International Monetary Fund (IMF) Executive Board has completed the fifth review under the Extended Credit Facility (ECF) arrangement for The Gambia and approved US$27.41 million disbursement for the country.
A statement by the IMF on Wednesday stated that the completion of the review enables the immediate disbursement of the equivalent of SDR20.55 million, (about US$27.41 million), to help meet the country’s balance-of-payments and fiscal financing needs amid challenges, including the repercussions of the war in Ukraine and the lingering impact of the COVID-19 pandemic.
This brings total disbursements under the ECF arrangement to SDR 65.55 million (about US$87.44 million), the statement noted.
The statement said the Executive Board also approved an augmentation of access under the ECF arrangement from SDR 55 million to SDR70.55 million (or 113.4 percent of The Gambia’s quota in the Fund), which is the second augmentation of access under this ECF arrangement.
Further, the Executive Board completed the financing assurances review and granted a waiver of nonobservance of a performance criterion on external arrears.
“The ECF arrangement with The Gambia was approved by the IMF’s Executive Board on March 23, 2020, with an initial total access of SDR 35 million (or 56.3 percent of quota) that was augmented at the completion of the first ECF review on January 15, 2021 to SDR 55 million (88.4 percent of quota). The Gambia has also benefited from an IMF Rapid Credit facility disbursement of SDR15.55 million and received debt service relief from the IMF under the Catastrophe Containment and Relief Trust totaling SDR7.9 million,” the stamen said.
According to the IMF The Gambian economy is facing multiple exogenous shocks, including the repercussions of the war in Ukraine, the lingering impact of the COVID-19 pandemic, and a major flooding.
It pointed out that the growth projections in 2022 have been revised downward from 5.6 percent to 4.5 percent. Inflation reached a record-high level of 13.2 percent (year-on-year) in October 2022.
“The Central Bank of The Gambia further increased its policy rate to 13 percent in December 2022 to tackle inflationary pressures. The balance of payments is adversely affected by disruptions of timber and cashew exports, weaker-than-expected tourist arrivals, lower remittance inflows, high food and fuel import bills, and elevated freight costs.
These shocks are generating foreign exchange shortages and weighing on forex reserves. Budget execution is facing pressures, including civil service salary increase and fuel revenue losses to alleviate the impact of the high global fuel prices on the population,” the statement pointed out.
Following the Executive Board discussion, Mr. Bo Li, Deputy Managing Director and Acting Chair, said The Gambia’s performance under the economic programme supported by the ECF has been broadly satisfactory despite economic and social challenges stemming from the repercussions of the war in Ukraine, the lingering impacts of the COVID-19 pandemic, and a recent major flooding.
“Owing to these exogenous shocks, economic recovery and tax collection are weaker than anticipated, while inflationary pressures and foreign exchange shortages are intensifying,” he said.
“The central bank is tightening the monetary policy stance to tackle inflation. It would be paramount to allow smooth functioning of the foreign exchange market and ensure that the exchange rate reflects market forces, which would help restore equilibrium.”
“To keep public debt on a downward path, it would be important to bolster domestic revenue mobilisation, streamline tax exemptions, rationalise subsidies to SOEs, strengthen cash management, and further prioritize public investment projects,” Mr. Li said.
