserve money and the 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 minus foreign liabilities. Foreign assets and liabilities defined as claims on nonresidents and liabilities to nonresidents, respectively.
- Conversion: For program monitoring, foreign assets and liabilities converted at the prevailing exchange rates.
- Supporting material: NDA of the central bank transmitted as part of the balance sheet of the CBG 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.

### D. 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 include CBG holdings of SDRs, foreign currency cash, foreign currency securities, deposits abroad, and the country’s reserve position at the IMF. Exclusions: assets pledged, collateralized, or encumbered; claims on residents; claims in foreign exchange arising from derivatives in foreign currencies vis-à-vis domestic currency; precious metals; assets in nonconvertible currencies; and illiquid assets (including capital shares in international organizations). Reserve liabilities include all foreign exchange liabilities to residents and nonresidents, including commitments to sell foreign exchange arising from derivatives, and all credit outstanding from the IMF, but excluding any liabilities to the IMF’s SDR Department.
- Conversion: For program monitoring, foreign assets and liabilities converted at the prevailing exchange rates.
- Adjuster: Quarterly NIR targets adjusted downward/upward by the US dollar equivalent of the shortfall/excess of total budget support grants received in that quarter relative to program forecasts. The downward adjustment to the NIR targets to compensate for shortfall in budget support will be capped at US$40 million. NIR targets will also be adjusted to account for any potential delay in disbursements under the ECF-supported program.
- Adjuster (SDR allocation): In case of an allocation of SDRs by the IMF, the NIR of the CBG will be adjusted upward by the amount of the SDR allocation.
- Supporting material: A detailed reserve statement with end-month data on NIR of the CBG will be transmitted within seven days of the end of each month.

### E. New External Debt Payment Arrears of the Central Government
- Definition: External debt = outstanding actual current (not contingent) liabilities requiring payment(s) of principal and/or interest denominated in any currency other than the Gambian dalasi. External debt payment arrears = external debt obligations of the central government that have not been paid when due in accordance with contractual terms (taking into account contractual grace periods).
- Exclusions from arrears (for program purposes): (i) financial obligations for which creditor accepted in writing to negotiate alternative payment schedules before relevant payment; (ii) arrears on claims 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).
- Performance criterion: Non-accumulation of new external debt payment arrears by the central government is a target, to be observed continuously.
- Supporting material: Accounting of non-reschedulable external arrears (if any) by creditor countries, with detailed explanations, transmitted monthly within four weeks of the end of each month. Accounting to include separately arrears owed by the Central Government and other public sector entities to Paris Club, non-Paris-Club, private, plurilateral and multilateral creditors. Any non-observance of this performance criterion must be reported immediately.

### F. New Non-Concessional External Debt Contracted or Guaranteed by the Central Government
- Definition: Refers to 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 and to commitments contracted or guaranteed for which value has not been received. Guarantee arises from any explicit legal or contractual obligation of the central government to service a debt owed by a third-party debtor. 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 and concessional debts as defined below, and any debt with maturity of one year or less. This performance criterion assessed on a continuous basis.
- Concessionality rule: A debt is concessional if it includes a grant element of at least 35 percent, calculated as the difference between the present value (PV) of debt and its nominal value, expressed as a percentage of the nominal value. PV calculated by discounting future payments using program reference rates as specified.
- Program reference rates and spreads:
  - Program reference rate for the six-month USD LIBOR: 2.42 percent
  - 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
  - Discount rate used: unified discount rate of 5 percent set forth in Executive Board Decision No. 15248-(13/97)
- Note: TMU can be updated to reflect benchmark replacements (SOFR; SONIA; EURIBOR; TONAR) prior to complete phase out of LIBOR once operationally feasible.
- Supporting material: A comprehensive record, including a loan-by-loan accounting of all new 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. Any non-observance must be reported immediately.
- Reporting requirement: MoFEA to 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.

*Source: 1gmbea2025002-print-pdf - 5. The Gambia: Reform Measures U (excerpts).*

### 23. Definition: This target, which is a ceiling, refers to new concessional external debt

### 1gmbea2025002-print-pdf - 23. Definition: This target, which is a ceiling, refers to new concessional external debt

### New concessional external debt (performance criterion)
- Definition:
  - Target is a ceiling on new 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 ¶16. Concessionality of debt is as defined in ¶20.
- Eligibility for concessionality when borrowing packages include grants:
  - For borrowing packages comprising both loan and grant components to meet the concessionality requirement (grant element of 35 percent), only the loan components will count toward the borrowing limit.
- Reporting requirement:
  - A comprehensive record, including a loan-by-loan accounting of all new concessional debt contracted or guaranteed by the Central Government with detailed explanations, will be transmitted on a quarterly basis within four weeks of the end of each quarter.

### Outstanding stock of external public debt with original maturity of one year or less
- Definition:
  - Refers to the stock of outstanding external public debt with original maturity of one year or less, owed or guaranteed by the public sector.
  - Public sector consists of the Central Government and regional governments and other public agencies, including the central bank.
  - Trade credits are excluded from this target including the ITFC credits.
  - This performance criterion will be assessed on a continuous basis.
- Reporting requirement:
  - 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 on a quarterly basis within four weeks of the end of each quarter.
  - Any nonobservance of this performance criteria must be reported immediately.

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

### Central Bank credit to the Government at non-market terms (indicative target)
- Definition:
  - Refers to the consolidated balance on the Treasury Main Account, the Consolidated Revenue Fund, other revenue accounts, and the special security proceeds accounts.
  - Covers all gross claims on the government on the balance sheet of the central bank, with terms materially different from market terms for treasury bills and bonds around the time of acquisition.
  - Also covers any overdue payments of principal and interest on Government securities held by the central bank.
  - Excludes RCF on-lending, and the 30-year bond held by the CBG.
- Quantitative monitoring rule:
  - To monitor this indicative target, the negative balance of the TMA should not exceed 10 percent of the previous year’s tax revenue.
  - The overdrafts on the TMA shall be fully repaid at the end of the year.
- Reporting:
  - Reporting on new central bank credit to the government at nonmarket terms will form part of the monetary sector data described in ¶41 and ¶42.

### New central bank credit to public entities (indicative target)
- Definition:
  - Change in the total stock of outstanding loans and advances by the CBG to public entities outside the central government.
- Reporting:
  - Reporting will form part of the monetary sector data described in ¶41.

### Poverty-reducing expenditures (indicative target)
- Definition:
  - 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.
- Reporting:
  - 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 — summary of key reporting obligations
- 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 (¶38).
- Government accounts data:
  - Monthly consolidated Central Government budget report (Statement of Government Operations) on budget execution for the month and cumulatively, transmitted within four weeks of the end of each month; report to cover revenue by major items, external grants by type, recurrent expenditure details, capital expenditure and net lending, overall balance, primary and basic balance, budget financing details, and details of domestic arrears and float payments (¶39).
  - End-week data on net domestic borrowing transmitted weekly within five business days of the end of each week (¶40).
- Monetary sector data:
  - Balance sheet of the CBG, prepared on the basis of current exchange rates, transmitted monthly within four weeks of the end of each month; must explicitly identify all claims on, and liabilities to, the government and other public entities (¶41).
  - Consolidated balance sheet of commercial banks and a monetary survey, including foreign currency deposits held by residents with commercial banks, transmitted within four weeks of the end of each month (¶42).
  - Daily data on reserve money transmitted weekly within five business days of the end of each week (¶43).
- Treasury bill market and interbank money market:
  - Weekly data on amounts offered and issued, net issuance, over/under subscription, and yields transmitted weekly within five business days of the end of each week; data on bills outstanding transmitted monthly within six weeks (¶44).
  - Daily data on interbank money market transmitted weekly within five business days (¶45).
- External sector data:
  - Transactions in official reserves forwarded within four weeks of the end of each month (¶46).
  - Daily interbank market exchange rates transmitted weekly within five business days; weekly interbank market exchange rates transmitted monthly within seven days; CBG’s monthly average and end-month exchange rates transmitted within seven days after the end of each month (¶47).
  - Daily data on foreign exchange intervention transmitted weekly within five business days (¶48).
  - Detailed reserve statement with end-week data on net usable international reserves transmitted weekly within five business days (¶49).
  - Monthly data on the volume of transactions in the foreign exchange market by participant in dalasi transmitted within seven days of the end of each month (¶50).
  - CBG will publish daily on its website the official exchange rates reflecting market conditions prevailing on that same day (¶51).
- 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 (¶52).
  - 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 (¶53).
- RSF Reform Measures:
  - For all reform measures (RMs), government authorities will share relevant material for the IMF to comment on progress at least 3 months before program reviews; content of measures to be in line with IMF staff technical recommendations and/or relevant development partners including World Bank, AFD and GCA (¶54).

### Debt sustainability assessment — key points and metrics
- Overall assessment:
  - The Gambia’s overall and external debt distress risk ratings remain High; public debt continues to be deemed Sustainable, consistent with the last Joint WB/IMF Debt Sustainability Analysis (DSA) of December 2024.
- Main vulnerabilities and mitigants:
  - Under the updated macro framework, the external debt service-to-revenue ratio breaches the threshold, primarily reflecting rising debt service commitments in the medium term.
  - Heightened domestic debt vulnerabilities contribute to breaches of the PV of overall debt-to-GDP ratio, though risks are mitigated by the projected drop below its benchmark of 55 percent of GDP in 2026, underpinned by fiscal consolidation, reliance on grants and concessional loans, and support from development partners.
  - Access to the Resilience and Sustainability Facility (RSF) financing and continued reliance on IDA improves the public debt trajectory by replacing relatively expensive financing with more affordable borrowing.
- Downside risks:
  - Debt dynamics remain vulnerable to multiple macroeconomic shocks, in particular those to exports.
  - Downside risks linked to escalation or spread of global and regional conflicts, global commodity price volatility, disruptions of global supply chains, and an abrupt global slowdown could weaken The Gambia’s economic recovery, intensify fiscal pressures, and adversely affect the debt profile.
- Composite index and debt carrying capacity:
  - The Gambia’s Composite Index is estimated at 3.03 and is based on October 2024 WEO update and 2023 WB CPIA published in July 2024; the debt carrying capacity remains medium (footnote).

### Public debt coverage and design of contingent liabilities stress test
- Coverage:
  - DSA uses end-2024 data as a starting point and a broader coverage of the public sector: 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 for in government debt.
- Contingent liabilities stress test defaults and adjustments:
  - Default settings: financial markets shock at 5 percent of GDP; SOE debt shock at 2.0 percent of GDP for debt not explicitly guaranteed by the government; PPPs exposure set at 0.0 (PPPs estimated marginal).
  - Total contingent liabilities test default total (2+3+4+5) = 7.0 (in percent of GDP).
  - Clarification: The 2% of GDP SOE shock is applied where government-guaranteed SOE debt is not fully captured under the public debt definition; if already included and risks are negligible, it may be reduced to 0% (Text Table notes).

### Recent debt developments (end-2024 metrics and projections)
- End-2024 debt stocks:
  - Total public debt to GDP stood at about 73.5 percent as of end-2024.
  - External debt to GDP stood at about 47 percent as of end-2024.
- Creditor composition (PPG external debt):
  - Around 67 percent owed to multilateral creditors.
  - Bilateral creditors account for 31 percent.
  - Commercial creditors account for 2 percent.
  - Approximately 28 percent of the PPG external debt is owed to the IMF and MDBs.
  - About 72 percent of PPG external debt is owed to a combination of various creditors from the Middle East.
- Debt service and undisbursed loans (baseline projections):
  - Overall external debt service between 2025-2031 stands at a cumulative US$744.0 million.
  - Of the total debt service, amortization stands at $633.4 million.
  - Interest charges over 2025-2031 total US$110.6 million.
  - Undisbursed loans amounted to US$179.5 million in December 2024.

*Prepared by the staffs of the International Monetary Fund and the International Development Association. Approved By Montfort Mlachila, Geremia Palomba (IMF), and Manuela Francisco, Abebe Adugna (IDA). June 2, 2025.*

### 4.      The Gambia has arrears on external debt, of about 0.9 percent of GDP, owed to Libya

### 1gmbea2025002-print-pdf - 4.      The Gambia has arrears on external debt, of about 0.9 percent of GDP, owed to Libya

### Arrears on external debt and creditor engagement
- Arrears amount to about 0.9 percent of GDP, comprising:
  - US$3.95 million owed to Libya.
  - US$19.5 million owed to Venezuela.
- Nature and status:
  - These arrears have materialized due to problems that are not an indication of debt distress.
  - Authorities are engaged in discussions with Libya on a disputed loan to reach mutual understanding regarding the amounts of debt and the related payment method; the latest meeting between the two parties was held in October 2023.
  - Regarding arrears to Venezuela, a virtual meeting was held in August 2024 to discuss the resumption of negotiations for paying of the outstanding debt by the Gambian authorities.
  - The authorities are currently working on a more comprehensive arrear stocktaking exercise which will allow to determine the stock of arrears. In 2024, the authorities validated GMD 267 million in additional arrears in the report they submitted to the IMF as part of the end- December 2025 structural benchmark.

### Recent macroeconomic developments (key findings)
- Growth and sector performance:
  - Real GDP is estimated to have expanded by 6 percent in 2024, supported by good performance of the construction, tourism sectors, and agriculture, despite decline in rice and groundnut production due to adverse weather conditions in 2024.
  - Tourist arrivals grew by 9.9 percent in 2024 relative to 2023.
- External flows:
  - Remittance inflows: US$709.4 million in 2024 relative to US$746.8 million in 2023.
- Inflation and monetary policy:
  - Headline inflation peaked at 18.5 percent (y-o-y) in December 2022 and declined to 9.1 percent (y-o-y) in March 2025.
  - Central Bank of The Gambia monetary policy rate: 17 percent (maintained since the September 2023 Monetary Policy Committee meeting).
- Fiscal outcomes:
  - Overall deficit is estimated to have exceeded projections by 1.1 percentage points, reaching 3.8 percent of GDP.
  - About 0.4 percent of GDP in unmet commitments were carried over to 2025.
  - Unbudgeted transfers and higher foreign capital disbursements affected fiscal outcomes despite strong revenue collection.
- External accounts and reserves:
  - Current account deficit in 2024 is estimated to be 6.2 percent of GDP (or US$158.3 million), reflecting large OIC-related imports.
  - Projected current account deficit in 2025: 4.8 percent of GDP.
  - Gross international reserves stood at US$533.5 million in 2024 or 4.2 months of prospective imports.
- Risks:
  - Macroeconomic outlook subject to large uncertainty due to global and regional conflicts, including international commodity price volatility, lower tourist arrivals, and weak remittance inflows.

### Macroeconomic assumptions and projections underlying the DSA baseline
- Growth projections:
  - Real GDP projected to expand by 5.7 percent in 2025.
  - Medium- to long-term steady-state growth assumed at 5 percent.
- Inflation:
  - Headline inflation projected to further decline over the medium term and converge to the CBG’s medium-term target of 5 percent.
- Fiscal policy stance:
  - Overall fiscal balance expected to gradually improve in the medium term through revenue and spending measures.
  - Revenue measures include: adjusting domestic fuel prices, revenue mobilization under the Domestic Revenue Mobilization Strategy, GRA’s Corporate Strategic Plan for 2025-2029, streamlining tax exemptions, digitalization of tax administration and customs, broadening the tax base, improving compliance, increasing some administrative fees, introducing a 5 percent social security contribution and a new duty on scrap-metal exports.
  - Additional resource efforts include privatization and sale of stolen assets under the Janneh Commission.
  - Spending-side measures: stricter expenditure prioritization, better cash management aligning expenditures with available resources, completion of OIC-related large infrastructure projects, expansion of the investment prioritization and selection tool by the Gambia Strategic Review Board (GSRB), and overhaul of the SOE sector.
- Financing assumptions:
  - External financing:
    - IMF’s new ECF lending: US$100 million during 2024-2026.
    - RSF lending: US$61.1 million during 2025-2026.
    - Total new external financing: average interest rate of 2 percent, average 3-year grace period, and average maturity of 23 years.
    - No new commercial borrowings assumed.
  - Domestic financing:
    - Over the next five years, 80 percent of all new domestic debt will be financed via T-bills, 15 percent via 3-year bonds, and the remaining via 5-year bonds.
    - Total new domestic financing over the next five years: average interest rate of 10.5 percent, average 4-year grace period, and average maturity of 5 years.
- Current account and trade specifics:
  - Exports in 2024: US$838.4 million, driven by re-exports (re-exports rose to US$285.3 million in 2023 from US$23.4 million in 2022).
  - The Gambia began importing electricity from Senegal and re-exporting it to different regions in Senegal from January 2023.
  - Long-term external imbalance expected to improve as tourism strengthens, cross-border export disruptions dissipate, exports increase in groundnuts, and fiscal balances improve.
  - Efforts to increase domestic production of key imported commodities such as rice, with support from the African Development Bank, aim to achieve self-sufficiency in rice production.
- Realism and program comparators:
  - Projected fiscal adjustment for the next three years is in the top quartile of the distribution of approved IMF-supported programs for LICs since 1990.
  - Contribution of government investment to real GDP growth is considered conservative and in line with historical magnitudes.
  - Drivers of projected medium-term debt-creating flows for public debt are comparable to those underlying historical outturns.

### Policy and reform measures highlighted
- Fiscal and public financial management:
  - Revenue mobilization through tax policy, digitalization, and broadening the tax base.
  - Expenditure prioritization, cash management reforms, and implementation of a maximum deviation rule for MDAs’ quarterly plans.
  - Strengthening public financial management to reduce arrears and governance and corruption vulnerabilities.
- Structural reforms and resilience:
  - Climate change adaptation and mitigation measures supported by the RSF arrangement.
  - Disaster risk management regulations and disaster risk financing regulations.
  - Urban and coastal resilience measures, institutional reforms for adaptation and resilience, and sustainable procurement provisions under the new Procurement Act (e-procurement).
  - Regulations to facilitate private sector participation in the energy sector and renewable energy penetration.
  - Judicial reform agenda, digitalization of business registration, and SOE sector overhaul.
- Implementation monitoring:
  - A reform monitoring committee has been put in place to ensure swift implementation of measures required to trigger support from development partners.

*Source: The Gambia — IMF Country Report content (selected excerpts).*

### 8.      This DSA uses the CI vintage October 2024 WEO and 2023 CPIA, which assess that The

### 1gmbea2025002-print-pdf - 8.      This DSA uses the CI vintage October 2024 WEO and 2023 CPIA, which assess that The

### Debt carrying capacity (CI) and applicable thresholds
- CI score: 3.03.
- CI rating: Medium.
- Most significant contributors to CI score: import coverage of reserves, followed by CPIA value.
- CI components (10-year average values and contributions):
  - CPIA: 3.079 → contribution 1.193 (39%).
  - Real growth rate (in percent): 4.89 → contribution 0.134 (3%).
  - Import coverage of reserves (in percent): 43.80 → contribution 1.785 (58%).
  - Import coverage of reserves^2 (in percent): 19.190 → contribution -0.77 (-25%).
  - Remittances (in percent): 14.98 → contribution 0.301 (10%).
  - World economic growth (in percent): 2.98 → contribution 0.401 (13%).
  - CI Score total: 3.03 (100%).
- Final classification: Medium (consistent with previous vintage and two previous vintages: Medium, Medium).
- Applicable external debt burden thresholds:
  - PV of debt-to-GDP: 40 (percent).
  - PV of debt-to-exports: 180 (percent).
  - Debt service-to-exports: 15 (percent).
  - Debt service-to-revenue: 18 (percent).
- Total public debt benchmark:
  - PV of total public debt in % of GDP: 55.

### External DSA — baseline and stress-test findings
- Baseline scenario:
  - PV of external debt-to-GDP, PV of external debt-to-exports, and debt-service-to-exports remain below thresholds of 40, 180, and 15 percent respectively over the projection horizon.
  - External debt service-to-revenue breaches the 18 percent threshold between 2025-30, then falls below threshold for the remainder of the forecast horizon.
  - Improvements relative to December 2024 DSA driven by projected GDP and exports improvement and reduction in relatively expensive domestic financing.
- Standardized stress tests:
  - Combined contingent liabilities shock assumed: 7.0 percent of GDP (5 percent of GDP for financial sector shock and 2.0 percent of GDP for non-guaranteed SOEs debt).
- Tailored/customized stress-test results:
  - Combined bound test: PV of debt-to-GDP breaches 40 percent in 2026 and falls below threshold in 2029.
  - Bound test of exports: PV of debt-to-exports breaches 180 percent in 2026 and remains above threshold over projection horizon.
  - Bound test of exports: debt-service-to-exports breaches 15 percent in 2026 and remains above threshold.
  - Combined bound test: debt-service-to-revenue breaches 18 percent in 2025 and remains above threshold for the remainder of the forecast horizon.
- Note on export data revision:
  - Standard deviation of annual export growth 2014–2023: 0.63; excluding 2023 step increase in re-exports reduces it to 0.41.
  - 2023 re-exports revision mechanically increases estimated export shocks and affects stress-test outcomes.

### Public DSA — baseline and stress-test findings
- Baseline scenario:
  - PV of total public debt-to-GDP breaches 55 percent in 2025, falls within benchmark in 2026, and declines thereafter.
  - PV of debt-to-revenue and debt service-to-revenue trend down across forecast horizon.
- Stress scenarios:
  - PV of total public debt-to-GDP is highly sensitive to export shocks, then GDP shocks and other flow shocks.
  - Bound test of exports: PV of total public debt-to-GDP remains above 55 percent until 2032.
  - Bound test of other flows: PV of total public debt-to-GDP remains above 55 percent until 2029.

### Domestic public debt and banking sector exposure
- Domestic public debt:
  - As of end-2024, outstanding public domestic debt: US$636 million (35.3 percent of total outstanding public debt).
  - Composition: T-bonds 36.2 percent, T-bills 40.7 percent, SAS bills or Islamic bills 5.3 percent.
  - T-bond structure: 3-year securities 24 percent of T-bonds at average interest rate 15.7 percent; 30-year securities 17.1 percent at 7 percent; 5-year securities 5.9 percent at 8.9 percent; 2-year securities 4.5 percent at 17.8 percent.
- Projection: Domestic public debt is projected to decline significantly under the baseline due to ambitious fiscal consolidation; domestic public debt-to-GDP ratio and related service expected to fall, approaching the median of LICs by 2032.
- Banking sector exposure and soundness:
  - Claims on government have averaged 60 percent of banks’ domestic assets over last 10 years.
  - Aggregate risk-weighted capital adequacy ratio: 28.5 percent at end-2024 (all banks above 10 percent regulatory minimum).
  - Liquidity ratio: 76.5 percent at end-2024 (prudential requirement 30 percent).
  - Non-performing loans: 14.6 percent in December 2024 (from 3.3 percent in December 2023), primarily due to a single large borrower default — indicates high concentration risk.
  - Vulnerabilities: reliance on government securities for income; potential profitability decline if rapid fall in rates on government securities occurs.

### Climate change risks, natural disaster and adaptation scenarios
- Baseline incorporates expected impact of RSF-supported reforms: adoption of a climate framework law, green PFM measures, sectoral bills on coastal resilience and water management, and assumes long-term growth potential of 5 percent.
- Customized natural-disaster stress test (one-off catastrophic flood):
  - Calibration: 6 percent decline in real GDP in 2026 relative to baseline; real GDP gradually reaches potential growth of 5 percent by 2029.
  - Medium-term impacts: overall fiscal balance worsens by average of 1.3 percent of GDP; current account deficit averages 4.1 percent of GDP (Text Table 6).
  - Under this scenario PV of total public debt-to-GDP breaches 55 percent through 2027 and falls within benchmark in 2028.
  - DIGNAD model analysis: frontloading investments in resilient infrastructure can alleviate negative effects of natural disasters (adaptation and reform scenario).
- Slow-moving climate-change/adaptation scenario (adaptation and reform):
  - Assumptions: additional climate-related investment cost 1 percent of GDP annually for next 10 years; mitigates impact on GDP by 2036 by 1 percent; reforms include climate public investment and financial management and increased VAT tax collection efficiency gradually over five years.
  - Financing mix: about half of additional financing from medium- and long-term domestic borrowing; remainder from external debt.
  - Outcome: PV of total public debt-to-GDP breaches 55 percent through 2025 but falls within benchmark by 2026; long-term public debt projected higher than baseline due to lower long-term real GDP growth and higher overall fiscal balance from additional public capital spending.
- Overall implication: one-off catastrophic events and slow-moving climate impacts can significantly imperil debt sustainability absent decisive climate action; adaptation and reform investments improve resilience and debt outcomes.

### Risk rating, vulnerabilities, and mitigation policy measures
- Risk rating:
  - External debt: high risk of distress but assessed sustainable.
  - Rationale: external debt-service-to-revenue breaches threshold over medium term due to expiration of debt-service deferrals and higher debt-service payments starting in 2025, tighter liquidity, and sharp exchange rate depreciation.
- Vulnerabilities:
  - Limited space for additional borrowing in near term.
  - Resumption of external debt servicing expected to absorb resources needed for social and infrastructure spending.
- Mitigating factors and policy actions:
  - Continued fiscal discipline and structural reforms.
  - Prudent financing choices: access to RSF and concessional financing to replace expensive domestic financing.
  - Measures to bolster domestic revenue mobilization per Domestic Revenue Mobilization Strategy and GRA’s Corporate Strategic Plan for 2025-2029.
  - Overhaul of SOE sector to reduce fiscal burdens and generate revenue.
  - Efforts to develop tourism and diversify exports to increase forex inflows.
  - Policies supporting foreign exchange reserves, improved tourism and remittances to address liquidity constraints.
  - Plan to broaden investor base for government securities (private investors including commercial banks, insurance companies, social security fund and microfinance institutions); investors’ relationship forum scheduled in 2025.

*Source: IMF staff estimates and projections as presented in the DSA content unit.*

### 22.      The Gambia’s overall public debt position is also assessed at high risk of debt distress but

### 22.      The Gambia’s overall public debt position is also assessed at high risk of debt distress but

### Assessment and sustainability
- The overall public debt position is assessed at high risk of debt distress but remains sustainable, based on the public DSA and the external DSA.
- The PV of total public debt-to-GDP continues to follow a firmly downward sloping path, remains within the benchmark from 2026 onwards, and continues to decline thereafter.
- Since the indicator falls below the benchmark within two years of the projection horizon and remains under benchmark thereafter, the overall debt position is deemed sustainable.
- Factors underpinning sustainability:
  - Continued downward sloping debt path underpinned by fiscal consolidation.
  - Reliance on grants and concessional loans.
  - Support from development partners.
  - Implementation of a debt management policy to reduce roll-over risks, including lengthening maturity of domestic debt instruments via the medium-term debt strategy (MTDS).
  - Development of government domestic borrowing through bonds to mitigate exposure to refinancing risks.

### Downside risks and stress scenarios
- Key downside risks:
  - Escalation or spread of global and regional conflicts affecting global commodity prices, tourist arrivals, and remittance inflows, worsening The Gambia’s external position.
  - Climate change risks, exemplified by major flooding in July 2022.
- In a downside scenario:
  - Growth could fall by about 1 percentage points below the baseline in the near term.
  - The fiscal deficit would widen due to higher spending and lower revenues, increasing financing needs.
  - PV of total public debt would fall below the benchmark level of 55 percent two years later than under the baseline.
  - Foreign exchange reserves would come under pressure, creating challenges to external debt servicing capacity.
- Mitigation: Successful strengthening of domestic revenue mobilization efforts could help mitigate risks to debt vulnerabilities.

### Data, financing, and project-related risks
- Factors that could affect future assessments:
  - Data revisions and uncertainty over data quality and timeliness.
  - Availability of concessional financing for infrastructure projects.
  - Potential decline in donor support or significant changes in donor grant disbursements toward budget support or key infrastructure financing.
- Recommended actions:
  - Bolster data collection and reconciliation for debt and external sector statistics.
  - Strengthen inter-agency coordination and data sharing on public debt and grants data.
  - Ensure financing plans for new infrastructure projects remain within the ceilings of the external borrowing plan to avoid posing risks to the debt outlook.

### Ongoing reforms, donor support, and institutional actions
- World Bank support:
  - Continued support for debt management, SOEs, and public investment management under the planned Public Administration Modernization Project (PAMP, P176924).
  - Complementary reform actions through pipeline Development Policy Financing operations and SDFP.
- IDA SDFP Policy Performance Actions (PPAs) achievements and focuses:
  - FY22: Approved a three-year public investment program (PIP) for selected priority sectors to rationalize public investment and anchor debt sustainability; ensured new borrowing remained within external borrowing plan ceilings.
  - FY23: (i) Published the annual public debt bulletin for 2022 including a table on government guarantees to SOEs, (ii) prepared and published the first Fiscal Risk Statement (FRS), (iii) ensured new external borrowing remained concessional.
  - FY24: (i) Published a report on outstanding arrears between Government and SOEs and institutionalized publication of arrears, (ii) adopted a credit risk assessment score card for provision of public guarantees and lending to SOEs, (iii) ensured new external borrowing remained concessional.
  - FY25: (i) Approved and published a Duty Waiver Policy to boost tax revenue collection, (ii) issued and published the State-Owned Enterprises Regulations establishing a performance monitoring framework for SOEs, (iii) ensured new external borrowing remained concessional.

### Authorities’ views
- Authorities agreed with staff’s DSA views and the urgency of sustained and credible fiscal adjustment over the medium term.
- Actions emphasized by authorities:
  - Adjustment of the 2025 budget expenditure envelope to remain in line with program objectives.
  - Continued prioritization of grant resources and seeking only highly concessional financing.
  - Ratifying only loans within the agreed annual ceiling even after the current ECF-supported program ends to safeguard debt sustainability.
  - Progress in reconciling longstanding external arrears: discussions with Libyan authorities and engagement with Venezuelan authorities to resume repayments of existing debt arrears.

### Key statistics and projections (selected exact figures)
- PV of total public debt benchmark referenced: 55 percent (benchmark level).
- Downside scenario growth impact: about 1 percentage points below the baseline.
- Table 1 selected values (percent of GDP unless otherwise indicated):
  - External debt (nominal): 2022 = 53.0; 2023 = 50.0; 2024 = 47.6; 2025 = 43.5; 2026 = 42.2; 2027 = 37.9; 2028 = 34.0; 2029 = 30.3; 2030 = 27.1; 2035 = 19.0; 2045 = 8.8.
  - Of which: public and publicly guaranteed (PPG): 2022 = 51.7; 2023 = 49.1; 2024 = 47.0; 2025 = 43.0; 2026 = 41.9; 2027 = 37.7; 2028 = 33.8; 2029 = 30.2; 2030 = 27.0; 2035 = 18.9; 2045 = 8.8.
  - Change in external debt: 2022 = 3.4; 2023 = -3.0; 2024 = -2.4; 2025 = -4.1; 2026 = -1.3; 2027 = -4.3; 2028 = -3.9; 2029 = -3.7; 2030 = -3.2; 2035 = -1.3; 2045 = -0.8.
  - Identified net debt-creating flows: 2022 = -2.6; 2023 = -3.4; 2024 = -2.2; 2025 = -2.6; 2026 = -2.6; 2027 = -3.2; 2028 = -3.8; 2029 = -3.9; 2030 = -4.1; 2035 = -2.1; 2045 = -5.2.
  - Non-interest current account deficit: 2022 = 3.7; 2023 = 4.9; 2024 = 5.7; 2025 = 3.9; 2026 = 3.8; 2027 = 2.9; 2028 = 2.3; 2029 = 2.2; 2030 = 0.9; 2035 = 2.0; 2045 = -2.0.
  - PV of PPG external debt-to-GDP ratio (selected years): 2025 = 34.8; 2026 = 33.2; 2027 = 32.5; 2028 = 29.5; 2029 = 26.5; 2030 = 23.9; 2031 = 21.7; 2035 = 14.9; 2045 = 6.3.
  - PV of PPG external debt-to-exports ratio (selected years): 2025 = 106.3; 2026 = 105.0; 2027 = 105.0; 2028 = 95.5; 2029 = 85.8; 2030 = 77.2; 2031 = 69.2; 2035 = 48.0; 2045 = 19.6.
  - PPG debt service-to-exports ratio: 2022 = 29.4; 2023 = 13.5; 2024 = 5.9; 2025 = 8.6; 2026 = 9.5; 2027 = 10.3; 2028 = 10.5; 2029 = 9.5; 2030 = 8.4; 2035 = 5.5; 2045 = 2.8.
  - PPG debt service-to-revenue ratio: 2022 = 30.8; 2023 = 34.1; 2024 = 14.7; 2025 = 18.0; 2026 = 20.2; 2027 = 22.3; 2028 = 22.6; 2029 = 20.5; 2030 = 18.4; 2035 = 12.4; 2045 = 6.5.
  - Gross external financing need (Million of U.S. dollars): 2022 = 57.2; 2023 = 115.5; 2024 = 110.9; 2025 = 84.1; 2026 = 77.3; 2027 = 57.4; 2028 = 31.1; 2029 = 26.0; 2030 = -14.8; 2035 = 12.4; 2045 = -549.6.
  - Real GDP growth (in percent): 2022 = 5.5; 2023 = 4.8; 2024 = 6.0; 2025 = 5.7; 2026 = 5.1; 2027 = 5.0; 2028 = 5.0; 2029 = 5.0; 2030 = 5.0; 2035 = 5.0; 2045 = 5.0; Average projection (mem) = 4.6; Current projection = 5.1.
  - Government revenues (excluding grants, in percent of GDP): 2022 = 12.0; 2023 = 12.1; 2024 = 13.2; 2025 = 15.1; 2026 = 14.6; 2027 = 14.2; 2028 = 14.3; 2029 = 14.4; 2030 = 14.4; 2035 = 13.8; 2045 = 13.7; Average projection = 12.8; Current projection = 14.3.
  - Aid flows (Million of US dollars): 2022 = 148.3; 2023 = 190.5; 2024 = 175.2; 2025 = 252.2; 2026 = 258.6; 2027 = 242.0; 2028 = 242.0; 2029 = 244.5; 2030 = 249.5; 2035 = 312.8; 2045 = 380.2.
  - Nominal GDP (Million of US dollars): 2022 = 2,135; 2025 = 2,773; 2026 = 2,952; 2027 = 3,158; 2028 = 3,391; 2029 = 3,642; 2030 = 3,928; 2035 = 5,947; 2045 = 13,761.
- Memorandum: PV of external debt (in percent of exports) in selected years: 2025 = 108.1; 2026 = 106.3; 2027 = 106.0; 2028 = 96.1; 2029 = 86.2; 2030 = 77.5; 2031 = 69.4; 2035 = 48.2; 2045 = 19.8.
- PV of PPG external debt (in Million of US dollars): 2025 = 891.3; 2026 = 919.3; 2027 = 960.6; 2028 = 932.3; 2029 = 899.3; 2030 = 871.9; 2031 = 851.8; 2035 = 883.2; 203... (table continues in source).

*Source: IMF staff assessment and projections as presented in the DSA chapter for The Gambia.*

### 2. The Gambia:

### 2. The Gambia:

### Public Sector Debt Sustainability Framework — Baseline Scenario, 2022–2045
- Public sector debt (percent of GDP):  
  - 2022: 83.9  
  - 2023: 76.8  
  - 2024: 73.5  
  - 2025: 68.0  
  - 2026: 61.9  
  - 2027: 56.8  
  - 2028: 52.2  
  - 2029: 47.5  
  - 2030: 44.4  
  - 2031: 41.1  
  - 2032: 39.3  
  - 2033: 36.6  
  - 2034: 35.0  
  - 2035: 32.2  
  - 2045: 13.3
- Of which: external debt (percent of GDP):  
  - 2022: 51.7; 2023: 49.1; 2024: 47.0; 2025: 43.0; 2026: 41.9; 2027: 37.7; 2028: 33.8; 2029: 30.2; 2030: 27.0; 2031: 25.2; 2032: 23.6; 2033: 21.9; 2034: 20.3; 2035: 18.9; 2045: 8.8
- Change in public sector debt (percent of GDP):  
  - 2022: 0.8; 2023: -7.0; 2024: -3.3; 2025: -5.5; 2026: -6.1; 2027: -5.1; 2028: -4.6; 2029: -4.7; 2030: -3.1; 2031: -3.3; 2032: -1.7; 2033: -2.7; 2034: -1.6; 2035: -2.8; 2045: -1.7
- Identified debt-creating flows (percent of GDP):  
  - 2022: 1.5; 2023: -9.2; 2024: -4.6; 2025: -6.2; 2026: -4.2; 2027: -4.5; 2028: -3.7; 2029: -3.9; 2030: -2.4; 2031: -2.4; 2032: -0.9; 2033: -2.1; 2034: -1.0; 2035: -2.3; 2045: -1.5
- Primary deficit (percent of GDP):  
  - 2022: 3.6; 2023: 1.5; 2024: 0.9; 2025: -2.1; 2026: -2.1; 2027: -1.8; 2028: -1.4; 2029: -1.2; 2030: -1.1; 2031: -0.5; 2032: -0.3; 2033: -0.3; 2034: -0.3; 2035: -0.4; 2045: -0.9
- Revenue and grants (percent of GDP):  
  - 2022: 18.9; 2023: 20.3; 2024: 20.0; 2025: 23.7; 2026: 22.8; 2027: 21.7; 2028: 21.3; 2029: 21.0; 2030: 20.6; 2031: 20.4; 2032: 19.7; 2033: 18.9; 2034: 18.6; 2035: 18.2; 2045: 16.1
- Of which: grants (percent of GDP):  
  - 2022: 6.9; 2023: 8.1; 2024: 6.8; 2025: 8.6; 2026: 8.2; 2027: 7.4; 2028: 7.0; 2029: 6.6; 2030: 6.2; 2031: 5.9; 2032: 5.3; 2033: 5.0; 2034: 4.7; 2035: 4.4; 2045: 2.4
- Primary (noninterest) expenditure (percent of GDP):  
  - 2022: 22.5; 2023: 21.7; 2024: 20.8; 2025: 21.6; 2026: 20.6; 2027: 19.8; 2028: 19.9; 2029: 19.8; 2030: 19.5; 2031: 19.9; 2032: 19.4; 2033: 18.6; 2034: 18.2; 2035: 17.8; 2045: 15.2
- Automatic debt dynamics (percent of GDP):  
  - 2022: -2.0; 2023: -10.1; 2024: -5.5; 2025: -5.2; 2026: -2.4; 2027: -2.0; 2028: -1.8; 2029: -2.1; 2030: -1.7; 2031: -1.6; 2032: -1.5; 2033: -1.4; 2034: -1.3; 2035: -1.2; 2045: -0.5
- Contribution from interest rate/growth differential (percent of GDP):  
  - 2022: -5.4; 2023: -6.4; 2024: -5.1; 2025: -5.2; 2026: -2.4; 2027: -2.0; 2028: -1.8; 2029: -2.1; 2030: -1.7; 2031: -1.6; 2032: -1.5; 2033: -1.4; 2034: -1.3; 2035: -1.2; 2045: -0.5
  - Of which: contribution from average real interest rate (percent of GDP): 2022: -1.1; 2023: -2.5; 2024: -0.7; 2025: -1.2; 2026: 0.9; 2027: 0.9; 2028: 0.9; 2029: 0.3; 2030: 0.6; 2031: 0.5; 2032: 0.5; 2033: 0.4; 2034: 0.5; 2035: 0.5; 2045: 0.2
  - Of which: contribution from real GDP growth (percent of GDP): 2022: -4.3; 2023: -3.8; 2024: -4.4; 2025: -4.0; 2026: -3.3; 2027: -3.0; 2028: -2.7; 2029: -2.5; 2030: -2.3; 2031: -2.1; 2032: -2.0; 2033: -1.9; 2034: -1.7; 2035: -1.7; 2045: -0.7
- Other identified debt-creating flows (percent of GDP): 2022: 0.0; 2023: -0.6; 2024: 0.0; 2025: 1.1; 2026: 0.3; 2027: -0.6; 2028: -0.5; 2029: -0.5; 2030: 0.4; 2031: -0.3; 2032: 0.9; 2033: -0.3; 2034: 0.6; 2035: -0.7; 2045: -0.1
- Residual (percent of GDP): 2022: -0.8; 2023: 2.2; 2024: 1.3; 2025: 0.7; 2026: -1.9; 2027: -0.6; 2028: -0.9; 2029: -0.8; 2030: -0.8; 2031: -0.9; 2032: -0.9; 2033: -0.7; 2034: -0.6; 2035: -0.6; 2045: -0.2
- Sustainability indicators (selected):  
  - PV of public debt-to-GDP ratio (selected projections): 2031: 62.3; 2032: 58.4; 2033: 52.8; 2034: 48.9; 2035: 45.2; 2045: 41.5; additional years shown in table.  
  - PV of public debt-to-revenue and grants ratio (selected): 2031: 311.8; 2032: 246.4; 2033: 232.1; 2034: 225.5; 2035: 211.7; further years shown in table.  
  - Debt service-to-revenue and grants ratio (selected): 2022: 108.2; 2023: 94.3; 2024: 85.8; 2025: 67.5; 2026: 77.5; 2027: 73.6; 2028: 70.2; 2029: 66.4; 2030: 63.8; 2031: 65.0; 2032: 58.9; 2033: 60.1; 2034: 58.1; 2035: 59.6; 2045: 25.1
  - Gross financing need (percent of GDP, selected): 2022: 24.0; 2023: 20.0; 2024: 18.0; 2025: 15.0; 2026: 15.8; 2027: 13.5; 2028: 13.1; 2029: 12.2; 2030: 12.5; 2031: 12.4; 2032: 12.2; 2033: 10.7; 2034: 11.0; 2035: 9.7; 2045: 3.0

### Key macroeconomic and fiscal assumptions (selected)
- Real GDP growth (in percent): 2017–2024 historical average noted elsewhere; projections: 2022: 5.5; 2023: 4.8; 2024: 6.0; 2025: 5.7; 2026: 5.1; 2027: 5.0; 2028: 5.0; 2029: 5.0; 2030: 5.0; 2031: 4.99; 2032: 4.99; 2033: 4.99; 2034: 5.0; 2035: 5.0; 2045: 5.0; historical average shown as 4.6 and projection average as 5.1 in table footnote areas.
- Average nominal interest rate on external debt (in percent): 2022: 1.1; 2023: 1.2; 2024: 1.1; 2025: 0.3; 2026: 0.5; 2027: 1.1; 2028: 1.4; 2029: 0.2; 2030: 1.4; 2031: 1.6; 2032: 1.5; 2033: 1.4; 2034: 1.6; 2035: 1.7; 2045: 1.7
- Average real interest rate on domestic debt (in percent): 2022: -3.2; 2023: -8.4; 2024: -1.4; 2025: -1.3; 2026: 6.6; 2027: 6.5; 2028: 5.6; 2029: 4.9; 2030: 4.5; 2031: 3.8; 2032: 3.8; 2033: 3.7; 2034: 3.8; 2035: 3.8; 2045: 4.9
- Inflation rate (GDP deflator, in percent): 2022: 8.8; 2023: 15.6; 2024: 11.7; 2025: 7.7; 2026: 3.5; 2027: 4.0; 2028: 4.6; 2029: 4.8; 2030: 4.8; 2031: 4.8; 2032: 4.8; 2033: 4.8; 2034: 4.8; 2035: 4.8; 2045: 4.8
- Growth of real primary spending (deflated by GDP deflator, in percent): 2022: 28.3; 2023: 1.4; 2024: 1.6; 2025: 9.7; 2026: 0.2; 2027: 0.9; 2028: 5.6; 2029: 4.1; 2030: 3.8; 2031: 6.7; 2032: 2.6; 2033: 0.8; 2034: 2.8; 2035: 2.6; 2045: 3.6
- Primary deficit that stabilizes the debt-to-GDP ratio (percent of GDP): 2022: 2.8; 2023: 8.5; 2024: 4.2; 2025: 3.4; 2026: 4.0; 2027: 3.3; 2028: 3.2; 2029: 3.5; 2030: 2.0; 2031: 2.8; 2032: 1.4; 2033: 2.4; 2034: 1.3; 2035: 2.4; 2045: 0.8

### Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2025–2035 (selected)
- Baseline PV of debt-to-GDP ratio (percent) 2025–2035 series (selected): 2025: 33.2; 2026: 32.5; 2027: 29.5; 2028: 26.5; 2029: 23.9; 2030: 21.7; 2031: 20.2; 2032: 18.7; 2033: 17.4; 2034: 16.0; 2035: 14.9
- Bound tests and alternative scenarios are reported across 2025–2035 for PV of debt-to-GDP, debt service-to-exports ratio, debt service-to-revenue ratio, and PV of debt-to-exports ratio. (Tables present scenarios A1, B1–B6, C1–C4 and thresholds; bold values indicate breaches of thresholds.)

### Public Debt Sensitivity Analysis, 2025–2035 (selected)
- Baseline PV of public debt-to-GDP ratio (percent) 2025–2035 series (selected): 2025: 58.4; 2026: 52.8; 2027: 48.9; 2028: 45.2; 2029: 41.5; 2030: 39.3; 2031: 36.2; 2032: 34.6; 2033: 32.2; 2034: 30.8; 2035: 28.2
- Baseline PV of debt-to-revenue ratio (selected): 2025: 246.4; 2026: 232.1; 2027: 225.5; 2028: 211.7; 2029: 197.7; 2030: 190.3; 2031: 177.6; 2032: 175.5; 2033: 169.9; 2034: 166.0; 2035: 154.7
- Baseline debt service-to-revenue ratio (selected): 2025: 67.5; 2026: 77.5; 2027: 73.6; 2028: 70.2; 2029: 66.4; 2030: 63.8; 2031: 65.0; 2032: 58.9; 2033: 60.1; 2034: 58.1; 2035: 59.6

### Vulnerability to Climate Change — Key Findings
- Macro performance and climate exposure: The Gambia’s economic growth expanded by 5.0 percent on annual average over 2017-2024, higher than the 2.8 percent annual average over 1990-2016. Growth remains fragile due to structural weaknesses and high climate vulnerability.
- Temperature and heat stress: Average annual temperature has increased by almost 2°C; the average number of extremely hot days (Heat Index above 35°C) in a year increased from less than 5 days to above 50 days per year.
- Rainfall and hydrological risks: Average rainfall has decreased in the past 60-70 years and the rainy season is getting more erratic, contributing to rising incidence of droughts and floods.
- Sea-level rise and coastal risk: The Greater Banjul area, home to around 1.4 million residents, is particularly vulnerable; a projected half-meter sea-level rise by 2050 could inundate low-lying areas. The economic costs associated with sea-level rise and coastal erosion are estimated to reach $70 million by 2050. A one-meter rise could submerge significant portions of the capital during storms and high tides.
- Historical disaster impacts:  
  - The 2011/2012 and 2014/2015 droughts resulted in a 50 percent decline in crop output.  
  - The 2022 flash flood caused approximately $82 million in damages, equivalent to about 3.8 percent of the nation's GDP.  
  - Secondary disasters from inadequate waste/hazardous waste management included an oil spill at NAWEC’s Brikama power plants.
- Agriculture exposure: Agriculture accounts for about half of total employment and over 22% of GDP; it is heavily rain-fed and highly susceptible to climate hazards. The 2024 agricultural season saw widespread crop failures in rice and groundnut.
- Emissions and mitigation context: The Gambia contributes less than 0.01 percent to global CO2e emissions. The agricultural sector accounts for about a third of total emissions, with livestock as a major contributor. Increasing renewable energy generation is highlighted to improve energy security and reduce fossil fuel dependence.

### Government Commitments in Climate Mitigation and Adaptation (NDC adaptation pillars)
- The NDC adaptation component is based on four pillars:  
  1) Developing an enabling environment for climate resilience in The Gambia  
  2) Climate-resilient land use mapping, planning and information systems  
  3) Developing climate-resilient infrastructure, services and energy systems  
  4) Developing integrated approaches to build rural climate resilience in The Gambia

*Sources: Country authorities; and staff estimates and projections.*

### 8.      The Gambia’s Nationally Determined Contribution (NDC) outlines a comprehensive

### 8.      The Gambia’s Nationally Determined Contribution (NDC) outlines a comprehensive

### NDC mitigation targets and sector focus
- Business-as-usual emission scenario: 6 617 tCO2e by 2030.
- Emissions with 13 new mitigation measures: 3 327 tCO2e by 2030.
- Unconditional (domestically funded) measures reduction: 169 tCO2e.
- Conditional (externally funded) measures reduction: 3 121 tCO2e.
- Key sectors targeted: agriculture, forestry, energy, transport, and waste management.
- Strategies: enhance efficiency and promote renewable energy sources.
- Implication: substantial dependence on international cooperation and funding for full mitigation ambition.

### Financial challenges for NDC implementation
- Total financing required (NDC adaptation component): $316 million (about 12.6 percent of GDP, equivalent to around 50 percent of the total budget in 2024).
- Note: The costing of the mitigation actions of the NDC is not included in the document; the $316 million would only address adaptation challenges.
- One of four adaptation pillars (climate-resilient infrastructure, services and energy systems) accounts for more than half of the estimated budget.
- Short-term financing need for NDC actions: $121 million (about 4.8 percent of GDP) or about $24 million (about 1 percent of GDP) per year.
- Average disbursement since 2020: about $10.6 million (about 0.4 percent of GDP) per year.
- Constraints to private climate finance development: high uncertainty regarding economic and climate policies; underdeveloped financial markets; liquidity constraints preventing establishment of a stock market.
- Source for climate-related development finance data: OECD DAC, climate-related development finance data.

### World Bank engagement and recent activities
- CCDR (Country Climate and Development Report): diagnostic tool analyzing decarbonization and adaptation complementarities, modelling water-energy nexus, coastal economy, private sector reactions, macroeconomic estimate of climate costs, and financing options.
- Renewable energy achievements:
  - Commissioning of Jambur solar power plant with 23 MWp capacity in March 2024 (part of Gambia Electricity Restoration and Modernization Project with the European Union and European Investment Bank).
  - Commencement of hydro power imports from Guinea through recently commissioned regional infrastructure.
  - Combined effect: The Gambia moved from 0% renewable energy production in 2023 to 30% in Q1, 2025.
  - World Bank support for feed-in-tariff and net metering regulations implementation.
- Improved resilience to disasters:
  - End-2024 World Bank financing included a pillar targeting social and climate resilience via improved disaster risk management and financing framework and adoption of an adaptive social protection system.
  - Pillar included a gendered component to meet needs of women and girls.
  - 2024 collaboration with National Social Protection Secretariat to achieve universal registration in the social registry.
- Coastal resilience:
  - Participation in West African Coastal Areas (WACA) Management Program.
  - Comprehensive flood and coastal risk assessment for Greater Banjul identified five hotspots and priority interventions; Kotu stream selected as a primary target.
  - WACA Resilience Investment Project targets regional and national coordination, policy and institutional strengthening, and physical and social investment.
- Climate-smart agriculture:
  - Gambia Inclusive and Resilient Agricultural Value Chain Development Project (GIRAV) to enhance productivity via improved water management, land tenure, seed innovations (high-yielding, early-maturing, drought-resistant, and in some cases saline-tolerant varieties).
  - Project aims to lower emissions, increase resilience, and transition from subsistence to commercial agriculture.
  - Tangible results are being observed.

### Statement by Mr. Wautabouna, Executive Director — Program performance
- Authorities broadly agree with staff’s assessment and policy priorities.
- RSF (Resilience and Sustainability Facility) to strengthen long-term balance-of-payments and macroeconomic stability; complements ECF (Extended Credit Facility).
- QPCs (end-December 2024): Six out of seven met, including floors on stock of net usable international reserves (NIR), domestic primary balance, and zero-ceiling on non-concessional external debt contracted and guaranteed by the government.
- Missed QPC: adjusted ceiling on net domestic borrowing (NDB) missed by 0.3 percent of GDP due to spending pressures.
- Indicative targets (ITs) for end-December 2024: All met, including floor on total tax revenue, ceilings on central bank credit to the central government and central bank’s net domestic asset, and floor on poverty-reducing expenditure.
- Structural benchmarks (SBs): Four out of seven met (study on rationalizing and consolidating subvented agencies with MDAs; finalization and enactment of regulations of the public procurement and SOEs Acts; expansion of social registry to Banjul and Kombo; cabinet approval of roadmap for program-based budgeting roll-out). Missed SBs: adoption of NAO Bill and GIEPA Act, and completion/publication of report on central government’s domestic arrears and unsettled commitments for end-2024.
- Expected approvals: GIEPA Act and NAO Bill finalized and expected to be approved by end-September 2025.
- Report on arrears: prepared by end-March 2025 but considered incomplete; authorities proposed modification and rescheduling of related SB to end-December 2025.

### Corrective fiscal measures and accountability
- Corrective measures to address NDB target miss: redesigned fiscal strategy, corrective actions incorporated, 2025 fiscal targets aligned with agreed program.
- Addressing 2024 pending commitments and spending pressures:
  - Additional support to National Water and Electricity Company (NAWEC).
  - Accounting for transfers of earmarked revenue not previously included in the budget.
  - Revising overall fiscal deficit.
- Cabinet-approved adjustments to 2025 budget to cover unpaid commitments of approximately GMD 660 million carried over from 2024.
- MDAs expected to modify 2025 budget allocations by reducing spending on goods, services, and transfers; postpone planned investments in roads, procurement of vehicles, and other discretionary expenditures (reflected in 2026 budget).
- Streamline office operating expenses; postpone planned equity participations and capital contributions to multilateral institutions while protecting poverty-reducing spending.
- Phase-out of Karpower as electricity supplier to NAWEC to reduce future budget burden.

### Revenue mobilization and tax administration reforms
- Finalizing Domestic Revenue Mobilization Strategy (DRMS): modernize VAT and balance tax policies with administrative measures.
- Use of falling oil prices: keep petrol and diesel prices above full passthrough levels in 2025 to enhance revenue collections.
- Full digitalization of VAT collection with smart invoice technology.
- Revenue assurance system for mobile network operators; implementation of Integrated Tax Administration System (ITAS) and electronic filing.
- Plan to revise GIEPA Act to streamline tax incentives.
- Develop in-house capacity for data and model-based assessments for PIT, CIT, and VAT.
- Expand tax base and enhance rental tax collection.
- Review VAT design and operation to address large VAT policy and compliance gap.

### Debt sustainability and innovative financing
- High risks of overall and external debt distress recognized.
- Fiscal consolidation measures being implemented to ensure sustainable debt path.
- Use of innovative options, including Africa50 Asset Recycling Program, to finance infrastructure without worsening debt vulnerabilities or creating fiscal risks.
- Commitment to keep new concessional borrowing below agreed limits under ECF while avoiding non-concessional borrowing.
- Plan to monitor progress of projects financed by foreign creditors to maintain external debt sustainability.

### Monetary, exchange rate, and financial sector policies
- Central Bank of The Gambia (CBG) monetary stance: tight policy to sustain declining inflation.
- Inflation target: CBG’s medium-term target of 5 percent.
- Policy tools: CBG bills, deposit window, reserve requirement ratio; data-driven and forward-looking analysis.
- Exchange rate policy: pursue a market-reflective exchange rate and implement new forex policy to prevent shortages and parallel market wedges; finalize and publish a forex intervention policy limiting interventions to alleviating excess volatility and disorderly conditions.
- Banking sector: sound, solid, and well-capitalized; authorities monitoring elevated NPLs and concentration risks, enhancing risk-based supervision, and establishing a credit reference bureau.
- Adoption of Basel Capital Frameworks with initial focus on implementation of Pillar 1 of Basel II.
- Augment banks’ minimum regulatory capital by GMD100 million by end-December 2025.
- Commitment to preserve Central Bank autonomy and to enshrine an ex-ante legal framework for temporary emergency lending to the government with strict conditions (in consultation with the Fund); approve amendments to the CBG Act in line with IMF safeguards recommendations, followed by Cabinet approval and submission to National Assembly.

### Structural reforms, governance, and climate resilience measures
- RF-NDP (2023-2027) objectives: strengthen macroeconomic stability and implement deep structural reforms via significant investments in priority sectors.
- Business environment reforms: set up a digital platform for business registration; adopt a land policy to facilitate transparent access to land and finance.
- Public Financial Management (PFM) strengthening:
  - Institutionalize and rephrase arrear stocktaking per Fund TA recommendations; comprehensive domestic arrears reporting and clear definition of expenditure arrears.
  - Publish a payment schedule of all arrears with provisions to manage arrears clearance starting with the 2027 budget.
  - Require MDAs to present quarterly cash plan updates through IFMIS and implement a 'maximum deviation' rule.
  - Extend IFMIS to four multilateral-donor projects and all government-funded projects implemented after January 1, 2025.
- SOE reforms:
  - Enhance SOE oversight; eight performance contracts signed with SOEs in April 2025.
  - New performance contract negotiation with NAWEC completed with ambitious KPIs.
  - Design competitive tenders for a 50 MW solar plant and a 30 MW dual fuel plant to reduce electricity costs.
  - Plan to make the national GMC service provider attractive to investors toward privatization.
- Governance and anti-corruption:
  - Implement recommendations from governance diagnostic report; establish anti-corruption commissioners in compliance with the Anti-Corruption Act.
  - Advance digitalization and transparency in public service delivery (online procurement of birth certificates, passports, driver’s licenses).
  - Ministry of Justice to compile all laws through end-2024 on its website.
  - Government-audited annual financial accounts to be published in the Gazette and posted on the Ministry of Finance’s website.
- Climate governance and RSF use:
  - RSF used to foster resilience and support climate-related reforms (institutional frameworks, green PFM, climate data and green financial sector, adaptation and resilience, energy transition).
  - Technical assistance received: Climate Policy Diagnostic and Climate-Public Investment Management Assessment (C-PIMA).
  - Drafting a new bill to establish a whole-of-government approach to climate governance, clarify responsibilities, and improve coordination.
  - Plans to approve insurance regulations to increase financial inclusion for vulnerable farmers.
  - Update zoning regulations to incorporate climate criteria for the coast and larger portions of the Gambia River, define setback distances and no-development zones in at-risk areas.
  - Issue regulations governing licensing procedures to control groundwater abstraction and impoundment and strengthen sustainable exploitation of groundwater resources.

### Recent economic developments and outlook
- Real GDP projection: 6 percent in 2024 and 5.7 percent in 2025.
- Medium-term growth projection: stabilize at around 5 percent.
- Growth drivers: strong recovery in tourism; good performance in agricultural and construction sectors.
- Downside risks: geopolitical and trade tensions; commodity price volatility; natural disasters; global uncertainty affecting tourist arrivals and remittance inflows, with potential inflationary and exchange rate pressures.
- Inflation path: peaked at 18.5 percent (y-o-y) in September 2023; declined to 10.2 percent (y-o-y) at end-2024; 8.1 percent in April 2025.
- Current account: remains elevated deficit due to larger import increase relative to exports.
- International reserves projection: remain above 4 months of prospective imports in the medium term, supported by disbursements from the Fund and other development partners and strong inflows of remittances.

### Conclusion and authorities’ request
- Gambian authorities remain on track advancing needed reforms despite multiple challenges and have reinforced commitment to the ECF arrangement while consolidating prior program gains.
- The Fund’s support is instrumental in anchoring reforms to strengthen macroeconomic stability and resilience to climate-related shocks as per RF-NDP (2023-2027).
- Authorities seek Executive Directors’ support in completing the third ECF review and associated requests, and for their Request for an Arrangement Under the Resilience and Sustainability Facility, to catalyze additional donor support and address remaining structural challenges.

*Source: 1gmbea2025002-print-pdf - 8.      The Gambia’s Nationally Determined Contribution (NDC) outlines a comprehensive*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1gmbea2025002-print-pdf.pdf_