Press Release: IMF Executive Board Concludes 2015 Article IV Consultation with The Gambia

September 21, 2015

Press Release No. 15/430
September 21, 2015

The Gambia has experienced large balance of payments and fiscal imbalances, caused by persistent policy slippages in recent years and financial difficulties in public enterprises. This was exacerbated by sizable exogenous shocks from the impact of the regional Ebola outbreak on tourism and the delayed summer rains in 2014. The authorities embarked on an economic program based on a strong 2015 budget and structural reforms, and efforts to secure donor support. The Fund supported the authorities’ efforts through a Rapid Credit Facility (RCF) disbursement in early April 2015 and a Staff-Monitored Program (SMP).

However, major policy slippages have occurred since the RCF disbursement, pushing the SMP off track and worsening the outlook considerably especially since budget support from donors will not be forthcoming. In early May 2015, the President’s office issued a directive imposing an exchange rate overvalued by more than 20 percent compared to the prevailing market rates, which the Fund staff assessed to be broadly in equilibrium. The fiscal position too has deteriorated significantly since mid-April, while inflationary pressures and T-bill rates have increased, reflecting the inconsistent macroeconomic policies. In the absence of corrective policies, The Gambia’s external viability and fiscal sustainability could be at serious risk.

Executive Board Assessment2

Executive Directors noted that a cycle of exogenous shocks followed by policy slippages had led to weaker real GDP growth in The Gambia than in other countries of the region. Directors regretted that recent policy slippages have worsened an already difficult macroeconomic situation and are threatening The Gambia’s near- and medium-term growth prospects. Accordingly, they called for strong corrective measures to address the growing macroeconomic imbalances and bring policies back on track to achieve the objectives of the authorities’ economic program monitored by Fund staff. Directors agreed that bold action on a variety of fronts, including targeted structural reforms, is urgently needed to restore policy credibility, rebuild policy buffers, re-engage development partners and achieve The Gambia’s poverty alleviation goals.

Directors stressed that an ambitious and sustained fiscal adjustment is necessary to bring the fiscal situation under control. They encouraged the authorities to implement the measures in the current budget and to identify soon additional measures for a deep budget restructuring beginning in 2016. Such an adjustment will create space for development spending while fostering macroeconomic stability and social progress over the medium term. Directors also highlighted the need to articulate a strategy to overhaul public enterprises in the energy and telecommunication sectors to stem their demand on budget resources.

Directors welcomed the Central Bank of The Gambia’s continued efforts to shore up financial stability. They commended steps underway to improve bank supervision and crisis management capacity. Directors observed that the flexible exchange rate regime had served The Gambia well, and agreed that the exchange directive currently in force to limit exchange rate flexibility should be rescinded immediately.

Directors welcomed The Gambia’s significant social gains over the past years but noted that there remains ample room to enhance inclusive growth and competitiveness. They encouraged the authorities to step up agricultural reforms and improve infrastructure in energy and transport to enhance economic diversification and resilience to shocks.


s
The Gambia: Selected Economic Indicators  
 
                   

 

 
  2010 2011 2012 2013 2014 2015 2016 2017 2018 2019  
  Act. Act. Act. Act. Prel. Active Policy Scenario Active Policy Scenario Active Policy Scenario Active Policy Scenario Active Policy Scenario  
                   

 

 
 

National account and prices

(Percent change; unless otherwise indicated)

 

 

Nominal GDP (millions of dalasi)

26,662 26,465 29,191 32,320 34,380 38,203 42,372 47,459 52,659 58,429  

Nominal GDP

11.1 -0.7 10.3 10.7 6.4 11.1 10.9 12.0 11.0 11.0  

GDP at constant prices

6.5 -4.3 5.6 4.8 -0.2 4.7 5.5 7.0 5.9 5.9  

GDP per capita (US$)

551 506 499 479 427 385 373 394 414 435  

GDP deflator

4.3 3.7 4.5 5.7 6.6 6.2 5.1 4.6 4.8 4.8  

Consumer prices (average)

5.0 4.8 4.6 5.2 6.2 6.5 5.3 5.0 5.0 5.0  

Consumer prices (end of period)

5.8 4.4 4.9 5.5 6.9 6.0 4.7 5.2 5.0 5.0  
                       

External sector

                     

Exports, f.o.b.

0.9 7.0 22.6 5.4 -6.6 -9.1 8.8 5.3 7.6 4.1  

Of which: domestic exports

1.0 0.9 66.1 -37.2 6.8 -11.4 -1.4 15.0 -5.8 5.2  

Imports, f.o.b.

5.3 -6.1 11.3 -6.7 10.2 -12.9 1.5 8.2 9.7 7.7  

Terms of trade (deterioration -)

-1.1 18.0 2.3 13.5 -0.7 21.1 4.8 -1.2 2.0 -0.2  

NEER change (depreciation -)1

-1.2 -6.5 -11.2 -10.6  

REER (depreciation -)1

0.6 -5.7 0.3 -7.5  
                   

 

 
(Percent change; in beginning-of-year broad money)

 

 

Broad money

13.7 11.0 7.8 15.1 11.2 11.0 15.0 14.0 14.0 14.0  

Net foreign assets

1.3 5.6 2.3 -2.5 0.5 -7.2 8.3 8.7 9.5 9.7  

Net domestic assets, of which:

12.3 5.4 5.5 17.7 10.7 18.2 6.7 5.3 4.5 4.3  

Credit to the government (net)

16.8 8.2 6.1 13.4 15.8 9.7 2.4 0.9 0.9 0.9  

Credit to the private sector (net)

4.7 2.8 1.3 6.2 -2.4 3.2 4.4 4.1 4.1 3.2  

Other items (net)

-10.1 -5.2 -1.7 -2.2 -2.2 2.1 -1.6 -0.8 -0.5 0.3  

Velocity (level)

2.0 1.8 1.8 1.8 1.7 1.7 1.6 1.6 1.6 1.5  

Average treasury bill rate (in percent)2

11.3 10.0 10.4 17.1 ... ... ... ... ... ...  
                   

 

 

Central government budget

(In percent of GDP; unless otherwise indicated)

 

 

Domestic revenue (taxes and other revenues)

14.9 16.1 16.4 16.3 18.7 19.7 20.5 20.8 20.8 21.0  

Grants

4.0 5.1 8.9 2.2 3.7 4.0 3.8 3.4 3.6 3.6  

Total expenditures and net acquisition of financial assets

24.3 25.8 29.8 27.2 35.4 31.7 27.9 26.0 25.0 25.3  

Net incurrence of liabilities

3.7 4.3 4.3 8.8 13.2 8.0 3.6 1.8 0.7 0.7  

Foreign

1.5 0.8 1.1 1.8 1.1 1.7 0.9 1.3 0.2 0.2  

Domestic

2.2 3.5 3.2 7.0 12.1 6.3 2.6 0.5 0.5 0.5  

Basic balance

-2.9 -2.1 -2.1 -5.2 -8.3 -5.2 -0.9 1.2 0.9 0.0  
                       

Public debt

69.6 77.3 77.0 83.3 101.1 107.6 102.4 95.0 87.9 84.4  

Domestic public debt 

29.4 33.2 33.3 37.1 47.0 48.6 46.4 41.9 38.3 37.9  

External public debt

40.2 44.1 43.7 46.2 54.2 59.0 56.0 53.1 49.6 46.5  

External public debt (millions of US$)

377.6 386.2 375.8 394.1 411.2 410.0 418.3 431.4 435.5 440.1  

 

 

   

 

 

 

 

 

 

 

 

 

External sector

   

 

 

 

 

 

 

 

 

 

Current account balance

             

 

 

 

 

Excluding budget support

-16.3 -12.3 -8.9 -10.2 -15.5 -21.6 -11.9 -11.0 -10.6 -10.6  

Including budget support

-16.3 -12.3 -7.9 -10.2 -13.1 -17.3 -11.1 -10.2 -9.8 -9.7  

 

             

 

 

 

 

Current account balance

(Millions of U.S. dollars; unless otherwise indicated)

 

 

Excluding budget support

-155.1 -110.3 -81.3 -91.6 -127.5 -164.4 -90.2 -90.4 -94.7 -102.0  

Including budget support

-155.1 -110.3 -72.1 -91.6 -108.0 -131.8 -84.0 -83.9 -87.1 -93.3  

Overall balance of payments

-23.8 8.4 0.1 -23.6 -18.7 -37.1 37.4 32.9 34.1 42.1  

Gross official reserves

157.6 169.7 183.8 161.1 111.9 80.2 111.5 136.9 163.1 198.6  

in months of next year's imports of goods and services

5.1 5.1 6.0 4.8 3.7 2.6 3.3 3.8 4.2 4.7  

 

                 

 

 

Use of Fund resources

(Millions of SDRs)

 

 

Disbursements

2.0 2.3 9.3 1.6 0.0 7.8 0.0 0.0 0.0 0.0  

Repayments

0.0 0.0 -0.2 -1.0 -2.1 -3.8 -4.3 -5.2 -5.5 -4.6  

Financing gap (possible ECF financing)

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0  

 

             

 

 

 

 
                   

 

 
 

Sources: Gambian authorities and IMF staff estimates and projections.

               

 

 

1 Percentage change between December of the previous year and December of the current year.

           

 

2 Average for the month of December.

                 

 

                     
s
The Gambia: Selected Economic Indicators  
 
                   

 

 
  2010 2011 2012 2013 2014 2015 2016 2017 2018 2019  
  Act. Act. Act. Act. Prel. Active Policy Scenario Active Policy Scenario Active Policy Scenario Active Policy Scenario Active Policy Scenario  
                   

 

 
 

National account and prices

(Percent change; unless otherwise indicated)

 

 

Nominal GDP (millions of dalasi)

26,662 26,465 29,191 32,320 34,380 38,203 42,372 47,459 52,659 58,429  

Nominal GDP

11.1 -0.7 10.3 10.7 6.4 11.1 10.9 12.0 11.0 11.0  

GDP at constant prices

6.5 -4.3 5.6 4.8 -0.2 4.7 5.5 7.0 5.9 5.9  

GDP per capita (US$)

551 506 499 479 427 385 373 394 414 435  

GDP deflator

4.3 3.7 4.5 5.7 6.6 6.2 5.1 4.6 4.8 4.8  

Consumer prices (average)

5.0 4.8 4.6 5.2 6.2 6.5 5.3 5.0 5.0 5.0  

Consumer prices (end of period)

5.8 4.4 4.9 5.5 6.9 6.0 4.7 5.2 5.0 5.0  
                       

External sector

                     

Exports, f.o.b.

0.9 7.0 22.6 5.4 -6.6 -9.1 8.8 5.3 7.6 4.1  

Of which: domestic exports

1.0 0.9 66.1 -37.2 6.8 -11.4 -1.4 15.0 -5.8 5.2  

Imports, f.o.b.

5.3 -6.1 11.3 -6.7 10.2 -12.9 1.5 8.2 9.7 7.7  

Terms of trade (deterioration -)

-1.1 18.0 2.3 13.5 -0.7 21.1 4.8 -1.2 2.0 -0.2  

NEER change (depreciation -)1

-1.2 -6.5 -11.2 -10.6  

REER (depreciation -)1

0.6 -5.7 0.3 -7.5  
                   

 

 
(Percent change; in beginning-of-year broad money)

 

 

Broad money

13.7 11.0 7.8 15.1 11.2 11.0 15.0 14.0 14.0 14.0  

Net foreign assets

1.3 5.6 2.3 -2.5 0.5 -7.2 8.3 8.7 9.5 9.7  

Net domestic assets, of which:

12.3 5.4 5.5 17.7 10.7 18.2 6.7 5.3 4.5 4.3  

Credit to the government (net)

16.8 8.2 6.1 13.4 15.8 9.7 2.4 0.9 0.9 0.9  

Credit to the private sector (net)

4.7 2.8 1.3 6.2 -2.4 3.2 4.4 4.1 4.1 3.2  

Other items (net)

-10.1 -5.2 -1.7 -2.2 -2.2 2.1 -1.6 -0.8 -0.5 0.3  

Velocity (level)

2.0 1.8 1.8 1.8 1.7 1.7 1.6 1.6 1.6 1.5  

Average treasury bill rate (in percent)2

11.3 10.0 10.4 17.1 ... ... ... ... ... ...  
                   

 

 

Central government budget

(In percent of GDP; unless otherwise indicated)

 

 

Domestic revenue (taxes and other revenues)

14.9 16.1 16.4 16.3 18.7 19.7 20.5 20.8 20.8 21.0  

Grants

4.0 5.1 8.9 2.2 3.7 4.0 3.8 3.4 3.6 3.6  

Total expenditures and net acquisition of financial assets

24.3 25.8 29.8 27.2 35.4 31.7 27.9 26.0 25.0 25.3  

Net incurrence of liabilities

3.7 4.3 4.3 8.8 13.2 8.0 3.6 1.8 0.7 0.7  

Foreign

1.5 0.8 1.1 1.8 1.1 1.7 0.9 1.3 0.2 0.2  

Domestic

2.2 3.5 3.2 7.0 12.1 6.3 2.6 0.5 0.5 0.5  

Basic balance

-2.9 -2.1 -2.1 -5.2 -8.3 -5.2 -0.9 1.2 0.9 0.0  
                       

Public debt

69.6 77.3 77.0 83.3 101.1 107.6 102.4 95.0 87.9 84.4  

Domestic public debt 

29.4 33.2 33.3 37.1 47.0 48.6 46.4 41.9 38.3 37.9  

External public debt

40.2 44.1 43.7 46.2 54.2 59.0 56.0 53.1 49.6 46.5  

External public debt (millions of US$)

377.6 386.2 375.8 394.1 411.2 410.0 418.3 431.4 435.5 440.1  

 

 

   

 

 

 

 

 

 

 

 

 

External sector

   

 

 

 

 

 

 

 

 

 

Current account balance

             

 

 

 

 

Excluding budget support

-16.3 -12.3 -8.9 -10.2 -15.5 -21.6 -11.9 -11.0 -10.6 -10.6  

Including budget support

-16.3 -12.3 -7.9 -10.2 -13.1 -17.3 -11.1 -10.2 -9.8 -9.7  

 

             

 

 

 

 

Current account balance

(Millions of U.S. dollars; unless otherwise indicated)

 

 

Excluding budget support

-155.1 -110.3 -81.3 -91.6 -127.5 -164.4 -90.2 -90.4 -94.7 -102.0  

Including budget support

-155.1 -110.3 -72.1 -91.6 -108.0 -131.8 -84.0 -83.9 -87.1 -93.3  

Overall balance of payments

-23.8 8.4 0.1 -23.6 -18.7 -37.1 37.4 32.9 34.1 42.1  

Gross official reserves

157.6 169.7 183.8 161.1 111.9 80.2 111.5 136.9 163.1 198.6  

in months of next year's imports of goods and services

5.1 5.1 6.0 4.8 3.7 2.6 3.3 3.8 4.2 4.7  

 

                 

 

 

Use of Fund resources

(Millions of SDRs)

 

 

Disbursements

2.0 2.3 9.3 1.6 0.0 7.8 0.0 0.0 0.0 0.0  

Repayments

0.0 0.0 -0.2 -1.0 -2.1 -3.8 -4.3 -5.2 -5.5 -4.6  

Financing gap (possible ECF financing)

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0  

 

             

 

 

 

 
                   

 

 
 

Sources: Gambian authorities and IMF staff estimates and projections.

               

 

 

1 Percentage change between December of the previous year and December of the current year.

           

 

2 Average for the month of December.

                 

 

                     

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

2 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.




IMF COMMUNICATIONS DEPARTMENT

Media Relations
E-mail: media@imf.org
Phone: 202-623-7100