By Omar Bah
The team leader of the International Monetary Fund visiting assessment team to Banjul, Jaroslaw Wieczorek has said that The Gambia should henceforth hold back from borrowing externally.
He said what Gambia need in the meantime is a very sound debt management system or policy.
“IMF view is that with the debt of 130% of GDP, ideally the country should refrain from any borrowing externally and domestically. It should reduce its total of the existing bonds to stabilize the economy to reduce the level of uncertainty,” he told journalists at an IMF-Ministry of Finance joint press conference yesterday.
He said the country’s debt vulnerabilities remain high “and ensuring debt sustainability will require firm fiscal discipline, the mobilization of sizable and sustained external grant support, and strictly limiting reliance on external borrowing, even on concessional terms.”
“The Gambia’s debt stock has risen further to about 130 percent of GDP at end-2017 (of which more than half is owed to external creditors) mainly due to legacy issues, including faster disbursements of previously contracted loans and the recognition of external arrears incurred by the former administration, and government’s assumption of State-Owned Enterprises (SOEs) liabilities,” he said.
To remedy the situation, he said, they have agreed with their Gambian counterparts for the government to produce a plan to deal with these liabilities and produce a national wellbeing plan of financing mostly little grants.
“And if grants cannot be found…we just pretend and understand that Gambia would seek loans with concessionality of 50% grant level higher giving its high rates of debts rate. Because there is a standard reasonable policy and if we go to the ECF, we would have to agree on an additional limit on the actual amount of borrowing even as concessional as bad as that,” he explained.
The private sector, he added, is key to achieving sustained growth and job creation. “Efforts are needed to leverage the restoration of investor confidence and pave the way for enhanced private sector participation, including by improving the business regulatory environment,” he said.
Read page 14 for the full IMF assessment report.