The Executive Board of the International Monetary Fund (IMF) has approved a US$47.1 million Extended Credit Facility (ECF) arrangement for The Gambia, allowing an immediate first disbursement of US$6.7 million to help the authorities deal with the challenges posed by the coronavirus disease (COVID-19) pandemic.
A statement issued on Tuesday by the Fund following the Board’s decision said the ECF programme aims to help The Gambia to be better prepared for external shocks, pursue high and inclusive growth, lessen debt vulnerabilities, strengthen public financial management, and bolster domestic revenue mobilization.
“The ECF-supported programme aims to anchor macroeconomic stability and progress on structural reforms achieved under the 2019 Staff Monitored Programme (SMP) and would provide a framework to assist the authorities in developing and implementing effective policy responses to address the COVID-19 challenges.
“The programme will also help catalyse much needed donor financing, particularly in the form of grants for budget support, maintain the momentum in reducing debt vulnerabilities, and deliver on key commitments in the National Development Plan 2018–2021, with the focus on inclusive growth and poverty reduction,” said the Fund’s Board.
It pointed out that disbursements of the remaining amount will be phased over the duration of the programme, subject to six half-yearly reviews.
According to the IMF Deputy Managing Director, Mr. Tao Zhang, 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,” Mr. Zhang remarked at the conclusion of the Board’s discussion on Gambia on Monday, explaining that the 39-month ECF arrangement would help anchor macroeconomic stability and meet balance-of-payments needs.
He said that grant financing and technical assistance from development partners will be needed to support the authorities’ reform efforts.
“The authorities should remain committed to fiscal consolidation in the medium-term to ensure debt sustainability. Major projects should be financed through grants or highly concessional financing and public procurement and project selection should be strengthened,” the IMF deputy chief suggested.
“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.”
According to the IMF, Gambia’s programme 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.