IMF Executive Board Concludes Second Review under the Extended Credit Facility Arrangement with The Gambia and Approves US$ 14.4 Million Disbursement
May 27, 2021
- The IMF Executive Board decision allows for an immediate disbursement of about US$ 14.4 million to The Gambia to help meet the country’s financing needs and support the post-pandemic recovery.
- The second wave of the COVID-19 pandemic has dampened economic activity, with attendant socio-economic costs. However, with the global vaccine rollout, development partners’ support of The Gambia’s vaccination campaign, and the resilience of some economic sectors, growth is expected to rebound to 4.9 percent in 2021.
- The authorities deserve praise for the strong performance under the IMF-supported program and their ability to maintain macroeconomic stability, despite the challenges posed by the pandemic.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) today completed the second review under the Extended Credit Facility (ECF) arrangement with The Gambia. The completion of the review enables an immediate disbursement of SDR 10 million, about US$ 14.4 million, to help meet the country’s balance-of-payments and fiscal financing needs as well as support the post-pandemic recovery. This brings total disbursements under the ECF arrangement to SDR 35 million, about US$ 50.5 million. The Executive Board’s decision was taken on a lapse-of-time basis. [1]
The ECF arrangement with The Gambia was approved by the IMF’s Executive Board on March 23, 2020 , with an initial total access of SDR 35 million that was augmented at the completion of the first ECF review on January 15, 2021 to SDR 55 million (88.4 percent of quota). The Gambia has also benefited from an IMF Rapid Credit Facility disbursement of SDR 15.55 million and is receiving debt service relief from the IMF under the Catastrophe Containment and Relief Trust, expected to total SDR 7.9 million, of which SDR 6.1 million has already been approved.
The second wave of the COVID-19 pandemic has dampened economic activity, with attendant socio-economic costs. For 2020, economic growth is estimated at zero percent; the tourism sector was hit hard while the agricultural and the construction sectors have shown resilience. For 2021, economic growth is expected to rebound to 4.9 percent, supported by the global and domestic vaccine rollout as well as the continued resilience of some economic sectors.
The authorities deserve praise for the strong program performance and their ability to maintain macroeconomic stability, despite the significant challenges posed by the pandemic. At the onset of the COVID-19 pandemic, the authorities relaxed the fiscal and monetary policy stances to help meet pandemic-related humanitarian needs and support economic activity, while keeping within program limits. Inflation dropped from 7.7 percent (year-on-year) at end-2019 to 5.7 percent (year-on-year) at end-2020 before picking up to 7.4 percent at end-March 2021 due to seasonal factors. Large official and private forex inflows helped boost reserves to 4.7 months of imports at end-2020. Public debt declined.
Going forward, ensuring continuation of strong policies is paramount to maintain good program performance. Adequate fiscal policy prioritization will be key to addressing the pandemic and supporting economic recovery, while reducing debt vulnerabilities. Tax exemptions will be further streamlined, and savings will be made on subsidies to State-Owned-Enterprises (SOEs). Pursuing a prudent fiscal policy will ensure reducing the high risk of debt distress in the medium term. Monetary policy remains appropriately accommodative, while liquidity and inflation developments need to be monitored and pockets of financial vulnerabilities tackled. Given the slow credit growth in a context of ample liquidity, structural obstacles to credit should be addressed.
It is critical to persevere in the ambitious structural reform agenda, especially in the context of upcoming presidential and parliamentary elections, to fully reap the benefits from the country’s remarkable turn-around in recent years. Swift implementation of the business environment strategy will support strong and inclusive growth. The Public Procurement Act should be enacted to improve the value-for-money of spending. The SOE Bill, which is on hold because of the stalled constitutional reform, should be finalized to improve SOEs’ performance and reduce their reliance on the state budget.
Table 1 . The Gambia: Selected Economic Indicators, 2019–26
|
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
|||
|
Prel. |
RCF |
Proj. |
RCF |
Proj. |
Projections |
|||||
|
(Percent change; unless otherwise indicated) |
||||||||||
|
National account and prices |
||||||||||
|
GDP at constant prices |
6.1 |
0.0 |
0.0 |
6.0 |
4.9 |
6.5 |
7.0 |
6.5 |
5.8 |
5.6 |
|
GDP deflator |
7.1 |
7.2 |
7.1 |
4.3 |
4.2 |
4.3 |
4.1 |
4.1 |
5.3 |
4.6 |
|
Consumer prices (average) |
7.1 |
6.1 |
5.9 |
6.0 |
6.0 |
5.5 |
5.1 |
5.0 |
5.0 |
5.0 |
|
Consumer prices (end of period) |
7.7 |
6.5 |
5.7 |
5.8 |
5.8 |
5.2 |
5.0 |
5.0 |
5.0 |
5.0 |
|
External sector |
||||||||||
|
Exports, f.o.b (US$ values) |
23.8 |
-10.7 |
-50.8 |
23.1 |
62.9 |
35.9 |
26.9 |
8.9 |
5.6 |
7.2 |
|
Imports, f.o.b (US$ values) |
14.6 |
-1.7 |
-2.4 |
17.9 |
27.7 |
12.2 |
7.1 |
2.0 |
2.8 |
2.4 |
|
Terms of trade (deterioration = -) |
-4.8 |
1.4 |
1.4 |
-1.7 |
-1.7 |
-1.4 |
-1.0 |
-0.5 |
1.9 |
2.8 |
|
Real effective exchange rate (depreciation = -) |
-4.4 |
… |
11.0 |
… |
… |
… |
… |
… |
… |
… |
|
(Contributions to broad money growth; percent) |
||||||||||
|
Money and credit |
||||||||||
|
Broad money |
27.1 |
15.5 |
22.0 |
9.5 |
12.6 |
… |
… |
… |
… |
… |
|
Net foreign assets |
18.9 |
9.7 |
17.6 |
-1.2 |
3.1 |
… |
… |
… |
… |
… |
|
Net domestic assets |
8.2 |
5.9 |
4.4 |
10.7 |
9.6 |
… |
… |
… |
… |
… |
|
Of which: |
||||||||||
|
Credit to central government (net) |
4.0 |
4.9 |
3.6 |
7.1 |
6.7 |
… |
… |
… |
… |
… |
|
Credit to the private sector (net) |
6.0 |
1.3 |
0.1 |
3.6 |
2.9 |
… |
… |
… |
… |
… |
|
Velocity (GDP/broad money) |
2.1 |
2.0 |
1.9 |
2.0 |
1.8 |
… |
… |
… |
… |
… |
|
(Percent change; unless otherwise indicated) |
||||||||||
|
Central government finances |
||||||||||
|
Domestic revenue (taxes and other revenues) |
13.9 |
13.3 |
13.8 |
14.1 |
13.8 |
14.0 |
14.4 |
14.5 |
14.7 |
14.9 |
|
Of which: Tax Revenue |
10.9 |
10.4 |
10.5 |
11.2 |
10.9 |
11.6 |
12.0 |
12.2 |
12.4 |
12.7 |
|
Grants |
7.1 |
10.3 |
8.1 |
7.4 |
7.7 |
8.0 |
7.3 |
6.5 |
6.0 |
5.7 |
|
Total expenditures and net acquisition of financial assets |
23.6 |
25.2 |
24.0 |
25.4 |
25.5 |
24.0 |
22.9 |
21.6 |
21.0 |
20.8 |
|
Of which: Interest (percent of government revenue) |
22.3 |
22.5 |
21.9 |
18.4 |
18.8 |
18.9 |
16.3 |
15.0 |
13.5 |
12.2 |
|
Net lending (+)/borrowing (–) |
-2.5 |
-1.7 |
-2.1 |
-3.9 |
-4.0 |
-2.1 |
-1.2 |
-0.6 |
-0.2 |
-0.1 |
|
Net incurrence of liabilities |
3.1 |
1.0 |
1.6 |
4.0 |
4.0 |
2.2 |
1.4 |
0.6 |
0.2 |
0.1 |
|
Foreign |
2.6 |
0.2 |
0.9 |
1.6 |
1.7 |
1.8 |
1.4 |
0.9 |
0.3 |
0.5 |
|
Domestic |
0.5 |
0.8 |
0.8 |
2.3 |
2.4 |
0.4 |
0.0 |
-0.3 |
-0.1 |
-0.4 |
|
Primary balance |
0.6 |
1.3 |
1.0 |
-1.3 |
-1.4 |
0.5 |
1.1 |
1.6 |
1.8 |
1.7 |
|
Public debt |
80.2 |
76.4 |
77.2 |
74.4 |
76.7 |
72.7 |
66.3 |
61.4 |
56.3 |
51.0 |
|
Domestic public debt |
35.6 |
33.6 |
34.0 |
31.1 |
31.9 |
29.4 |
25.0 |
22.5 |
20.3 |
17.2 |
|
External public debt |
44.6 |
42.8 |
43.2 |
43.3 |
44.8 |
43.3 |
41.3 |
38.9 |
36.0 |
33.8 |
|
External public debt (millions of US$) |
798.1 |
813.8 |
820.4 |
888.0 |
905.6 |
953.1 |
993.0 |
1015.9 |
1023.6 |
1040.6 |
|
External current account balance |
||||||||||
|
Excluding official transfers |
-9.2 |
-10.9 |
-8.3 |
-14.1 |
-14.5 |
-16.3 |
-15.0 |
-12.6 |
-11.0 |
-10.3 |
|
Including official transfers |
-6.2 |
-6.2 |
-4.0 |
-11.9 |
-12.4 |
-13.9 |
-13.0 |
-11.0 |
-9.4 |
-8.8 |
|
Gross official reserves (millions of US$) |
225.0 |
330.0 |
352.0 |
389.8 |
412.3 |
432.8 |
449.1 |
458.4 |
473.8 |
506.4 |
|
(months of next year's imports) |
3.9 |
4.6 |
4.7 |
4.6 |
4.6 |
4.5 |
4.5 |
4.5 |
4.5 |
4.6 |
|
Savings and investment |
||||||||||
|
Gross investment |
19.4 |
18.5 |
19.4 |
21.8 |
24.2 |
23.9 |
23.7 |
22.9 |
23.1 |
22.7 |
|
Of which : Central government |
9.0 |
7.8 |
6.7 |
10.0 |
10.1 |
9.9 |
9.6 |
8.7 |
8.3 |
8.3 |
|
Gross savings |
13.2 |
12.3 |
15.4 |
9.9 |
11.8 |
10.0 |
10.7 |
12.0 |
13.7 |
13.9 |
|
Memorandum items: |
||||||||||
|
Nominal GDP (billions of dalasi) |
91.4 |
98.0 |
98.0 |
108.3 |
107.1 |
119.0 |
132.6 |
146.9 |
163.7 |
180.8 |
|
GDP per capita (US$) |
774.2 |
787.4 |
785.3 |
830.0 |
819.4 |
865.8 |
917.6 |
967.9 |
1025.7 |
1075.7 |
|
Use of Fund resources (millions of SDRs) |
||||||||||
|
Disbursements |
0.0 |
20.6 |
20.6 |
35.0 |
35.0 |
10.0 |
5.0 |
0.0 |
0.0 |
0.0 |
|
Of which : 2020 RCF |
… |
15.6 |
15.6 |
… |
… |
… |
… |
… |
… |
… |
|
Of which : Proposed ECF Augmentation |
… |
… |
… |
20.0 |
20.0 |
… |
… |
… |
… |
… |
|
Repayments |
-4.3 |
-3.6 |
-3.6 |
-4.0 |
-4.0 |
-2.8 |
-4.1 |
-3.9 |
-5.2 |
-9.5 |
|
CCRT debt relief 1 |
0.0 |
3.2 |
3.2 |
4.0 |
4.0 |
0.8 |
… |
… |
… |
… |
|
PV of overall debt-to-GDP ratio |
70.4 |
67.5 |
67.4 |
65.9 |
66.7 |
63.0 |
57.1 |
52.9 |
48.6 |
43.8 |
|
Sources: The Gambian authorities; and IMF staff estimates and projections. |
||||||||||
|
1 The grant for debt service falling due through October 15, 2021 is available under the CCRT. Subject to the availability of sufficient resources in the CCRT, debt service relief could be provided for a total period of two years, through April 13, 2022. |
||||||||||
[1] The Executive Board takes decisions under its lapse-of-time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.
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