By Tabora Bojang
Patrick Gitton, the IMF Country Representative in The Gambia has said there are at least 20 countries in Sub-Saharan Africa including The Gambia that are either at debt distress or at high risk of debt distress in 2025.
Speaking at the launching of IMF’s Regional Economic Outlook (REO) for Sub-Saharan Africa Fall 2025 yesterday, Mr Gitton reported that although The Gambia witnessed a high GDP growth surpassing regional average and supported by construction, tourism and agriculture, there remain key vulnerabilities including high public debt and debt service burden.
“Fiscal fragility has been a key vulnerability for much of the region especially for low income countries. The average public debt ratio for Gambia is around 75 percent of the GDP which is sustainable but the debt service burden is very heavy for Gambia in terms of interest payment to fiscal revenue,” the IMF Country Rep noted.
Sub Saharan Africa, according to him, is penalised more than other regions when it comes to debt service. This, he added is crowding out priority development expenditure for the Gambia as 20 percent of the country’s revenue is primarily consumed by the service of debt.
Gitton further noted that relative weakening of the dollar normally should be easing the debt for countries that borrowed a lot in dollars but in actual fact it provides very limited relief. “Our studies show that 5 percent depreciation of the US dollar reduces debt levels in most countries by no more than 1.5 percent.”
The IMF chief also warned against high domestic borrowing to fund capital or other programmes. “For Gambia, about one-third of public debt is domestic, so the shift towards new domestic financing creates some new risks which may constrain growth to the private sector and heightened macro financial vulnerability,” he warned.
Bernard Mendy, an economist at the IMF resident Office in The Gambia, said the IMF is recommending to authorities to continue to safeguard and strengthen the independence of the Central Bank especially in the face of commodity price shocks, shallow financial markets and pressures relating to the electoral cycle.
“Constrains in external financing as well as the high debt burdens and also the pressing spending even calls for more domestic revenue mobilisation efforts with a view to restoring the required fiscal buffers as well as supporting development. “This would require tackling the issue from both the tax administration and the tax policy. Countries in the region have taken significant steps in this direction. There has been significant improvement in domestic revenue mobilisation evidenced by an increase in tax revenue to the GDP ratio. However, the Gambia is significantly lagging behind the regional average in terms of its domestic revenue mobilisation,” Mendy noted.
