Wednesday, September 7, 2011

Gov’t denies Gambia at Risk of Debt Distress

The Gambia government has denied that the country is at high risk of debt distress, saying according to auditing done by international organizations, Gambia’s profile, if anything, is not at a debt distress level, contrary to the revelation made by a study report on the establishment of national civil society education fund.

Finance Minister 
The report states that The Gambia is still classified as high risk of debt distress even though the country received extensive debt relief under the Highly Indebted Poor Countries and Multilateral Debt Relief Initiatives in 2007.

“No, The Gambia is not in any way at a debt distress level,” said Finance and Economic Affairs Minister Mambury Njie recently.  “I think if anything our recent CPIA rating has improved in a major variable and that is the proper management of the economy.” 

The CPIA - Country Policy and Institutional Assessment - rates countries against a set of 16 criteria grouped in four clusters which are: economic management, structural policies, policies for social inclusion and equity, and public sector management and institutions.

The finance minister said:  “Whereas you have the average resources allocations increase for developing countries to an average of 18 - 20%,  The Gambia, specifically, was able to realise almost a 100% in terms of increase in resources and this are resources that are either grants or at concessional level. “

Mr Njie explained that the government’s debt policy continues to attach importance to grants and concessionary financing, and prudent borrowing for investment. 
“I am sure you are also aware that we are paying almost 20 – 25% of our budget to interest on domestic debt,” he disclosed. “What this has revealed is that we always start [borrowing] domestically before we go international because at local level is lower rate and less problem.”

He said at the level of the government, they are conscious of the fact that The Gambia is not endowed with natural resources. “So whatever we do, we have to burn the midnight candle to make sure that our [loan] negotiations are to our advantage,” he says.  The amount that goes to interest on international debt, which is higher, is not revealed.

However, the study report on the establishment of national civil society education fund indicates that as at the end of 2009, external debt stood at 34 per cent of country Gross Domestic Product (GDP) while total public sector debt was 54 per cent of GDP.

 Half of country’s population in poverty
The report also indicates that more than 50% of the population is living in poverty even though there has been a decline between the years of 2003 and 2008 from 59% to 56%.

It stated that in order to address this high rate of poverty, the government intends to shift the focus of its poverty reduction strategy towards increasing economic growth and employment as well as stepping up infrastructure investment.
To this end, the report indicates, the Poverty Reduction Strategy Paper II (2007 to 2011) will be replaced by the Programme for Accelerated Growth and Employment (PAGE).

“The elimination of poverty and progress towards sustainable development can only be realised with increased and improved levels of education,” the study reveals.


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