By Buba Gagigo
The International Monetary Fund (IMF) released its latest Regional Economic Outlook (REO) for Sub-Saharan Africa on Wednesday, revealing that approximately 27% of Gambia’s tax revenue is allocated toward debt servicing. The statement was made by Bernard Mendy, an economist at the IMF Resident Office in the Gambia.
The REO, published biannually by the IMF’s African Department, offers a thorough analysis of economic trends across Sub-Saharan Africa. This edition, titled “Reforms Amid Great Expectations,” highlights the region’s uneven economic growth, tight financing conditions, and ongoing challenges, including poverty, limited opportunities, and weak governance.
“In terms of debt interest payments, 21% of our revenue, excluding grants, is spent on interest payment, said in another way, we have about 27% of our tax revenue that is committed to debt interest payments alone, which approximately is 2.8% of our GDP,” Mr Mendy said.
He further explained that the majority of the country’s debt is external. “When you look at the composition of our debt or our debt structure, most of our debt stock is external debt. And within this external debt component, you realize that the highest bars are the ones for the multilateral institutions. So our debt with the multilateral institutions forms the greater chunk of our debt stock, followed by, I mean, debt with bilateral partners. Then you have commercial or private credit, followed by a few other external debts.
“It is worth noting that out of this debt stock that we have, for instance, by end March 2024, that is a couple of months ago, our public debt stock, to be specific, stood at around D1.74 billion, of which the country’s exposure to the IMF is only 8%. So the quantum of debt that the Gambia has contracted with the IMF constitutes only 8% of the country’s total debt stock, whereas the remaining 92% is debt contracted with other partners, including bilateral, multilateral and the domestic stock,” he explained.