## IMF Executive Board Concludes 2017 Article IV Consultation; and Completion of the First Review under and Extension of the Staff monitored Program with The Gambia

_IMF News, March 23, 2018_

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## Bibliographic details
- Published: March 23, 2018

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### Economic developments and outlook
- Economic growth for 2017 is estimated at 3.5 percent, reflecting a better agricultural season and a strong rebound of tourism and trade.
- Headline inflation declined from 8.8 percent in January 2017 to 6.4 percent in January 2018, reflecting the stabilization of the dalasi and a gradual decrease in food prices.
- The dalasi has remained stable since April (2017), supported by much-improved fiscal discipline and external financial support.
- Gross international reserves increased from 1.6 months of import cover at end-2016 to 2.9 months at end-2017.
- The Executive Board granted a waiver.

### Staff-monitored program (SMP) and program extension
- The authorities’ commitment to the SMP is described as strong.
- Performance under the program was broadly satisfactory, with good progress on the structural agenda despite severe capacity constraints.
- The Managing Director approved the authorities’ request for an extension of the SMP by six months to end-September 2018 to provide more time to establish a track record for transition to an arrangement under the Extended Credit Facility (ECF).
- Note on SMPs: An SMP is an informal agreement between country authorities and Fund staff; SMPs do not entail financial assistance or endorsement by the IMF Executive Board.

### Executive Board assessment and policy recommendations
- Directors commended strong commitment to reforms and welcomed progress in stabilizing the economy.
- Fiscal policy:
  - Maintain strict fiscal discipline.
  - Contain spending while raising domestic revenue, including implementing the revenue measures delayed to 2018.
  - Further efforts to streamline the civil service.
  - Develop a medium term economic and fiscal framework together with a debt management strategy to anchor fiscal policy.
  - Prioritize and sequence investment projects; refrain from contracting any large new debt or contingent liabilities that would jeopardize debt sustainability.
- Debt and external support:
  - Directors noted substantial debt vulnerabilities and high risk of external debt distress.
  - Concerted international community support is key to addressing the high debt overhang.
  - Mobilization of assistance for the National Development Strategy should focus on grants, with only very limited room even for highly concessional loans in the medium term.
  - Directors called for additional resources to foster debt sustainability, including debt restructuring and softening of terms on existing commitments.
- Monetary and exchange rate policy:
  - Further progress in reducing inflation would provide room to lower the policy interest rate.
  - Welcome the authorities’ commitment to maintain a flexible exchange rate system to support rebuilding international reserves.
  - Strengthen the central bank’s independence, governance, and operational effectiveness.
- Financial sector and business environment:
  - Crowd in the private sector to support broad-based growth, including by increasing access to financing.
  - Safeguard financial stability through heightened and risk-based supervision given lower interest rates and maturity lengthening of domestic debt.
  - Strengthen the AML/CFT framework to address the decline in correspondent banking relationships.
  - Improve the business environment and strengthen governance.
- Social and inclusive growth:
  - Reducing income and gender inequality would support economic growth while achieving better social outcomes.

### Selected quantitative highlights reported in the statement
- Growth and inflation:
  - 2017 economic growth: 3.5 percent.
  - Inflation: 8.8 percent in January 2017 → 6.4 percent in January 2018.
- External and reserve indicators:
  - Gross international reserves: 1.6 months of import cover at end-2016 → 2.9 months at end-2017.
- Program timing:
  - SMP extension: six months to end-September 2018.
- Table excerpts and selected series (as published):
  - Nominal GDP (millions of dalasi): 38,581; 42,252; 47,139; 47,289; 52,577; 57,973; 63,645; 69,848; 76,574; 83,941.
  - Nominal GDP (percent change): 10.9; 9.5; 11.6; 11.9; 11.2; 10.3; 9.8; 9.7; 9.6.
  - GDP at constant prices (percent change): 4.3; 2.2; 3.0; 3.5; 5.4; 5.2; 4.9; 4.8; 4.9.
  - GDP per capita (US$): 451; 473; 488; 480; 500; 518; 531; 542; 554; 563.
  - GDP deflator: 6.4; 7.1; 8.3; 8.1; 5.5; 4.6; 4.7.
  - Consumer prices (average): 6.8; 7.2; 8.0; 5.8; 5.0.
  - Trade balance (percent of GDP, deficit -): -25.7; -17.9; -22.8; -27.8; -31.9; -29.5; -26.2; -24.9; -23.8; -24.1.
  - Exports of goods and services (percent change): -9.5; -6.0; 16.9; 9.3; 9.0; 8.2; 6.5.
  - Imports of goods and services (percent change): 11.3; -10.2; 12.3; 23.2; 20.5; 3.2; 0.9; 4.0; 4.4; 6.1.
  - Broad money (percent change): -0.9; 15.3; 11.4; 19.3; 11.0; 9.1; 8.4.
  - Net foreign assets (percent change): -11.6; -4.5; 28.3; 3.8; 6.6; 2.3; 2.5.
  - Credit to the government (net, percent change): 16.0; 24.8; -7.8; -7.0; 0.0; -1.6; 0.2; 0.1.
  - Domestic revenue (percent of GDP): 19.7; 18.4; 18.7; 19.6; 20.9; 18.9; 19.2; 20.2; 20.4.
  - Grants (percent of GDP): 11.1; 13.2; 10.0; 7.3; 6.2; 4.2.
  - Total expenditures and net acquisition of financial assets (percent of GDP): 29.7; 29.8; 28.0; 34.5; 34.8; 30.6; 27.6; 25.6; 25.1; 24.6.
  - Interest payments (percent of government revenue): 36.8; 42.0; 31.5; 24.2; 18.2; 18.1; 19.1; 15.6; 14.1; 13.0.
  - Net lending (+)/borrowing (–) (percent of GDP): -8.1; -9.7; -2.5; -3.9; -0.8; -1.7; 0.3; -0.6.
  - Net incurrence of liabilities (percent of GDP): 12.1; 13.7; 3.9; 0.8; 1.1; -0.3.
  - Public debt (percent of GDP): 105.3; 118.5; 112.7; 122.6; 111.5; 105.2; 99.5; 92.7; 87.7; 82.0.
  - Domestic public debt (percent of GDP): 53.9; 61.9; 61.8; 59.4; 49.4; 45.1; 42.1; 37.5; 31.7.
  - External public debt (percent of GDP): 51.4; 56.6; 50.9; 63.2; 62.1; 60.1; 57.5; 55.2; 53.1; 50.2.
  - External public debt (millions of US$): 499.0; 544.7; 517.2; 627.7; 666.1; 687.9; 695.2; 701.7; 706.0; 702.0.
  - Current account balance excluding budget support (percent of GDP): -16.9; -14.4; -19.4; -23.7; -21.2; -18.1; -16.0.
  - Current account balance including budget support (percent of GDP): -15.0; -8.9; -9.4; -14.3; -18.4; -13.2; -14.1; -13.6.
  - Current account balance (Millions of U.S. dollars): -134.0; -85.4; -97.0; -144.2; -200.1; -196.4; -177.2; -170.8; -192.1; -193.6.
  - Overall balance of payments (Millions of U.S. dollars): -41.3; -10.3; 13.4; 75.2; 44.0; 26.6; 28.9; 33.8; 20.0; 19.9.
  - Gross official reserves (Millions of U.S. dollars): 76.1; 59.8; 84.8; 143.9; 180.0; 200.0; 223.6; 251.7; 267.7; 281.9.
  - Gross official reserves (months of next year's imports of goods and services): 1.4; 2.9; 4.1; 4.5.
  - Use of Fund resources (Millions of SDRs) – Disbursements: 7.8; 11.7. Repayments: -3.8; -4.3; -5.2; -5.5; -4.6; -3.6; -4.0.

*IMF Communications Department, Press Release No. 18/105, March 23, 2018.*

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## References

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_Source: https://www.imf.org/en/news/articles/2018/03/23/pr18105-imf-executive-board-concludes-2017-article-iv-consultation-with-the-gambia_