By Haddy Touray
Gambia’s economic activity continues to recover robustly and its growth was estimated at 5.3 percent in 2023, supported by good performance of the agriculture, services, telecommunication, and construction sectors, according to the International Monetary Fund (IMF).
Tourist arrivals continued to increase in 2023 but remain slightly below pre-pandemic levels, while remittance inflows also showed a sustained good performance. Headline inflation eased from a peak of 18.5 percent (year-on-year) in September 2023 to 11 percent in April 2024 mainly due to declining global food and energy prices, but it remains well above the central bank’s medium-term objective of 5 percent.
The IMF Executive Board made these observations on Tuesday as it completed Gambia’s first review under the Extended Credit Facility (ECF) arrangement, which was approved on 12 January 2024 for US$98.7 million.
Completion of the review allows for an immediate disbursement of US$10.95 million bringing the total disbursement under the arrangement to US$21.9 million.
Continued implementation of the reforms will help address medium- and long-term macroeconomic challenges and catalyse additional financing from development partners and the private sector.
The introduction of a new foreign exchange policy in December 2023 helped to largely close the wedge between the official and parallel market exchange rates and to ease foreign exchange shortages. International reserves remain at a comfortable level of above 4.5 months of imports.
The outlook remains subject to downside risks from the repercussions of global and regional conflicts. Such risks include international commodity price volatility, lower tourist arrivals, and weak remittance inflows.
Following the Executive Board’s discussion, IMF Deputy Managing Director Bo Li remarked: “The Gambian authorities continue democratic and justice reforms. Economic recovery is strengthening while inflation is progressively decelerating albeit remaining high. Programme performance under the ECF arrangement has been satisfactory despite the challenging environment.
“The central bank has appropriately maintained its tight monetary policy stance to fight inflationary pressures. Foreign exchange shortages have eased following the introduction of the new foreign exchange policy. Going forward, the central bank is encouraged to make full use of its policy toolkit to fight inflation, and continue to ensure a market-based exchange rate and smooth functioning of the foreign exchange market.”
According to the IMF, Gambia’s fiscal outturns in 2023 reflected good revenue performance but the fiscal deficit and public debt exceeded projections due to an accelerated execution of some infrastructure projects.
Also, Mr. Li pointed out that the country’s fiscal policy in 2024 remains anchored on the approved budget. Efforts to bolster domestic revenue mobilisation and reprioritisespending should continue.
To reduce debt vulnerabilities, he said, “it will be critical to adhere to the fiscal risks from SOEs and PPPs, and implement a strong medium-term fiscal framework.”
Additionally, strong external buffers are needed to prepare for the upcoming expiration of debt service deferrals.
“The authorities are encouraged to build on recent progress and pursue further structural reforms. The adoption of the anti-corruption bill by the National Assembly was an important milestone. Further progress remains critical, including on enhancing governance and improving the business environment to foster a strong recovery and inclusive growth. Adopting strong climate-related policies would be essential to build The Gambia’s resilience to climate risks,” the IMF official emphasised.
