By Arfang M.S. Camara
The Executive Board of the International Monetary Fund (IMF) has on Tuesday approved a thirty-nine-month Extended Credit Facility (ECF) arrangement for The Gambia in the amount of Special drawing rights (SDR)35 million (about US$47.1 million, about D2 billions or 56.3 percent of The Gambia’s quota in the Fund.
The ECF-supported program aims to anchor macroeconomic stability and progress on structural reforms achieved under the 2019 Staff Monitored Program (SMP) and would provide a framework to assist the authorities in developing and implementing effective policy responses to address the COVID-19 challenges.
This development which was revealed by IMF Program on a 15-paged Documents on Extended Credit Facility (ECF) arrangement which aims to help Gambian authorities deal with the challenges posed by the coronavirus disease (COVID-19) pandemic as well as better prepared The Gambia for external shocks, pursue high and inclusive growth, lessen debt vulnerabilities, strengthen public financial management, and bolster domestic revenue mobilization.
“The IMF Executive Board decision enables an immediate disbursement of SDR 5 million, about US$6.7 million. Disbursements of the remaining amount will be phased over the duration of the program, subject to six half-yearly reviews. Following the Executive Board discussion on The Gambia,” said Mr Tao Zhang, Deputy Managing Director International Monetary Fund in a statement.
“The Gambian authorities’ commitment to prudent policies and institutional improvements has supported robust economic growth, while voluntary debt service deferrals from their main external creditors have helped attain debt sustainability. However, the ongoing COVID-19 pandemic will challenge the authorities’ efforts to further strengthen economic performance and resilience,” he added.
According to him, the 39-month ECF arrangement, focused on advancing reforms in revenue mobilization, public financial management, and economic governance to support inclusive growth, will help anchor macroeconomic stability and meet balance-of-payments needs. Grant financing and technical assistance from development partners will be needed to support the authorities’ reform efforts.
Mr. Tao Zhang urged the authorities to remain committed to fiscal consolidation in the medium-term to ensure debt sustainability, noting that major projects should be financed through grants or highly concessional financing and public procurement and project selection should be strengthened.
“The governance and financial management of state-owned enterprises need to be improved to help reduce fiscal risks and enhance efficiency in public service delivery. Further strengthening of tax administration and public financial management is also needed to boost resources for priority investment and social spending.” He noted.
He reveled that, The Gambia’s program of economic policies and reforms implemented under two consecutive SMPs covering 2017–18 and 2019 helped consolidate macroeconomic stability, achieve public debt sustainability, improve domestic revenue mobilization, and strengthen public financial management (PFM).
“Real GDP growth is estimated to have reached 6 percent in 2019 despite erratic rainfall resulting in a 10–percent decline in agricultural production. Inflation picked up in 2019 and averaged 7.1 percent, mainly due to one-off hikes in postal charges, while the underlying trend appears benign and core inflation subdued”.
However, he said that, The Gambia’s banking system remains well capitalized, liquid and profitable, with non-performing loans at 4.5 percent of gross loans at end-2019.