A slowdown in economic activity caused by the Coronavirus outbreak and a sustained closure of the country’s air space and borders are expected to account to a contraction this year.
Recent twitter postings show the International Monetary Fund (IMF) boss, Kristalina Georgieva, interface with various world leaders seeking bailout draws, or just about enough breathing space in debt repayment regime – alas focus soon turned closer to home.
The issues with Gambia’s debt trap are extremely complex, evidenced by poorly financed agreements. Try to ask any Gambian on the high street about the debt situation and gauge their reactions: I assure you few will have understood, or aware of the extreme burdens it places on effective governance.
As it stands, the country pays a truck load of cash on the principal loan contracted over the past many years under Jammeh, as well as the current administration. Monthly repayments total as much as D500,000,000 ($10,000,000)in interest servicing alone.
While the finance minister would boast that monthly collections at the port outstrip debt repayment regime, these valuable assets could have otherwise used to rebuild the country’s vast crumbling infrastructure, dilapidated public structures, libraries and cleaner streets. The imposed repayment framework signed under clouds of darkness then sold to the population as gold dust is indefensible –reprehensible indeed.
The IMF announced that it will offer up to $50bn in emerging financing for countries stricken by the coronavirus outbreak. In a statement, it says:
The IMF is making available about $50 billion through its rapid-disbursing emergency financing facilities for low income and emerging market countries … of which $10 billion is available at zero interest for the poorest members through the Rapid Credit Facility.
I urge the administration to sort access to the latter at zero interest conditional to favourable terms with the current debt portfolio.
The cash could be used to shore up the economy protect local businesses from collapse, saving jobs. It is understood the administration already has put aside D500 million in Corona fight. That is admirable – but is it resolved to explain to parliament (and public) how that extra cash came about?
It is worth remembering that former president Jammeh seized power at a time of a strong dalasi, low inflation, low debt economy fromthe fiscally considerate Jawara government. That regime then succeeded in destroying fiscal discipline in place against no-frills spending spree – invitation to predatory loan sharks.
President Barrow, to his credit, inherited a rigged economy with GDP/debt ratio of some 107%. But lack of fiscal maturity has seen the administration shoot the deficit cliff wide open to a whopping 120% GDP. The disaster, in my view, was the failure to map out a vision to reshape economic revival post-dictatorship. Then step in Mambury Njie, an appointment I’d cheered on account of technocratic baggage. Yes, inflation was brought undercheck, economic growth all but steady. Of late however, the minister appears to prove his detractors right who protested his appointment. He needs to wean off the Gambia from debt addiction – and for parliament to mobilise on “debt ceiling” legislation, as argued by the economist, Nyang Njie.
I will say this: GDP growth rate projected for 2020 is obsolete therefore needs to be revised. For a start, Gambia is not a manufacturing nation nor an export oriented economy to mitigate balance of payment deficit. The country is stuck poor with a sizeable trade imbalance to Senegal, China, India, and every other country it does commerce. That cannot be right, not sustainable either – concern the minister of trade has failed to address!
The administration should take its case to the IMF and World Bank demand incapable of fulfilling terms of the loan. I recognise excellent efforts by the Commonwealth helping the finance ministry to better coordinate the vast expansive cadre of loan sharks. The technical component and skills transfer will be of tremendous value long term if standards are maintained in line with procedures.
The financial year 2020, the country will pay in excess of D4 billion in debt repayment. Given the high rate of poverty and unemployment, having that money – sustainable and accountable – invest incommercial rice value chain, surely, will redress lots of ills in society. While one admits not versed in economic reading or technicalities of the sort, events on the ground and common sense inform this argument. For God’s sake here is a country which a river runs through it, blessed with fresh water lakes yet successive gov’ts cannot designate all year round mechanised commercial farm ventures. What upsets most is see the country reduced to a beggar nation. That, I have a fundamental issue with. The leadership must address the rate of poverty in the country, uphold rule of law and ethics in governance.
A concerned citizen