President Adama Barrow has on Thursday at the national assembly's chambers in Banjul on the State of the Nation Address (SONA) 2020, decried the looming COVID-19 challenges in the coming months which could further affect the country's economy.
Already, the country is grappling with economic setbacks as most businesses are not operating effectively.
Barrow said Gambia's revenue generation from the import duties and other tax revenues is estimated to register losses of D2.3 billion dalasi due to decline in import volumes which is as a result of the direct impact of the COVID-19 pandemic.
"The total estimated fiscal impact from the decline in import duties and other tax revenues is Two Billion, Three Hundred Thousand Million Dalasis (D2.3 Billion); that is, 2.4 percent of GDP. The Ministry of Finance and Economic Affairs (MoFEA) projects that the fiscal deficit will widen from 1.5 percent of GDP to 2.1 percent of GDP," President Barrow said.
President Barrow further said The Gambia has been experiencing a slowdown of economic growth due to the reduction of economic activities, as a direct result of the COVID-19 pandemic.
He said an initial analysis shows that GDP growth rates this year could decline from six percent (6%) to two percent (2%), adding that the decline in import volumes and economic activities will correspondingly lead to shortfalls in import duties and other tax revenues.
Based on the current situation, Barrow said an estimated twenty percent (20%) of expected revenue will be lost.
He also said the pandemic has negatively impacted on budget execution as approved by the National Assembly and the Government had to resort to cuts and reallocation of funds from line items, such as travel, training and workshops, into much needed areas.
"These decisions were taken to set aside Five Million Dalasis (D500 Million) as emergency funds to cater for prevention, containment and response to the pandemic. Certain budget line expenditures have been reallocated to the Ministry of Health for COVID-19-related expenditures. This decision has affected almost all Ministries, Departments and Agencies (MDAs). MoFEA was forced to make further budget cuts in the face of declining revenue in recent months and the expected loss of revenue for the rest of the year," he revealed.
With declining revenues and the need to provide humanitarian assistance and support businesses during this period of economic downturn, President Barrow said the Government is faced with a challenging task for the coming months.
According to the President, the Covid-19 pandemic will continue to have a significant socio-economic impact on the economy both directly and indirectly.
Directly, he said it will be through the effects of the disease on production, investment and trade within the country, and between The Gambia and the rest of the world.
Indirectly, he said the impact will be felt through the slowing of global economic growth, supply chain disruptions and, by extension, negatively impacting The Gambia's growth prospects.
"There is an imminent threat of a global recession arising from the pandemic, and the extent of this impact is yet to be fully determined. No matter what the impact will be, Government has already devised post-pandemic plans to protect lives and livelihoods," he said.