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The Monetary Policy Committee (MPC) of the CBG states in its quarterly report, released on Friday, that grants (to The Gambia) declined significantly from D1.8 billion (US$ 5, 260, 000) in 2012 to D725.1 million (US$ 2,000,000) in 2013.
The Committee has not given any reason for this negative development. However, in 2013, President Jammeh abruptly withdrew The Gambia from the Commonwealth, and also cut diplomatic relations with Taiwan; an organization, and a country that used to donate to the country.
The MPC report states that provisional data on the execution of the 2013 budget show that total revenue and grants amounted to D5.9 billion (US$ 15, 790,000) , equivalent to 17.5 per cent of the country’s Gross Domestic Product (GDP). This total revenue is well below the target of D7.7 billion (US$ 21,056,000), or 20 per cent of the GDP.
This steep difference in the targeted total revenue and grants, and the amount realized is due to negative donor response from the country’s donor partners.
Former National Assembly Member for Basse, Hon. Sellu Bah, has earlier on said that The Gambia should not depend on grants to finance its economy.
”Let us work as a nation to ensure that we collect our domestic revenue to the letter to counter any negative response on grants,” Hon. Bah said.
“I think this [huge reduction in grants] would teach us a lesson,” he added.
Domestic revenue increase
The Gambia has intensive revenue collection efforts when its donor-partners are not forthcoming. As a result, the country’s domestic revenue, comprising both tax and non-tax revenue, increased by 10.6 percent to D5.2 billion in 2013.
However, the increase in domestic revenue has done little to cushion the effect of the low flow of grants to The Gambia. As a result of the shortfall in grants and a need for more expenditure, the government has increased its borrowing from local sources, such as the commercial banks in the country, to balance the difference.