The reason for our underdevelopment as a country is not lack of resources, or lack of human capital or peace but purely due to the level of fiscal indiscipline of the three successive governments.
If a government cannot strike a balance between how much it receives and how much it spends then it is faced with two scenarios, that is, it will either have its receipts more than expenditure or expenditure more than receipts. In our own case it has been unfortunately the later, a government that is unable to maintain fiscal discipline will have to borrow funds or incur deficit financing from central bank or other multinational partners.
This piles up the debt burden of the country as can be seen by our GDP debt ratio which recently stands at 130 per cent of GDP of which domestic debt accounts for 41.9 per cent, the debt ratio is as a result of deviation from path of fiscal discipline and non-adherence to the principles of prudent debt management.
There has been an ever-increasing rise in nonproductive expenditure by government since independence and the menace of corruption in major projects, and these contributes to the ever-increasing debt burden.
Our updated debt sustainability analysis has indicated that the country is in external debt distress and our public debt also unsustainable, with both external and domestic debt very high, a good chunk of the already contracted loan pose a risk to solvency. Almost 80 percent of revenue generated by the government would go towards debt financing crowding out investment in key socio-economic sectors such as health, education, and infrastructure development unless the government resurrects it debts.
Recently, the government appointed Potomac Group to develop and implement a strategy to sustain the country’s external debt on a sustainable path, this decision in my opinion is superficial and a complete waste of resource if one may ask me because we know our problems, they are domestic and the solutions to them are also domestic in nature.
We must use the right formula in solving our quadratic Gambian problem. We must deal with the level of wastefulness in government expenditure.
The earlier we stop the tradition of supplementary budget allocations, cut down unnecessary travel, buying of high capacity sport utility vehicle, funding of kafolu that align themselves with the political agenda of the incumbent, the better and more prudent we will be our quest to strike the required balance between our revenue and expenditure.
This wasteful tendency is what is contributing to the recent donor fatigue by donor partners and a setback to the National Development Plan as funds have not been forthcoming recently.
This presents a funding gap because the government has no contingency against this unforeseen predicament.
In order to command confidence in our governance process, we must commit to the reform agenda for state owned enterprises, lower our domestic borrowing and commit ourselves to administrative austerity measures to reduce our deficit. Overall, our policies must put emphases on efficiency in service delivery using limited government resources.
It is not bad to contract loans, but how you manage the loaned fund is very important. If the government spends loans on the fundamentals of the economy and reduce nonproductive expenditure, we will not only be able to meet our liability obligations but also develop faster than we could imagine.
Previous governments and the current one have all aligned themselves with the belief that without external funding, the country cannot develop, and this notion of dependence is what is derailing our progress as a nation.
We must mobilise resources internally, and do away with the dependency syndrome. I know we live in a global village and we cannot be an island unto ourselves, but we must not look for solutions elsewhere for our internally generated and manmade problems.
The country is blessed with a young population and natural resources that have not been fully optimised by Gambians.
We have 500,000 acres of an arable, fertile land, with abundant sun all year round, the River Gambia for fishing, transport and other recreational uses.
Investment in agriculture which employs 70 per cent of the workforce is imperative in order to boost export and reduce import especially with regard to the stable foods which constitute a significant proportion of import.
This would reduce unemployment, increase productivity; increase output and spur economic development.
We must spend and spend judiciously, manage our debt well and look within to mobilise resources for our development if we are to breakaway from poverty and underdevelopment.
School of Business and Public Administration
University of The Gambia