By Tabora Bojang
The Ministry of Finance has explained that the $19.6 million arrears it paid to Turkish Electricity Company, Karpower following the expiration of its contract, was borrowed to the government by the Central Bank of The Gambia.
Controversy and a certain misunderstanding on the reported arrears erupted after Finance Minister Seedy Keita disclosed to lawmakers last week that The Gambia government is about to receive US$45 million in budget support from the World Bank part of which ( US$19.6 million) will be used to pay off the Karpower arrears, only for the Turkish Embassy and Karpower itself to claim that it does not have any arrears with the government .
This clarification forced the Ministry of Finance to further explain that “Karpowership was fully paid earlier this year through an advance payment made by the Government of The Gambia, on the understanding that, once the World Bank disburses the approved US$45 million, the government will be reimbursed for the Karpower arrears already settled.”
Yesterday, the Ministry published on its Facebook a memorandum of understanding between the Ministry of Finance and Central Bank of The Gambia for the apex bank to lend US$19.412,661 million to the government to enable it “settle outstanding arrears to Karpowership.”
According to the agreement, CBG shall borrow US$19,412,661 to the government and that CBG shall debit the principal amount and accrued interest once the World Bank budget support is received without recourse to a separate authority from the Accountant General.
It further states that in the event of a delay or non-receipt of the World Bank budget support by end of 2025, the CBG shall not extend any further advance to the government until the facility is fully repaid.
According to the Ministry, the agreement was made in consultation with the International Monetary Fund (IMF) in order to address an “immediate financing gap” and that the facility was provided at a market rate interest rate in accordance with the CBG Act 2018 and the terms of the IMF supported Extended Credit Facility ECF program.
