The International Monetary Fund (IMF), on Wednesday, 14th December 2022, introduced the approval of US$27.41 million disbursement for the Gambia, through the Executive Board of the organisation, throughout its 5th assessment of its Extended Credit Facility association.
According to the IMF, the of entirety of the assessment permits the speedy disbursement of the identical of SDR20.55 million, about US$27.41 million, to assist meet the nation’s balance-of-payment and financial financing wishes amid demanding situations, together with the repercussions of the warfare in Ukraine and the lingering have an effect on of the COVID-19 pandemic.
The Executive Board, in step with the IMF additionally licensed an augmentation of get entry to underneath the ECF association from SDR55 million, to SDR70.55 million (or 113.4 p.c of The Gambia’s quota from the Fund), which is the 2nd augmentation of get entry to underneath this ECF association; that the Executive Board finished financing assurances assessment and granted a waiver of non-observance of a efficiency criterion on exterior arrears.
“The ECF arrangement with The Gambia was approved by the IMF’s Executive Board on 23rd March, 2022 with an initial total access of SDR35 million (or 56.3 percent of quota) that was augmented at the completion of the first ECF review on January, 15th 2022, to SDR55 million (88.4 percent of quota). The Gambia has also benefited from an IMF Rapid Credit Facility disbursement for catastrophe containment and relief trust of SDR15.55 million as well as debt service relief,” the IMF reported. The IMF additional buttressed that the Gambian financial system is going through more than one exogenous shocks, together with the repercussions of the warfare in Ukraine, the lingering have an effect on of the COVID-19 pandemic, and devastations brought about through a big floods, announcing “growth projections in 2022 have been revised downward from 5.6 percent to 4.5 percent, with inflation reaching a record-high level of 13.2 percent (year-on- year) in October 2022.”
The IMF additionally indicated that The Central Bank of The Gambia additional larger its coverage charge to 13 p.c in December 2022, to take on inflationary pressures.
“The balance of payments is adversely affected by disruptions of timber and cashew exports, weaker-than-expected tourist arrivals, lower remittance inflows, high food and fuel import bills, and elevated freight costs. These shocks are generating foreign exchange shortages and weighing on forex reserves. Budget execution is facing pressures, including civil service salary increases and fuel revenue losses to alleviate the impact of the high global fuel prices on the population.”
Mr Bo Li, Deputy Managing Director and Acting IMF Chair, in his commentary stated that The Gambia’s efficiency underneath the financial program supported through the Extended Credit Facility (ECF), has been widely sufficient in spite of financial and social demanding situations stemming from the repercussions of the warfare in Ukraine, the lingering affects of the COVID-19 pandemic, and a contemporary main flooding.
He stressed out that owing to those exogenous shocks, financial restoration and tax assortment are weaker than expected, whilst inflationary pressures and foreign currency echange shortages are intensifying.
He stated the Central Bank of the Gambia is tightening the financial coverage stance to take on inflation. “It would be paramount to allow smooth functioning of the foreign exchange market and ensure that the exchange rate reflects market forces, which would help restore equilibrium.”
He defined that the Fiscal coverage objectives at assuaging the have an effect on of the top international gasoline and meals costs on the inhabitants whilst safeguarding debt sustainability, underscoring that to stay public debt on a downward trail, it will be vital to reinforce home earnings mobilisation, streamline tax exemptions, rationalise subsidies to SOEs, make stronger money control, and additional prioritise public funding tasks.
“In view of lingering vulnerabilities, including anticipated increases in debt service obligations at the expiry of the debt service rescheduling period, it would be important to maintain sufficient fiscal and external buffers. To this end, it would be advisable to contain domestic borrowing, strictly adhere to the external borrowing plan, and seek grants and highly concessional loans,” he stated.