IMF Executive Board Approves US$100 million Under a New Extended Credit Facility Arrangement and Concludes the 2023 Article IV Consultation with The Gambia
IMF News, January 12, 2024
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- Published: January 12, 2024
Approval and Program Overview
- Executive Board approved a new 36-month Extended Credit Facility (ECF) arrangement with requested access of SDR 74.64 million (around US$100 million).
- The Executive Board’s decision enables an immediate disbursement of SDR 10.9 million (US$ 14.56 million).
- The ECF-supported program aims to:
- strengthen economic recovery;
- tackle inflation;
- address foreign exchange pressures;
- reduce debt vulnerabilities;
- advance structural reforms; and
- foster strong and inclusive growth.
- The program will build on the recently completed 2020-23 ECF-supported program and the authorities’ 2023-2027 Recovery-Focused National Development Plan.
Main Policy Focuses and Recommendations
- Fiscal policy:
- Focus on fiscal consolidation to build fiscal resilience while safeguarding priority and poverty-reducing spending.
- Implement the planned medium-term fiscal strategy, including further streamlining of tax incentives and fuel subsidies, rationalization of subsidies to state-owned enterprises, and better prioritization of public investment projects.
- Bolster domestic resource mobilization and maintain prudent domestic borrowing.
- Strictly adhere to the external borrowing plan and seek grants and highly concessional financing.
- Monetary and exchange rate policy:
- Tighten monetary policy stance to tackle inflationary pressures.
- Reaffirm a market-determined exchange rate to address foreign exchange pressures and ensure smooth functioning of the forex market.
- Public enterprises, governance, and structural reforms:
- Overhaul the SOE sector to turn SOEs into revenue-generating assets, including through partial privatization.
- Advance governance reforms guided by recommendations from an IMF governance diagnostic mission.
- Enhance public financial management and implement anti‑corruption measures, including accelerating the implementation of the anti‑corruption bill.
- Strengthen the business environment to support private sector-led growth and poverty reduction.
- Social and long-term resilience:
- Adopt strong climate-related policies and request a Climate Public Investment Management Assessment.
- Tackle gender inequality and enhance financial inclusion to support resilient and inclusive growth.
Executive Board Assessment and Staff Appraisal
- Directors agreed with the thrust of the staff appraisal and commended authorities for democratic consolidation and reform implementation under the previous ECF arrangement.
- Noted downside risks: high inflation, reemerging foreign exchange pressures, and debt vulnerabilities.
- Emphasized continued reform implementation and program ownership to maintain macroeconomic stability and foster inclusive growth.
- Welcomed the authorities’ medium-term fiscal framework anchored in strengthened domestic revenue mobilization and enhanced spending efficiency.
- Recommended building buffers, enhancing debt management, and maintaining prudent external borrowing given the expiration of debt service deferrals in 2025.
- Commended central bank monetary actions; noted that further tightening guided by inflation developments could be needed.
- Stressed the importance of a market-determined exchange rate to ease foreign exchange pressures and safeguard reserves.
- Encouraged strengthening financial supervision, regulatory framework, and AML/CFT framework.
Economic Outlook and Recent Performance (selected findings)
- The Gambia has weathered COVID-19 and Russia’s war in Ukraine more resiliently relative to peer countries.
- Economic growth:
- 2022: 4.9 percent
- 2023: 5.6 percent (expected this year, up from 4.9 percent in 2022)
- Medium term: around 5 percent, supported by remittances, tourism recovery, and new infrastructure projects.
- Inflation:
- Headline inflation at 18.0 percent y-o-y in October 2023 (driven primarily by international commodity prices).
- Inflation projected to gradually ease following tightening of monetary policy stance.
- Foreign exchange and reserves:
- Forex pressures and shortages are reemerging.
- Forex reserves, in months of imports, projected to slightly decline in the medium term but broadly remain at an adequate level (around 4 months) with support of IMF and other development partner disbursements.
- Debt vulnerabilities:
- Public and external debt remain at high risk of distress; reducing debt vulnerabilities is a program priority.
Program Pillars (as articulated in Annex Program Summary)
- (i) Addressing inflation and foreign exchange pressures:
- Central bank to tighten monetary policy, reaffirm market-determined exchange rate, and ensure smooth forex market functioning.
- (ii) Reducing debt vulnerabilities and overhauling the SOE sector:
- Sustain fiscal consolidation, bolster domestic revenue mobilization, enhance expenditure efficiency through prioritization and strict PFM principles, and pursue partial privatization of SOEs.
- (iii) Strengthening governance and unlocking growth potential:
- Implement key recommendations from governance diagnostic; strengthen business environment.
- (iv) Addressing long-term challenges related to climate change and gender gaps:
- Build climate resilience and close gender gaps to bolster income and reduce inequality.
Selected Economic Indicators (2019–26, selected series and values)
- GDP at constant prices (percent change):
- 2022: 4.9
- 2023: 5.6
- 2024: 5.8
- 2025: 5.0
- 2026: (projection) 5.0
- GDP deflator (percent change):
- 2022: 10.8
- 2023: 14.1
- 2024: 11.4
- 2025: 8.3
- Consumer prices (average, percent change):
- 2022: 17.2
- 2023: 15.9
- 2024: 10.5
- 2025: 6.5
- Consumer prices (end of period, percent change):
- 2022: 13.7
- 2023: 18.9
- 2024: 12.9
- 2025: 8.1
- Exports, f.o.b (US$ values, percent change):
- 2022: 58.7
- 2023: 92.3
- 2024: 20.9
- 2025: 13.6
- 2026: 12.1
- Imports, f.o.b (US$ values, percent change):
- 2022: 24.6
- 2023: 15.6
- 2024: 3.2
- 2025: 6.9
- Broad money (contributions; percent):
- 2022: 2.5
- 2023: 9.4
- 2024: 9.6
- Net foreign assets (contribution to broad money growth):
- 2022: -8.2
- 2023: 0.4
- 2024: -0.5
- 2025: 0.3
- Central government finances (percent of GDP):
- Domestic revenue (taxes and other revenues):
- 2022: 12.0
- 2023: 13.0
- 2024: 12.8
- Tax Revenue:
- 2022: 9.1
- 2023: 9.9
- 2024: 10.2
- Grants:
- 2022: 7.0
- 2023: 6.4
- Total expenditures:
- 2022: 22.3
- 2023: 22.7
- 2024: 20.5
- 2025: 20.0
- Net lending (+)/borrowing (–):
- 2022: -4.9
- 2023: -2.5
- 2024: -1.3
- 2025: -1.0
- Public debt (percent of GDP):
- 2022: 82.8
- 2023: 71.8
- 2024: 65.2
- 2025: 60.8
- 2026: 56.2
- External public debt (millions of US$):
- 2022: 965.9
- 2023: 1029.3
- 2024: 1032.0
- 2025: 1084.2
- 2026: 1112.4
- 2027: 1134.8
- External current account balance (excluding official transfers, percent of GDP):
- 2022: -6.1
- 2023: -7.2
- 2024: -7.6
- 2025: -5.5
- 2026: -4.4
- Gross official reserves (millions of US$):
- 2022: 454.7
- 2023: 412.3
- 2024: 437.5
- 2025: 440.4
- 2026: 448.1
- Gross official reserves (months of next year's imports):
- 2022: 4.2
- 2023: 4.1
- Nominal GDP (billions of dalasi):
- 2022: 122.6
- 2023: 147.6
- 2024: 174.8
- 2025: 200.2
- 2026: 221.5
- GDP per capita (US$):
- 2022: 841.9
- 2023: 904.5
- 2024: 1009.2
- 2025: 1076.2
- 2026: 1109.4
- PV of overall debt-to-GDP ratio:
- 2022: 59.9
- 2023: 54.3
- 2024: 50.8
- 2025: 46.6
Press Release No. 24/02