The International Monetary Fund, IMF Resident Representative Mamadou Dioulde Barry has ended his tour of duty in the country and heading back to headquarters. Mr Barry served in The Gambia since August 2019 at a time when the country faced a difficult economic and financial situation caused by 22 years of isolation during the Jammeh dictatorship.
Yesterday, Mr Barry was accorded an official sending off reception by the IMF office at Tamala Hotel attended by the IMF staff, government officials, donor community members, the private sector and a cross-section of people from Gambian and the international community resident in the country.
As he prepares to leave for Washington, Mr Barry was approached by The Standard to reflect on his work and the relations between the IMF and The Gambia in the last four years.
The Gambia emerged from a difficult period of economic stagnation from autocratic rule in 2017 to a new era or what was hoped to be one, how has the IMF helped in getting the country recover economically?
Barry: While the IMF has always stood by The Gambia and its people, the unprecedented change in economic and social management of the country in 2017 provided an opportunity to strengthen the IMF relation with The Gambia.
As a development partner who understood the dire macroeconomic situation at the time, the IMF came strongly to support The Gambia in providing policy advice, financing, and capacity building. The IMF was among the first donor to provide financial support to the authorities under its Rapid Credit Facility to the tune of US$16 million, to address immediate financing needs, limit excessive borrowing, and support the country’s international reserves.
The IMF management approved a Staff-Monitored Programme (SPM) to build a track record for sound policy implementation and catalyses further donor financing support to pave the way for a future programme engagement with the IMF.
Key areas of the IMF supported reforms during the SMP which led to record growth of more than 6 percent in 2018-2019 included:
o the preparation of the 2018-2022 National Development Plan,
o the negotiation of debt deferral to restore debt sustainability required for a strong donor engagement.
o The SOEs audits to set the basis for the ongoing comprehensive SOEs reform.
o Strong TA and capacity development support, which place Gambia among the largest receivers of IMF’s capacity development support
o Another notable fact is the visit for the first time of an IMF deputy managing Director, Tao Jang, in early 2019. The visit sent a strong signal of the IMF’s resolve to support The Gambia and called for other development partners to support the new Gambia agenda.
o Given all these interventions and the strong government commitment, a three-year programme supported by the ECF was approved by the IMF board in March 2020 to support the country navigate through the multiple shocks of COVID-19, the Russia war in Ukraine, and climate.
Numerous IMF interventions for example injection of budgetary support has been reported in the last few years of the programme with Gambia. Why was this necessary?
Barry: For clarity, the IMF does not often engage directly in budget support as a funding mechanism but rather assists countries to address balance of payment challenges. Notwithstanding, given the fiscal need to address the impact of the pandemic and the cost-of-living crisis, multiple recent IMF financing to The Gambia were on-lent to the budget.
Since 2020, the IMF has provided about US$ 211 million to The Gambia with US$ 101 million allocated to the budget to support key reforms and government priorities in building resilience, boosting inclusive growth, and providing social support. This included:
o US$21 million disbursement under the RCF fully on lent
o US $94million disbursement under the ECF with US$ 70million on-lent to the Budget.
o US$85 million from the 2021IMF’sgeneral SDR allocation; US$ 20 million on-lent to the budget.
o US $11 million debt service cancellation under the CCRT covering April 2020 and April 2022, which was entirely used by the budget.
o These measures were instrumental in enabling government to meet its priority spending, especially in critical areas such as health, education, roads, and social support.
Since the IMF monitors a country’s financial discipline and discourages borrowing, how come The Gambia’s debt continues to grow?
Barry: The IMF’s role as you have mentioned, is advisory. Thus, the decision to contract, or not to contract debt is a sovereign decision. However, based on the prevailing circumstances, we advise being cautious while taking additional debt based on the following:
o high debt vulnerabilities materialised by high level of debt to GDP ratio or high-level of debt service to revenue or export ratios.
o Weak capacity to prepare and implement projects.
o Limited tools, capacity, and policies for proper debt management
o Let me quickly add that The Cambia debt ratio to GDP remains about the same at 63 percent of GDP between 2019 and 2023, despite the need for the country to respond to the multiple shocks caused by the Covid-19 pandemic and the spillovers of the Russia war in Ukraine, to protect the most vulnerable and mitigate the impacts of these shocks on the economy.
o Additionally, The Gambia is suffering from legacy debt, inherited from several years of economic mismanagement and lack of donor support. Maintaining debt sustainability will require fiscal consolidation through strong domestic revenue mobilisation, a key objective of the Minister of Finance, and boosting spending efficiency.
The inflation rate in The Gambia has grown significantly in the last few years; what has the IMF done to ensure the country control its inflation, especially food, energy, and fuel prices?
Barry: First, we need to understand that the recent price hike is a global phenomenon, which did not spare The Gambia. While inflation is at a record level in The Gambia it remains moderate compared to peer countries. The sources of inflation can be categorised into two factors:
External factors: As a net importer, The Gambia suffered from the increase in commodity prices particularly food and fuel caused by trade disruptions and the Russia war in Ukraine. It also suffered from the strengthening of the US dollar following the increase of the interest rate by the FED, causing the dalasi to depreciate.
Domestic factors: The country is affected by the structural bottlenecks at the Banjul port and strong domestic demand fuelled by large remittances and public consumption.
Regarding what the IMF has been doing, we maintain a close dialogue with authorities on various issues including inflation and exchange rate management. I would like to commend the Central Bank for the steps taken to fight inflation by increasing its policy rate by 600 basis points to 16 percent since May 2022. This is expected to tame inflation and help anchor inflation expectations, which are fundamental in the fight against inflation. The Central Bank also welcomed an IMF TA mission on FX management, and we are working closely with them for the implementation of the mission’s recommendations.
We are providing extensive capacity building in revenue mobilisation and expenditure management to build buffers. We are also coordinating with other development partners to support the port extension, the completion of which will boost productivity and reduce cost.
The Gambia Government recently announced the country has graduated from the IMF Programme, what does this mean?
Barry: Let me take this opportunity to congratulate and extend my profound gratitude to His Excellency President Adama Barrow and his government especially his economic management team and the Gambian population for the sustained efforts that have led to the successful completion of the three-year IMF programme under the EFC arrangement.
It took an extraordinary effort and commitment to maintain programme performance despite multiple shocks: the Covid-19 pandemic, the war in Ukraine, and several climatic shocks.
The ECF programme was instrumental in providing the fiscal space to respond to multiple shocks, shielding the most vulnerable population while preserving macroeconomic stability. It helped build capacity in conducting economic policy and supported serval reforms in the areas of public procurement, project selection, revenue mobilization, SOEs management and Central Bank governance and banking supervision.
Regarding your question I would use the term completion of the programme instead of graduation from the programme. This means that the programme period has elapsed and that all six reviews agreed under the programme are completed and the corresponding disbursement made (about US$ 96.5 million). The government has requested a new programme, which we are strongly willing to support to sustain the reform momentum, reduce debt vulnerabilities, consolidate macroeconomic stability and private sector-led growth to reduce poverty.
Could you tell us as IMF country Rep, what has relations with The Gambia been over the last seven years? And how has the IMF helped in economic stability and reduction of poverty in the country?
Barry: The relationship has been quite cordial, culminating in a series of technical and financial support for the country. We have conducted more than 100 technical assistance missions of various types to the country between February 2018 and now, with at some point three resident experts on the ground. My office and the IMF teams visiting The Gambia had a series of engagements with Gambian authorities, the private sector, and civil society to exchange views, provide economic updates, and explain the benefit of economic reforms. These engagements were overwhelmingly enriching and contributed to advancing reforms.
The unprecedented IMF financing flows received in recent years, combined with the catalytical budget support received from traditional partners, helped maintain resilience in The Gambia, double the level of reserves between 2019 and 2022, reduce pressure on domestic borrowing, and protect the vulnerable population to recover some of the poverty reduction gains lost during the pandemic. Growth in the Gambia remained stronger than in peer countries, averaging 3.6 percent during 2020-22 compared to 2.3 percent for SSA countries and remittances were above US$700 million in 2021 and 2022 thanks to renewed confidence in government policies supported by the IMF programme.
I have also had excellent relations with people outside my work circle including the women activists, farmer association in Basse, and vibrant private sector and youth leaders. The Smiling Coast, with its beautiful coast line and riverbank, will remain part of me forever.