By Aji Fatou Faal
The Minister of Finance and Economic Affairs has revealed that the new government inherited a debt burden of over D56.5 billion (120 percent of GDP).
Amadou Sanneh made this disclosure last Friday while delivering the 2018 budget speech before the National Assembly Members in Banjul.
He noted that this huge debt would put immense pressure on government’s capacity to finance its developing agenda for years to come, and at a time when they face pressing development needs and strong expectations for improved livelihoods and lives from Gambians.
The Minister said 2017 has been a very challenging period for the Gambian economy. “With the election of Adama Barrow has heralded the beginning of concerted efforts to unwind a legacy of grave economic mismanagement and restore good economic governance, reverse the stagnation of living standards, symptomized by poverty levels that have been stuck at 48 percent for decade, and to stem the sharply deteriorating performance of the economy in more recent times,” he said.
He informed members that the government’s fiscal consolidation and reforms are already yielding results while adding that the government’s net borrowing requirement has declined sharply from 12 percent of GDP in 2016 to a projected 1 percent of GDP in 2017. “We have slowed down the rate growth in the accumulation of domestic debt.
In the wake of this, the cost of government borrowings has also declined markedly with 91-day, 182-day and 364-day Treasury bill yields declining from 17.56 percent, 20.87 percent and 16.97 percent in September 2016 to 5.04 percent, 7.1 percent and 8.11 September 2017, respectively. The challenge is now to sustain this much-reduced crowding out of the private sector and translate it into this borrowing, investment, growth and jobs by private businesses. The 2018 Budget builds on and deepens these reforms to ensure that the results that they achieve are sustainable,” he averred.
Minister Sanneh said government is committed to striking a right balance between the need for fiscal consolidation on the one hand and, on the other, the imperative to promote much needed public investments and other critical development expenditures to complement reforms and support growth and poverty reduction.
The National Development Plan (NDP2018-2021) identifies the highest priority development expenditures to help achieve sustained high growth and improved lives for their citizens. He stated that 2018 budget would start moving some of the NDP’s key flagship projects and initiatives.
Against the backdrop of the debt overhang, he said, they are committed to ensuring that the execution and, in particular, the financing of flagship programs does not further undermine their debt situation. He said they would work closely with their development partners in pursuit of this goal as they mobilize resources for the NDP.