Washington, DC: A team from the International Monetary Fund (IMF), led by Mr. Ivohasina Fizara Razafimahefa, Mission Chief for The Gambia, held discussions with the Gambian authorities during September 21–October 4, 2022, on the fifth review of The Gambia’s economic program supported by the IMF’s Extended Credit Facility (ECF) arrangement.
At the conclusion of the mission, Mr. Razafimahefa issued the following statement:
“The mission team reached staff-level agreement with the authorities on the economic and financial policies that could support the IMF Executive Board’s completion of the fifth review under the ECF arrangement. Despite the challenges caused by the repercussions of the war in Ukraine and the lingering effects of the COVID-19 pandemic, all quantitative performance criteria and three out of four indicative targets at end-June 2022 were met. Structural reforms are also advancing. The IMF Executive Board’s consideration of the staff report on the review is tentatively scheduled for December 2022. Upon the Board’s approval, SDR 5 million (equivalent to about US$[6.4] million) will be made available to The Gambia.
“Owing to the repercussions of the war in Ukraine and the lingering effects of the COVID-19 pandemic, GDP is forecast to grow by 4.5 percent in 2022, a downward revision from the 5.6 percent forecast at the time of the 4th ECF review. Nonetheless, some sectors, including tourism, construction and agriculture, have shown positive signs. The inflation rate entered two-digits territory in April 2022 and reached 12.9 percent in August 2022, mainly driven by global high food and energy prices induced by the war in Ukraine, combined with supply chain disruptions and high freight costs.
“The authorities are taking measures to address the implications of the multiple and large exogenous shocks. Revenue collection on fuel products was reduced to contain domestic fuel price increases. Improved collection of non-oil related taxes and prudent budget execution helped contain the overall fiscal balance at 2.4 percent of GDP at end-June 2022. Nonetheless, pressures have intensified, and some budgetary slippages were noted at end-September 2022. To tame inflation and anchor inflation expectations, the Central Bank increased the policy rate twice by a total of 2 percentage points, bringing the rate to 12 percent. The monetary policy stance will be tightened further, as needed to contain inflation. To address foreign exchange market pressures, the CBG will henceforth ensure a smooth functioning of the forex market, and the exchange rate policy will aim at restoring the equilibrium between supply and demand.
“The Gambian authorities continue to fulfill their commitments to transparency requirements for COVID-19-related spending. They resumed the reporting of COVID-19 spending in the monthly budget execution report. The National Audit Office (NAO) will soon complete the second phase of an ex-post audit of the COVID-19-related spending. Good progress has also been made on revenue administration and public financial management, including the digitalization of tax collection systems, and budget and debt management processes.
“Going forward, economic growth is expected at 6 percent in 2023 and 6.5 percent in 2024. These projections are predicated on a dissipation of commodity price shocks, a non-occurrence of an abrupt global slowdown or recession, full recovery of the tourism sector, and continued good performance of private construction and agriculture. Risks to the outlook are tilted to the downside, including the uncertainty about the war in Ukraine, the path of the COVID-19 pandemic, and the vagaries of climate change, which pose significant threats to the economy.
“The mission team met with [His Excellency Adama Barrow, President of The Republic of The Gambia] and His Excellency Badara Alieu Joof, Vice President of The Republic of The Gambia; and held discussions with Minister of Finance and Economic Affairs, Seedy Keita; Minister of Tourism, Hamat Bah; Minister of Transport Works and Infrastructure, Ebrima Sillah; Minister of Agriculture, Demba Sabally; Governor of the Central Bank of The Gambia, Buah Saidy; senior government and central bank officials.
The mission team also had fruitful discussions with representatives of the private sector, civil society, and development partners. The mission team would like to thank the Gambian authorities for the constructive discussions and the good collaboration.”
The Extended Credit Facility (ECF) provides financial assistance to countries with protracted balance of payments problems. It supports countries’ economic programs aimed at moving toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. The ECF may also help catalyze additional foreign aid.