The International Monetary Fund (IMF) has approved the disbursement of US$2.3 million to The Gambia government to support programmes and structural reforms necessary to reduce the high rate of poverty and boost economic growth in the country.
The disbursement is following the IMF executive board’s completion of the first review of the government’s economic performance under a programme supported by the Extended Credit Facility (ECF) arrangement, according to a press release from the IMF-Gambia office on Thursday.
This last disbursement makes the total disbursements under the arrangement to about US$16.2 million.
In May 2012, the executive board of the IMF approved a three-year ECF arrangement with an amount equivalent to about US$28.3 million for The Gambia to support the government's economic programme.
Economy still recovering
“The Gambian economy is still recovering from the severe drought of 2011,” Naoyuki Shinohara, deputy managing director and acting-chair of the IMF, said following the Board’s discussion of The Gambia.
The government’s policies and the support of the international donor community played an important role in enabling the recovery in agriculture to take hold, he noted.
However, he said there are downside risks related to The Gambia’s economic recovery such as the high domestic debt burden, weaknesses in the balance of payments, and inflationary pressures.
The domestic debt of the government increased to D11.3 billion, as at end-March 2013.
“High public indebtedness continues to pose risks to macroeconomic stability and significant costs to the budget,” Mr Shinohara affirmed.
However, he said the government plans to sustain the fiscal adjustment and reduces domestic borrowing, to address this problem.
He also noted that the recent introduction of the Value-Added Tax and the planned phasing out of fuel subsidies are welcome steps towards a stronger fiscal position,
Additional tax reform needed
Mr Shinohara pointed out that there is further scope to pursue additional tax reforms and enhance the quality of government spending, including by developing a medium-term expenditure framework.
Quality of data should be improved
Measures should also be taken to improve the quality of economic data to enhance policy making and programme monitoring, he also said.