IMF Reaches Staff-Level Agreement with The Gambia on a Program to be Supported under the Extended Credit Facility

IMF News, February 11, 2020

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An IMF team, led by Jaroslaw Wieczorek, visited Banjul during February 3–11 to take stock of the 2019 Staff Monitored Program (SMP) implementation and agree on policies underpinning The Gambia’s request.
The Gambia is requesting a three-year program to be supported by an Extended Credit Facility (ECF) arrangement in the amount of SDR 35 million (or around $US 48 million).
The IMF team will submit, for the consideration of its Executive Board, a report on the assessment of the 2019 SMP and supporting The Gambian authorities’ request for a program supported under an ECF arrangement.

Real GDP growth in 2019 is estimated to have reached 6 percent.
Drivers of 2019 growth cited: gaining competitiveness as a tourist destination, strong private sector consumption and investment supported by foreign exchange inflows, greater availability of credit, and a much-improved reliability of electricity and water supply.
Near-term shocks noted: temporary drop in tourist arrivals in November 2019 following the bankruptcy of Thomas Cook (UK) and much lower agricultural output due to erratic rainfall.
Inflation: average of 7.1 percent in 2019 with a policy objective of moderating to the Central Bank of The Gambia’s target of 5 percent over the medium term.
Over the medium term, sound macroeconomic policies are expected to underpin prospects for sustained growth and strengthening of foreign exchange buffers.

Significantly improved fiscal efforts in 2018 and 2019 helped to reduce the deficit, largely through strong domestic revenue mobilization.
Public debt-to-GDP ratio declined from nearly 87 percent of GDP in 2018 to around 81 percent of GDP in 2019.
The Gambia’s 2020 Budget, approved in December 2019, is aligned with IMF staff’s projections and aims to stabilize the domestic public debt by:
- Building on continued strong domestic revenue performance and appropriate tax policy measures.
- Channeling additional resources toward public investment and social spending.
Under the 2019 SMP, quantitative targets, including on domestic borrowing by the government and on poverty-reducing spending, were met.
The implementation of the 2019 budget was accompanied by strong tax revenue effort, improved expenditure control and debt management, and measures to clear domestic payment arrears with suppliers and among state-owned enterprises.
Timely preparation of a medium-term fiscal framework strengthened the strategic orientation of the 2020 budget and enhanced its credibility.

The restructuring of The Gambia’s external debt is being finalized following commitments provided by participating creditors.
Debt service deferrals, agreed with most participating creditors, have markedly improved The Gambia’s debt outlook and enabled it to exit from debt distress.
Caution advised: avoid contracting any new non-concessional debt given the high level of public debt and the large existing pipeline of already contracted project loans.
With anticipated debt relief, prerequisites for entering into a financing arrangement with the IMF are largely in place.
An ECF arrangement is expected to catalyze additional resources from other international partners.

The Gambia has advanced the structural reform agenda under the 2019 SMP and made concerted efforts to bridge governance gaps and tackle corruption vulnerabilities.
Notable governance actions:
- Works of the Janneh Commission and the Truth, Reconciliation and Reparations Commission helped identify past corruption, lay the basis for asset recovery, and dispense justice to victims of the previous regime.
- A draft Anti-Corruption Bill, recently submitted to the National Assembly, is expected to increase efficiency in tackling corruption.
- Concrete actions to prosecute human traffickers were taken.
Further reform priorities identified:
- Strengthen revenue mobilization.
- Improve public financial management and governance of state-owned enterprises.
- Improve public investment and procurement processes.
- As institutional capacity develops, broaden reforms to include gender budgeting and addressing climate change-induced economic challenges, which are of primary importance given The Gambia’s unique riparian ecosystem.

The mission met with President Adama Barrow, Minister for Finance and Economic Affairs Minister Mambury Njie, Governor of the Central Bank of The Gambia Bakary Jammeh, Solicitor General Cherno Marenah, Director General for the Department of Strategic Policy and Delivery at the Office of the President Alhagie Nyangado, and senior staff of the Ministry of Finance and Economic Affairs, the Central Bank of The Gambia, and state-owned enterprises.
The mission also met with representatives of the private sector, civil society and development partners.
The mission thanked The Gambian authorities for constructive discussions, cooperative spirit, and warm hospitality.

Press Release No. 20/45 — February 11, 2020.