By Mohammed Jallow
After doing a review of the 2026 budget it’s clear that, The Republic of The Gambia faces a delicate fiscal juncture. While macroeconomic growth prospects have improved, debt levels remain high, with public debt continuing to absorb a significant portion of fiscal resources and posing risks to developmental spending and economic stability. A sizeable portion of this debt is owed under arrangements with the International Monetary Fund (IMF) notably through the Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF). Without a calibrated approach, servicing these obligations could increasingly crowd out essential expenditure, undermining long-term growth goals articulated in the 2026 national budget.
This analysis consolidates public debt figures, situates The Gambia’s liabilities vis-à-vis IMF exposure, compares our debt profile with regional peers, and outlines practical recommendations that balance debt service requirements against economic realities, fiscal financing constraints, and commitments to inclusive development.
1. The Gambia’s public debt and IMF loan position: Facts and figures
Public debt overview
The Gambia’s total public debt to GDP was about 73.5% by end-2024. External debt accounted for about 47% of GDP, with the remainder being domestic obligations. External debt service obligations (principal and interest) between 2025 and 2031 are projected at US$744.0 million. Of this, approximately US$633.4 million represents amortisation, and US$110.6 million represents interest.
External creditors include multilateral institutions (~67%), bilateral lenders (~31%) and commercial creditors (~2%). IMF and multilateral development banks constitute around 28% of public external debt.
Although some external arrears exist (e.g., owed to Libya and Venezuela), these represent a small fraction (about 0.9% of GDP) and are subject to ongoing discussion and negotiation.
World Bank analysis notes debt service absorbs roughly 6.5% of GDP, and debt service could reduce economic growth by about 1.2 percentage points between 2025–28 due to tighter fiscal space.
IMF arrangements and disbursements
Under the Extended Credit Facility (ECF) (approved January 2024), The Gambia has accessed around SDR49.75 million (≈US$68 million) following multiple reviews, including the completion of the Fourth Review, enabling further disbursements.
Under the Resilience and Sustainability Facility (RSF) (approved June 2025), approximately SDR15.54 million (US$21.24 million) was disbursed to support climate resilience and macro stability.
New or additional commitments reported indicate that The Gambia has unlocked access to approximately US$80.5 million in IMF resources during 2025 through combined arrangements.
Debt service and revenue pressures
IMF and World Bank data indicate that about 27% of Gambian tax revenue is allocated to debt payments (interest and principal), a significant drain on fiscal resources that would otherwise support health, education, or infrastructure.
The government estimates a significant share of future budgets will be committed to debt servicing, obligating careful fiscal planning in the 2026 Budget cycle.
2. Macroeconomic context: Gambia’s growth, budget priorities and vulnerabilities
Positive developments
Despite debt pressures, The Gambia’s economic outlook has shown resilience, with projected GDP growth remaining robust at around 5.7–6% in 2025 supported by tourism, agriculture, and construction.
Fiscal reforms under IMF programs have supported stronger revenue mobilisation and policy discipline, enabling continued access to IMF financing.
Fiscal and structural vulnerabilities
Debt service absorbs a sizeable portion of public spending, estimated at around 29% of the national budget for 2025 well above the government’s own forecast of 20.8%.
External debt dominance exposes The Gambia to currency and global financing risks, including interest rate volatility and exchange rate pressures.
Limited domestic revenue collection capacity and bounds on fiscal space constrain the government’s ability to both service debt and finance vital public investment.
3. Sub-Regional comparison: The Gambia and other African economies
In evaluating The Gambia’s situation, it is useful to benchmark our debt performance with other African economies:
Debt levels
The Gambia’s public debt is high for a low-income country (~73.5% of GDP).
Senegal, a West African neighbour, has reported significantly higher debt burdens estimated at over 119–132% of GDP, most recently due to revelations of previously hidden debt, which has complicated ongoing IMF negotiations.
Nigeria’s debt-to-GDP ratio is significantly lower, around 38–55%, reflecting a mix of oil revenues and relatively stronger domestic revenue bases.
By comparison, Sub-Saharan Africa’s average government debt stands around 58–60% of GDP, though significant variation exists across countries.
IMF exposure
Countries with larger economies often have elevated absolute IMF exposure but benefit from deeper capital markets and institutional capacity to manage refinancing risks. The Gambia’s reliance on IMF support especially for structural reforms and balance of payments support indicates continued vulnerability without diversification of financing sources.
4. Strategic recommendations for The Gambia
To address the IMF obligations and public debt challenges in a sustainable, non-disruptive manner, the Government of The Gambia should consider the following strategic, phased, and evidence-based policy actions:
A. Strengthen domestic revenue mobilisation
Rationale: Increasing domestic revenue redces reliance on external borrowing, frees up fiscal space for priority public investment, and improves the debt servicing profile.
Actions:
1. Enhance tax compliance and broaden the tax base through digitalisation of tax administration and targeted audits.
2. Progressive reform of tax incentives to reduce revenue loss from exemptions, especially where they do not demonstrably attract investment.
3. Improve collection of property, consumption, and excise taxes while protecting the vulnerable via targeted social programs.
Expected Outcome: By raising the revenue-to-GDP ratio, the budget’s flexibility improves, enabling more resources to be allocated toward productive sectors without jeopardising debt obligations.
B. Optimise debt portfolio and reduce cost of borrowing
Rationale: The current balance of concessional, semi-concessional, and commercial debt requires optimisation to lower interest costs and extend maturities where possible.
Actions:
1. Renegotiate existing high-cost obligations with bilateral partners, multilateral institutions, and private creditors to smooth repayment schedules.
2. Explore blended finance mechanisms with development partners targeting specific sectors (e.g., agriculture, climate adaptation) that can leverage concessional funding while reducing reliance on commercial borrowing.
3. Continue engagement with the IMF and World Bank to align debt sustainability analyses with medium-term economic planning.
Expected Outcome: Lower interest costs over time and more predictable repayment profiles that reduce shock vulnerability.
C. Integrate growth-oriented fiscal policy with debt strategy
Rationale: A balanced approach ensures that fiscal discipline does not undermine growth drivers critical to expanding the tax base and employment.
Actions:
1. Prioritise high-impact public investment (e.g., agriculture productivity, tourism infrastructure, digital infrastructure) that bolsters growth and trade performance.
2. Adopt counter-cyclical spending where feasible, maintaining essential public investment during downturns while protecting debt sustainability targets.
3.
Expected Outcome: Enhanced growth improves the government’s capacity to service debt while fostering broader economic development.
D. Leverage climate and resilience financing
Rationale: Climate risks pose significant economic threats. Financing targeted at climate adaptation (e.g., RSF resources) should reduce the need for future emergency borrowing.
Actions:
1. Fully utilise RSF arrangements for resilience building and green investments.
2. Partner with climate finance institutions (e.g., GCF, AfDB) to unlock concessional resources outside traditional commercial debt.
Expected Outcome: Climate resilience reduces fiscal volatility and strengthens long-term growth prospects
E. Institutionalise transparent debt management frameworks
Rationale: Strong institutions that systematically track, report, and evaluate debt enhance credibility with international partners and improve negotiation leverage.
Actions:
1. Publish regular debt sustainability reports with clear methodology aligned with IMF/WB frameworks.
2. Strengthen legal frameworks for borrowing, including parliamentary oversight and public disclosure standards.
Expected Outcome: Enhanced investor confidence and stronger negotiating position with creditors and rating agencies.
5. Conclusion and call to collective action
The Gambia stands at a critical crossroads. While the commitment to fiscal discipline under IMF programmes has provided a platform for macroeconomic stability, the burden of debt service and the allocation of limited fiscal resources toward external obligations require urgent, strategic, and carefully sequenced actions.
The 2026 Budget presents an opportunity not merely to service debt obligations, but to pivot toward sustainable growth, build domestic revenue capacity, and optimise the debt portfolio in ways that accelerate development outcomes without undermining economic momentum.
With political will, institutional reforms, and strategic engagement with development partners including IMF leadership, The Gambia can navigate this period of fiscal constraint while safeguarding essential public investments, protecting vulnerable populations, and maintaining macroeconomic stability.
This is not a dilemma to be solved overnight, but through smart sequencing, pragmatic policy choices, and unrelenting commitment to long-term resilience.
