Press Release No. 11/209

Press Release No. 11/209
June 1, 2011

Mr. David Dunn, International Monetary Fund (IMF) mission chief for The Gambia, issued the following statement today in Banjul:

“An IMF mission visited The Gambia during May 18–31, 2011 to initiate negotiations on a policy framework that could be supported by a new three-year arrangement under the IMF’s Extended Credit Facility (ECF). The team met with Her Excellency Vice-President Aja Dr. Isatou Njie-Saidy, Honorable Minister of Finance and Economic Affairs Mambury Njie, Central Bank of The Gambia Governor Amadou Colley, and other senior officials. The mission also met representatives of non-governmental organizations, the private sector, and development partners.

“The Gambian economy continues to perform well, coming off another strong year for agriculture, particularly in rice and groundnut production. Tourism, however, has remained suppressed, owing to lingering effects of the economic slowdown in key European markets, but is expected to pick up later in the year. Overall, gross domestic product (GDP) is projected to grow by about 5½ percent in real terms in 2011, while annual inflation would remain moderately elevated at about 6 percent, reflecting food and fuel price pressures. The longer-term economic outlook is generally positive, although The Gambia’s heavy debt burden remains a concern.

“The IMF team appreciates the candid policy discussions with the authorities and welcomes the President’s leadership on addressing the debt problem. We support the intention of the Government to curb its borrowing needs beginning in 2011, with the goal of achieving near-zero net domestic borrowing by 2014. This will require a gradual, but steady fiscal adjustment, including a reversal of the decline in government revenues in recent years and firm restraint on spending. We welcome the recently-introduced cash-budgeting approach to contain monthly expenditures, which should assist in reducing the Government’s net domestic borrowing to about 2 percent of GDP in the current year. This should help to ease pressure on interest rates, generate fiscal savings, and avoid the crowding out of credit to the private sector.

“The new ECF arrangement, which the authorities have requested, will support the forthcoming Programme for Accelerated Growth and Employment (PAGE). Financing of the PAGE will pose a significant challenge in light of the country’s already heavy debt burden. Thus, in addition to seeking development partner support for the PAGE, we welcome the authorities’ aim to embark on a program of private sector participation in critical areas of infrastructure investment, including telecommunications and electricity generation. To build broad support for the PAGE, the IMF team encourages the authorities to further engage civil society, the donor community, and other stakeholders in the final formulation of the strategy.

“The IMF team will return to The Gambia later in the year to conduct discussions on surveillance issues and medium-term policy options, such as tax reform aimed at reducing rates and broadening the base. Program discussions could be concluded by early 2012.”