The Executive Board of the International Monetary Fund (IMF) has approved 1.555 million Special Drawing Rights (SDR) [approximately US$2.3million] for The Gambia. The amount was approved Thursday, after the board completed the first review of Gambia's economic performance under a programme supported by the Extended Credit Facility (ECF) arrangement. This brings the total disbursements under the arrangement to SDR 10.885 million, approximately US$16.2 million. In completing the review, the board approved the authorities' request for a waiver for nonobservance of the continuous performance criterion on external arrears and a re-phasing of the reviews. In May last year, the Executive Board approved a three-year ECF arrangement with an amount equivalent to 18.66 million SDR, which was then about US$28.3 million for The Gambia to support the government's economic program me.
Naoyuki Shinohara, deputy managing director of the IMF and the acting chairman, in issuing his statement said: "The Gambia economy is still recovering from the severe drought of 2011. The authorities' policies and the support of the international donor community played an important role in enabling the recovery in agriculture to take hold." He however stated that downside risks related to the domestic debt burden, weaknesses in the balance of payments, and inflationary pressures, has weighed on the outlook. He further remarked that a steadfast commitment to the objectives of the Fund-supported programme and structural reforms will be necessary to address the challenges ahead, boost growth, and reduce poverty. "High public indebtedness continues to pose risks to macroeconomic stability and significant costs to the budget. To address this problem, the authorities plan to sustain the fiscal adjustment and reduce domestic borrowing," he revealed, and added: "Eventually, as interest costs come down, the fiscal savings could help finance priority social programmes under the Programme for Accelerated Growth and Employment (PAGE). Improving debt management is also important".
Shinohara stated that the recent introduction of the Value Added Tax (VAT) and the planned phasing out of fuel subsidies are welcome steps toward a stronger fiscal position, while also generating resources for better targeted pro-poor spending. Looking ahead, he went on, there is further scope to pursue additional tax reforms and enhance the quality of government spending, including by developing a medium-term expenditure framework. He noted that the Central Bank of The Gambia has tightened her monetary stance to curb inflation risks. This policy adjustment, together with an ample stock of official international reserves, he said, would help bolster the dalasi. "A flexible exchange rate regime will continue to facilitate adjustment to balance of payments shocks. Domestic economic activity will benefit from additional steps to improve the business climate. Measures should also be taken to improve the quality of economic data in order to enhance policymaking and programme monitoring."