IMF Staff Completes Discussions for the Sixth Review under the Extended Credit Facility Arrangement for The Gambia

IMF News, March 24, 2023

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Canonical URL: IMF Staff Completes Discussions for the Sixth Review under the Extended Credit Facility Arrangement for The Gambia

Mission dates: March 14–24, 2023.
Mission led by: Mr. Ivohasina Fizara Razafimahefa, Mission Chief for The Gambia.
Staff-level agreement reached with authorities on policies to support the IMF Executive Board’s completion of the sixth review under the ECF arrangement.
IMF Executive Board consideration of the staff report on the review is tentatively scheduled for June 2023.
Upon Board approval, SDR 5 million (equivalent to about US$6.7 million) will be made available to The Gambia.
Program performance through end-December 2022:
- Five out of six quantitative performance criteria were met.
- Three out of four indicative targets were met.
- Two structural benchmarks were met; one structural benchmark was completed after the deadline.

External environment: Repercussions of the war in Ukraine continue to strain the socio-economic environment in The Gambia.
Growth:
- Growth in 2022 is estimated to have remained around its 2021 level, at 4.4 percent.
- Growth drivers in 2022 included a strong recovery in the tourism sector and robust public and private construction.
Inflation:
- Inflation persisted at 13.6 percent in February 2023, driven by high food and energy prices amid the protracted war in Ukraine.
Foreign exchange:
- Foreign exchange shortages that were observed in the second half of 2022 have eased.
Fiscal context:
- The government maintained prudent fiscal management despite measures to support the population and despite some expected important resources not materializing.
- Significant revenue losses occurred due to government measures to alleviate the passthrough of high international oil prices to domestic pump prices.

Central bank actions:
- The central bank increased the policy rate four times for a total of 4 percentage points, to 14 percent, to help tame inflationary pressures and anchor inflation expectations.
- The central bank took decisive actions to address foreign exchange shortages and ensure smooth functioning of the forex market.
- The central bank is committed to closely monitoring inflation developments and further tightening the monetary policy stance if needed, while safeguarding the fragile economic recovery.
- The central bank remains committed to an exchange rate policy that ensures equilibrium between supply and demand on the foreign exchange market.

Authorities’ commitment: The Gambian authorities remain committed to structural reforms.
Progress reported:
- Good progress in revenue administration.
- Good progress in public financial management.
- Good progress in public contracts procurement.
- Good progress in the institutional framework of State-Owned Enterprises.
Specific legislative and regulatory actions:
- Regulations related to the recently approved public procurement law are under finalization.
- National Assembly approval process progressing for bills on state-owned enterprises and anticorruption.
- The PFM act has been approved by Cabinet and will be submitted to the National Assembly.
- Efforts are supported by extensive and coordinated capacity development from development partners.

Growth projections:
- Growth is expected at 5.6 percent in 2023.
- Growth is expected at 6.3 in 2024.
- These projections are predicated on improvement of the external macroeconomic environment—including a full recovery of the tourism sector—and continued resilience of domestic activity, particularly in the construction and agriculture sectors.
Fiscal policy stance:
- Despite strong pressures on spending, including from higher debt service amid a rapid increase in domestic financing conditions and Dalasi depreciation, the government is determined to maintain fiscal discipline by anchoring the 2023 fiscal framework on the approved budget.
Monetary policy stance:
- The central bank will closely monitor inflation and may further tighten monetary policy if needed, while safeguarding the recovery.
Exchange rate policy:
- Continued commitment to an exchange rate policy that ensures equilibrium between supply and demand on the foreign exchange market.

Principal government counterparts consulted:
- His Excellency Adama Barrow, President of The Republic of The Gambia.
- Honorable Fabakary Tombong Jatta, National Assembly Speaker.
- Seedy Keita, Minister of Finance and Economic Affairs.
- Baboucarr O. Joof, Minister of Trade, Industry, Regional Integration, and Employment.
- Ebrima Sillah, Minister of Transport Works and Infrastructure.
- Buah Saidy, Governor of the Central Bank of The Gambia.
- Senior government and central bank officials.
Other consultations:
- Discussions with representatives of the private sector, civil society, and development partners.
- Mission expressed thanks to the Gambian authorities for constructive discussions and good collaboration.

International Monetary Fund press release, March 24, 2023.