4 December 2012

Gambia: Finance Minister Presents 2013 Estimate Revenue, Expenditure to Assembly

The minister of Finance and Economic Affairs Monday laid the 2013 Annual Estimates of Revenue and Expenditure of the Government of The Gambia for the Fiscal year January 1st to December 31st, 2013, both dates inclusive, before deputies at the National Assembly.

The legal requirements for the presentation of the government of The Gambia budget to the National Assembly are specified in the 1997 Constitution, and the Budget Management and Accountability Act of 2004. Section 152 (1) of the 1997 Constitution of the Republic of The Gambia requires His Excellency the President to instruct the minister of Finance and Economic Affairs to prepare and submit to the National Assembly, at least 30 days before the end of each financial year, the Estimates of Revenues and Expenditures of The Gambia for the following year.

Section 152 (1A) of the Constitution also requires the National Assembly within a maximum of 14 days, after receiving the Estimates of Revenue, Recurrent and Development Expenditures, to consider and approve the Estimates. Section 22 (1) of the Budget Management of Accountability Act equally requires the minister of Finance and Economic Affairs to lay before the National Assembly, the Appropriation Bill Documents, at least 30 days before the end of the financial year. Section 25 of this Act specifies the content of the Appropriation bill documents, which are now incorporated in the documents on the Estimates being presented to the National Assembly.

Presenting the estimates, Abdou Kolley, the minister of Finance and Economic Affairs, said government is committed and determined to continue with the fiscal and structural reforms undertaken during 2012, noting that government will continue to consolidate the microeconomic gains recorded for the past successive years.

"It would be recalled that The Gambia suffered a major crop failure in 2011 due to drought that affected several countries throughout the Sahel region. Crop production fell by about 60 percent from previous year's harvest, and even though several non-agricultural sectors of the economy performed well during the year, real GDP as a whole is estimated to have contracted by about 4 percent in 2011," he added.

He explained that the crop failure further weakened economic activity during the first half of 2012; however, real GDP growth is estimated to recover to about 4 percent, due to a projected strong rebound (50 percent) in crops late in the year. "Despite some pressure on food prices and a weakening of the Gambian dalasi, inflation has remained under control (4.2 percent for the 12 months ending August)," he noted.

The Finance and Economic Affairs minister told the deputies that government fiscal operations in the first nine months of 2012 showed an improved position compared to the same period last year, noting that during this period, the government's net domestic borrowing (NDB) was 1.6 percent of annual GDP, while in 2012 as a whole, NDB is expected to be limited to GMD 720 million (2.5 percent) of GDP, compared with 3.4 percent of GDP in 2011.

"A significant increase in government revenues has been recorded thus far in 2012, as Government implemented multiple measures to bolster revenues and Tax compliance. A Commission of Inquiry into Tax Evasion and other Corrupt Practices was established and tasked with investigating tax evasion and identifying those who owed back taxes. The Commission published its report in early June 2012 and we have since noticed a substantial increase in the collection of taxes and tax arrears," he said.

Minister Kolley further told deputies that government has been steadfast in adjusting fuel prices every month so far in 2012, but has not quite kept pace with rising import prices, adding that pump prices are currently about 9.5 percent below the full pass-through level, about the same in December 2011. The recent depreciation of the dalasi against the US Dollar, he went on, has undermined the government's effort to reduce the fuel subsidy.

"The GRA has implemented a detailed compliance improvement plan for large tax payers. Around 70 percent of large taxpayers have filed their income tax returns for the 2011 tax year by September 2012. The medium-term objective is to reach a compliance ratio of 100 percent for the Large Taxpayer Unit," he explained.

He said government has continued to strengthen the GRA's Large Taxpayer Unit (LTU) with more staff, and went on to disclose that it hired 25 new staff by July 2012 and continues to aim for 60 staff by January 2013. He added that the Government has also continued to make progress toward a timely and smooth introduction of the value added tax (VAT) in January 2013, inline with its commitment to Ecowas.

Budget for 2013

His words: "Within a weak global economic environment, revenue projections for 2013 have been cautious. Moreover to avoid a spiraling of our already high domestic debt, domestic financing of the budget has been limited to about D340 million. Accordingly, there was rigorous privatisation in this budget to make sure that expenditure outlays match revenue projections as much as possible, within a limited scope for increase in domestic debt to finance the deficit."

Total revenue & grants

According to Minister Kolley, the total revenue and grants is projected to rise by 13.1 percent in 2013 to D6, 528.2 million. This, he said, is principally due to the 18.4 percent rise in tax revenue.

"The drivers of this increase in revenue will be income tax, both personal; and company, as well as import sales tax on non-oil items and collection from the replacement for sales tax, the VAT," he stated, adding that these forecasts assume GRA will continue to make improvements in compliance levels. "Non-tax revenue is expected to rise by 4.8% to D598.7 million. Grants are expected to be almost double the 2012 levels to stand ad D2.2 billion," he noted.

Total expenditure & net-lending

On the total expenditure and net-lending, Minister Kolley said it is projected to rise from D6, 719.3 million in 2012 to D7, 398.9 million in 2013, an increase of 10.1 percent, adding that personnel expenditures are projected to increase by 8.6 percent to stand at D1, 861.7 million. "Other Current expenditure is estimated to be D1933.1 million, a rise of by 3.2 percent from 2012. Capital spending is estimated to rise by 18.0 per cent in 2013. Part of this will be financed by donors, with capital spending financed by the GLF projected to be D236.3 million (13.1 percent) of total capital spending,"

According to the Finance and Economic Affairs minister, the equity participation is expected to be D41.5 million in 2013 reflecting equity participation in Sehelo-Saheliene Bank for Investment and Commerce (BSIC) and ECOWAS Bank for Investment and Development(EBID). He said that D25 million is budgeted for a Civil Service Loan Scheme, which will be used to provide loans to qualified civil servants starting in 2013.

He said Gross Budget Balance is projected as a deficit of D870.7 million, down from D951.4 million in 2012. "In terms of financing this deficit, net domestic borrowing is projected to be limited to D340 million in 2013, around 1 percent of GDP. Reducing net domestic borrowing is a critical step on the path to eliminating net domestic borrowing and putting the Budget on a sustainable footing," he stated, adding that interest payments currently consume around 22 percent of government revenues.

Minister Kolley told NAMs that other financing items are D603.6 million from foreign amortization, D45 million on Arrears and Guarantees, and D50 million is projected for capital revenue. He concluded that the budget, if approved, will be a useful tool in the drive to accelerate growth and reduce poverty as well as sustain macroeconomic stability.

Hon. Netty Baldeh, member for Tumana, seconded the move and commended the minister for doing justice to the presentation. Meanwhile, debate on the estimated budget by member will start on Wednesday, 5th December, 2012.

Medium Term Framework

He then stated that the 2013 Budget includes the first development of a medium-term expenditure framework (MTEF) for the budget, which covers the years 2013-2015. The MTEF is presented in a Budget Framework Paper (BFP). He added that the BFP presents an MTEF, based on the medium-term outlook, which sets out the fixed expenditure ceilings for the 2013 Budget for each Ministry, and provides indicative expenditure ceilings for 2014-2015. "These ceilings will aid in ministry planning and will be used to guide the development of the 2014 Budget. As part of this process, MOFEA will endeavour to ensure that limited resources are increasingly allocated to areas of government priority under the PAGE," he added.

He said that although medium term estimates have been provided for all ministries, the 2013 budget implementation will focus on the Ministries of Finance and Basic and Secondary Education as pilot Ministries for MTEF implementation, adding that the process would be rolled out to other ministries starting in 2014 based on the outcome of the pilot phase.

Pre-budget workshop

Meanwhile, shortly after the presentation of the budget estimates, NAMs proceeded to the Paradise Suites Hotel for a two-day pre-budget workshop organised by the National Assembly in collaboration UNDP, and the African Development Bank (AfDB) under the Institutional Support for Economic and Financial Governance project.

The workshop is aimed among other things to ensure the NAMs make informed decisions on the allocation of Resources for the Social Priority Sectors; enable NAMs assess the adequacy or otherwise of the levels of funding provided for the Social Priority Sectors to meet the MDGs and PAGE; identify the Funding gaps/ shortfalls thereto; and discuss strategies and sector proposals for resource mobilisation.

It is expected that at the end of the workshop, NAMs would be better informed on Pro-Poor and Gender budgeting, and will also enable them to consider and approve the National Budget based on the MDGs, the PAGE and Vision 2020. It will also make NAMs better appreciate the policy priorities of Government and the huge capital investment and policy intervention for the good of the society.

Officially declaring the workshop open, Hon. Abdoulie Bojang, the speaker of the National Assembly, said similar workshops have been organised in the past years by the National Assembly together with development partners for NAMs to critically analyse and scrutinise the Annual Draft Budget Estimates of the Government of the Republic of The Gambia.

According to him, the workshop therefore shall accord NAMs the opportunity to collectively examine the core policy strategies and development objectives of the government vis-a-vis the budget. "As elective representative of the people, we are inclined to put emphasis into the social priority sectors of Health, Education and Agriculture without necessarily limiting ourselves to only these sectors as all other sectors and cross-cutting issues are equally important," Speaker Bojang said, adding that this year's workshop is expanded to include other important presentations like the State of the Gambia economy; Challenges and perspectives for Growth; together with detail Policy Analysis of Key Priority Sectors.

While urging members to critically study the Draft Estimates in order to fully participate in the discussion, Speaker Bojang did not hesitate to recognise in high esteem, the abundant goodwill they continue to enjoy from the executive arm of government under the distinguished leadership of President Jammeh, as well as development partners.

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