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Friday, July 12, 2024

Despite gains, Gambia still in debt-distressed — IMF

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By Alagie Manneh

Despite making “big gains” in addressing its public debt vulnerabilities, The Gambia still remains a debt-distressed country, according to the IMF resident representative.
The country’s debt is equivalent to some 130% of its GDP.
And Ruby Randall said in a presentation yesterday that public debt ratios in The Gambia and sub-Saharan Africa, are on a ‘steady rise’.

“Many of you know about the debt situation in The Gambia and that The Gambia is very much an outlier. The Gambia reached its Highly Indebted Poor Countries (HIPC) completion point in 2007 and you see the dramatic drop in the debt to GDP ratio. But what we have seen is that overtime, this debt to GDP ratio is rising and is now almost on par with pre-HIPC levels. So this is very concerning, but as most of you know, this is a legacy problem. It was inherited by the current administration but it is an issue that the current administration is grappling with and has put forward a strategy for addressing the country’s debt vulnerabilities.”
Ms Randall was speaking at an outlook forum designed to present the April 2018 report of the Regional Economic Outlook (REO) for sub-Saharan Africa, organised by the IMF.

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The REO is the flagship publication of the IMFs African department, which provides an analysis of cross-country and discuss recent economic developments and the outlook for countries in this region.
She said: “In The Gambia, as an outlier, the interest payments as a percentage of domestic revenues went from about 22% in 2011 all the way to an average of about 47% between 2016 and 2017. This is important because it means that debt service is crowding out other priority expenditures, propose spending, priority investment spending and the like, underscoring the importance of addressing these debt vulnerabilities.

“The current administration is very much engaged in this effort. So, this rising debt levels actually mean that about 40% of sub-Saharan African low-income countries are either at a high risk of debt distress or already in debt distress, which means they are unable to service their external debts. So, this is worrisome.”
However, she paid tribute to efforts by the government to address these developments.

“[The Gambia] put together this multi-prong strategy to restore and maintain debt sustainability. This is comprised of reaching out to all of its creditors and requesting debt relief and debt restructuring. And the authorities have already achieved some big gains in this area. China has forgiven all of The Gambia’s debt, and the Saudi fund, extended the grace period and debt maturity of the debts that are old to the Saudi fund.”
The permanent secretary at the Ministry of Finance, Lamin Camara, accepted that the country’s debt is “very high.”

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“If you look at our debt situation, the ratio, it almost doubled the highest country in Africa, which is around 60%. This is really huge,” he said.

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