IMF Completes 6th Review of Gambia's Credit Facility

• The repercussions of the war in Ukraine continue to strain the socio-economic environment in The Gambia. Growth is estimated to have remained moderate in 2022 and inflation pressures persist; but foreign exchange shortages have eased.
• The government has maintained prudent fiscal management despite measures to support the population, but some expected important resources did not materialize.
• The authorities remain committed to structural reforms. Good progress has been made in key areas, including revenue administration, public financial management, public contracts procurement, and the institutional framework of State-Owned Enterprises.

Washington, DC: A team from the International Monetary Fund (IMF), led by Mr. Ivohasina Fizara Razafimahefa, Mission Chief for The Gambia, held discussions with the Gambian authorities during March 14–24, 2023, on the sixth review of The Gambia's economic program supported by the IMF's Extended Credit Facility (ECF) arrangement.[1]

At the conclusion of the mission, Mr. Razafimahefa issued the following statement:

"The mission team reached staff-level agreement with the authorities on the economic and financial policies that could support the IMF Executive Board's completion of the sixth review under the ECF arrangement. Despite multiple shocks that affected the economy, including the spillovers from the war in Ukraine, five out of six quantitative performance criteria and three out of four indicative targets at end-December 2022 were met. Two structural benchmarks were met, and one structural benchmark was completed after the deadline. The IMF Executive Board's consideration of the staff report on the review is tentatively scheduled for June 2023. Upon the Board's approval, SDR 5 million (equivalent to about US$6.7 million) will be made available to The Gambia."

"The multiple external shocks that hit the Gambian economy obstructed a rapid economic recovery in 2022. Growth is estimated to have remained around its 2021 level, at 4.4 percent, despite a strong recovery in the tourism sector as well as robust public and private construction. Inflation persisted at 13.6 percent in February 2023, fueled by high food and energy prices amid the protracted war in Ukraine. Fiscal policy remained broadly prudent despite pressures from significant revenue losses due to measures taken by the government to alleviate the passthrough of high international oil prices to domestic pump prices. The central bank took appropriate measures to help tame inflationary pressures and anchor inflation expectations, by increasing the policy rate four times for a total of 4 percentage points, to 14 percent. It also took decisive actions to address the foreign exchange shortages observed in the second half of 2022 and ensure a smooth functioning of the forex market."

"The Gambian authorities continue to advance important structural reforms. The regulations related to the recently approved public procurement are under finalization. The National Assembly approval process is progressing well for the bills on state-owned enterprises and anticorruption. The PFM act has been approved by Cabinet and will be submitted to the National Assembly. These efforts are supported by extensive and coordinated capacity development from development partners."

"Going forward, economic growth is expected at 5.6 percent in 2023 and 6.3 in 2024, predicated on the improvement of the external macroeconomic environment—including a full recovery of the tourism sector—and continued resilience of domestic activity, particularly in the construction and agriculture sectors. Despite strong pressures on spending, including from higher debt service amid a rapid increase in domestic financing conditions and Dalasi depreciation, the government is determined to maintain fiscal discipline by anchoring the 2023 fiscal framework on the approved budget. The central bank is committed to closely monitor inflation developments and further tighten the monetary policy stance if needed, while safeguarding the fragile economic recovery. It also remains committed to an exchange rate policy that ensures equilibrium between supply and demand on the foreign exchange market."

The mission team met with His Excellency Adama Barrow, President of The Republic of The Gambia, Honorable Fabakary Tombong Jatta, National Assembly Speaker; and held discussions with Seedy Keita, Minister of Finance and Economic Affairs; Baboucarr O. Joof, Minister of Trade, Industry, Regional Integration, and Employment; Ebrima Sillah, Minister of Transport Works and Infrastructure; Buah Saidy, Governor of the Central Bank of The Gambia; and senior government and central bank officials.

The mission team also had fruitful discussions with representatives of the private sector, civil society, and development partners. The mission team would like to thank the Gambian authorities for the constructive discussions and the good collaboration.