By Lamin Jahateh, Banjul
The Gambia’s fiscal performance continues to be challenged by higher-than-projected expenditures by the government that are not matched by revenue performance of the country.
For this reason, the country has a budget deficit of D733.6 million or 2.6 percent of Gross Domestic Product (GDP) as at the end of September 2010, though the Minister of Finance, Hon. Abdou Kolley, said his ministry continues to monitor and control expenditures to enable us to achieve an improved fiscal balance by the end of the year.
Hon. Kolley made this statement on Monday while presenting the estimates of revenues, recurring and development expenditures for the fiscal year 2011 before the National Assembly for consideration and approval.
The Finance Minister told the parliamentarians that fiscal deficit for 2011 is estimated at D466.36 million or 1.47 percent of GDP. He explained that the deficit would be financed by foreign and domestic borrowing amounting to D833.82 million and D120.00 million respectively. He said foreign amortization is projected at D506.20 million.
He said: “Interest payment is projected to increase from D762.40 million in 2010 to D918.59 million in 2011. This is mainly attributable to the securitization of the government overdraft position with the Central Bank of The Gambia in the interest of better fiscal management.
“Total expenditure and net lending is estimated to increase from D5.77 billion in 2010 to D6.12 billion in 2011, representing 19.30 of GDP.”
This increase in mainly attributed to increases in personnel emoluments, which is projected to grow by 11.5 percent and other current expenditure.
The Gambia’s total revenue and grants is estimated to increase from an approved level of D5.50 billion in 2010 to D5.65 billion in 2011, representing 17.82 percent of GDP. This is attributed o increase in domestic revenue and project grants.
“Domestic tax revenue is estimated to increase from the approved figure of D3.99 billion in 2010 to D4.07 billion in 2011. Project grants is estimated to increase from D636.16 million in 2010 to D981.10 million in 2011,” Hon. Kolley said.
He explained that the ministry of finance continues to keep a keen eye on domestic debt stock, line with the recently adopted domestic debt strategy. “This caution is what also informs our decision to restrain spending,” he said
As at end-September 2010, the total outstanding domestic debt stock increased to D1.8 billion, representing 24.67 percent of GDP, from D6.9 billion a year earlier driven mainly by the 30-year Government Bond and increased Treasury Bills issuance. The sharp surge in domestic debt is mainly explained by the recent transformation of the overdraft in the Treasury Main Account at the Central Bank into a long term bond in the interest of better public financial management and also to help then country conform to borrowing limit of the CBG Act.
According to the Finance Minister The Gambia’s performance under our current Extended Credit Facility (ECF) programme with the IMF is broadly satisfactory. “All the quantitative, as well as qualitative targets were met, barring the basic balance which continues to be a challenge for the past two years,” he said.
The difficulty in meeting this target is explained by huge expenditures but also some flaws in the computation of basic balance criterion. Hon. Kolley said the ministry of finance continues to negotiate with the IMF on this issue, whilst trying to restrain expenditure and also come up with additional revenue measures.
Hon. Kolley told the parliamentarians that The Gambia economy continues its robust growth trajectory in the face of unfavorable global economic environment. He said GDP is estimated to grow by about 5.5 percent in 2010, an improvement over the previous projection of 5 percent, underpinned by healthy performance of the agricultural sector.
He explained that inflation continues to be subdued with average inflation standing at 4.2 percent in September 2010 compared to 5.6 percent a year earlier. He said food items, which accounts for 55 percent of the weight of the basket of goods and services, continued to be the main driver of headline inflation.
The Finance Minister’s presentation of the estimates to the National Assembly is in conformity with the laws of the land. Section 152 (1) of the 1997 constitution of the Gambia requires the President to instruct the Minister of Finance to prepare and submit to the National Assembly at least 30 days before the end of each financial year the estimates of revenue and expenditures of The Gambia for the following year.
Furthermore, section 22 (1) of the Budget Management and Accountability Act of 2004 also requires the Minister of Finance to lay before the National Assembly the Appropriation Bill Document at least 30 days before the end of the financial year.
However, Section 52 (1a) of the 1997 constitution requires the National Assembly within a maximum of 14 days after receiving the estimates of revenues, recurrent and development expenditures, to consider and approve the estimates.