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Thursday, February 29, 2024

2024 budget is characterized by hugemistakes, misstatements and omissions

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By Morro Gaye  

It would be illusory to address the growing fiscal deficit in a credible and accurate manner under such misleading circumstances. With a projected fiscal deficit of D4.45 billion representing 2.55% of GDP in 2024, the Government will need to borrow more money domestically from the private commercial banks in order to finance the widening budget deficit with the consequences of further increasing the country’s debt portfolio.

The debt to GDP is more than 81 percent and the debt interest charges for the year has increased from D3.5 billion to D7.5 billion. This is more than the combined allocations for the social priority sectors such as Health, Education, and Agriculture. There is no doubt that the economic trajectory of the country is not going in the right direction.

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The International Monetary Fund has established a benchmark of close to 70 % for developing countries which meant that those low-income countries like the Gambia surpassing the established debt ceiling set by the IMF must do everything possible to stay within the acceptable limits.

In 2021/2022, the Gambia reported the highest debt to GDP figure. The table below will show the ratio in relation to other countries in the region.

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Source: IMF website

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Contrary to the finance minister’s statement on the debt situation of other countries, our debt portfolio is actually among the highest in the region. Nigeria’s debt in 2022 accounted for 38.4% which is the lowest so far among other countries in the region.

The year 2024 will be stressful as essential health services and charges for passport, ID cards and vehicle license fees as well as road tax are expected to increase substantially in the coming year consistent with Government’s plans to boost non-tax revenues on essential services. Last year the increases on revenue measures were mainly from immigration fees for non-Gambians plus environmental taxes on tobacco products.

Also, a revision was made on duty-waiver application fees. Despite all the revenue measures taken in 2023, the deficit stubbornly refused to disappear and is now increased from D3.9 billion in 2023 to D4.5 billion in 2024. What is this telling us?

It means that the economic trajectory of the government is not on course and we are not getting the right results. As a matter of fact, plans to contain the fiscal deficit must include measures to tackle wasteful spending on discretionary expenditures and overseas travels.

Despite the recent introduction of a travel ban, the Government is shamelessly going to spend close to D450 million on international travels and seminars in 2024 without due regard to the huge increases in the rising debt levels of the country. This does not augur well for a country trying to curtail years of fiscal profligacy and economic mismanagement.

The increase in the public debt amounting to more than 81 percent of GDP in 2023 has become worrisome as a significant part of these debts relates to public entities such as NAWEC, GAMTEL and GCCA for which the Government has undertaken to settle fully as the guarantor for these loans.

It sounds incredulous that government has taken total responsibility to service the debts of the energy and telecommunication companies who have yet to contribute anything to the national budget not to mention paying out the required dividend to the Government.

Without doubt, the greatest expectations from this year’s budget concern improving the affordability of essential services from NAWEC having just increased electricity charges by over 30 percent this year. Many were hoping that with these painful increments we will soon start getting better value-for-money from the services of the nation’s electricity and water supplier. But are we?

Power outages, water shortages, depleted road networks, and aging telecommunications infrastructure continue to have a negative impact on the economy. Lowering the taxes that ordinary people have to pay that could ease the difficult economic circumstances for the public, should be the main concern of the government.

Within the past months, the dalasi has depreciated remarkably against major international currencies including the dollar and CFA with the resultant effect on the impacting prices of essential commodities. Inflation has now reached 18%, a record in the economic history of the country while interest rates, the price we pay for borrowing from the banks, are at all time high and will continue to rise given the recent increases in the central bank policy rate now set at seventeen percent.

The economic outlook for the country in the medium term lacks the necessary preconditions for sustainable economic development. Efficient tax mobilization, ineffective reform strategies to increase the fiscal space which could minimize the heavy reliance on donor support plus the lack of coherent economic policies and programs to assist in the development process of the country for the attainment of the NDP goals are all proving to be elusive.

Even the euphemism that surrounded the recycling agreement of the Senegambia bridge is beginning to wane. During the year, toll fees were introduced at the Basse Bridge. Similarly, it would not be an exaggeration to predict with reasonable accuracy that the Bertil Harding highway when completed will be transformed as a suitable candidate for asset recycling. The question needed to asked: why the proceeds from the sale of the Senegambia bridge failed to impact positively the fiscal deficit?

We are now facing the reality of a stressful year where every Gambian is forced to struggle to make ends meet whilst those who are supposed to better the lives and livelihoods of the people are busy travelling expensively on business class, augmenting their statutory salaries and allowances with travel per diems and kickbacks.

If it was not for those Gambians in the diaspora making stupendous contributions in remittances to help their family members and friends back home, the poverty levels would have been alarming.

How the growing economic deprivations of the ordinary Gambians failed to be addressed sufficiently in the controversial 2024 draft budget remains unanswered? Touching the budget estimates for those untouchable independent entities such as the Ombudsman, NAO, the National Assembly and the IEC is unconstitutional.

It is an undeniable truism that the Government of Adama Barrow and his finance minister will continue to rely heavily on the commercial banks to finance the budget deficit ad infinitum.  

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