By Bakary Ceesay
The Executive Board of the International Monetary Fund (IMF) approved a thirty-nine-month Extended Credit Facility arrangement for the Gambia in the amount of SDR35 million (about US$47.1 million, or 56.3 percent of the Gambia’s quota in the Fund) today.
The ECF-supported program aims to anchor macroeconomic stability and progress on structural reforms achieved under the 2019 Staff Monitored Program (SMP) and would provide a framework to assist the authorities in developing and implementing effective policy responses to address the COVID-19 challenges.
The program will also help catalyze 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.
The IMF Executive Board decision enables an immediate disbursement of SDR5 million, about US$6.7 million. Disbursements of the remaining amount will be phased over the duration of the program, subject to six half-yearly reviews.
Following the Executive Board discussion on The Gambia, Mr Tao Zhang, Deputy Managing Director and Acting Chair, issued the following statement:
“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.
The 39-month ECF arrangement, focused on advancing reforms in revenue mobilization, public financial management, and economic governance to support inclusive growth, will help anchor macroeconomic stability and meet balance-of-payments needs. 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 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.
“The monetary policy framework needs to be enhanced, including by gradually adjusting the interest rate corridor, and enabling the SDF rate to effectively anchor the functioning of the interbank market, and the central bank’s balance sheet should be strengthened.
“The vulnerabilities identified in the 2019 Financial Sector Stability Assessment should be addressed to ensure soundness of the financial sector and improve legal and supervisory framework for banking supervision.
The authorities should leverage the financial inclusion strategy, including through mobile banking, while strengthening the oversight of non-banking institutions and monitoring of risks involved in mobile banking.
“The authorities’ support for social programs and commitment to structural reforms and improvement in governance, as outlined in the authorities’ National Development plan, will be necessary to help address social needs, combat corruption and promote private-sector-led inclusive growth.”