THE GAMBIA Request for a Three-Year Arrangement Under the Poverty Reduction and Growth Facility and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries—Informational Annex

This paper discusses the Request from Gambia for a Three-Year Arrangement Under the Poverty Reduction and Growth Facility (PRGF) and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries (HIPC). The Gambian authorities are requesting a three-year PRGF arrangement to support their economic reform program and to help them make progress toward the HIPC completion point. The program aims to consolidate recently achieved macroeconomic stabilization while addressing the formidable challenges faced by the country, including debt distress, vulnerability to exogenous shocks, and widespread poverty.


This paper discusses the Request from Gambia for a Three-Year Arrangement Under the Poverty Reduction and Growth Facility (PRGF) and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries (HIPC). The Gambian authorities are requesting a three-year PRGF arrangement to support their economic reform program and to help them make progress toward the HIPC completion point. The program aims to consolidate recently achieved macroeconomic stabilization while addressing the formidable challenges faced by the country, including debt distress, vulnerability to exogenous shocks, and widespread poverty.

The Gambia: Relations with the Fund

(As of December 31, 2006)

Membership status. Joined September 21, 1967. The Gambia accepted the obligations under Article VIII, Sections 2(a), 3, and 4, of the Fund’s Articles of Agreements on January 21, 1993. It maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions.

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Latest Financial Arrangements

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Projected Obligations to the Fund (SDR million; based on current use of resources and present holdings of SDRs)

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Implementation of HIPC Initiative

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Safeguards assessments

A FIN Safeguards Assessment mission visited The Gambia in March 2003 and in November 2003 to conduct a Stage 1 onsite assessment of the Central Bank of The Gambia (CBG). The assessment was completed on February 3, 2004. FIN conducted an update Safeguards Assessment of the CBG in November 2006. This update assessment was performed against the backdrop of previous safeguards findings, which identified significant vulnerabilities in the CBG’s safeguards framework.4 While the CBG has instituted a series of control reforms since that assessment, a key challenge looking forward is to build on existing progress to strengthen remaining vulnerabilities in the CBG’s safeguards framework, including controls over international reserves and procedures for extending credit to the government. The update assessment recommended certain priority actions be taken, including semi-annual audits of monetary program data, the implementation of segregation of duties in the reserves management function, a phased implementation of International Financial Reporting Standards, and an action plan to ensure that government borrowing from the CBG is brought within the statutory limits.

Exchange rate arrangement

Until January 20, 1986, the Gambian currency, the dalasi, was pegged to the pound sterling at a rate of D5 = £1. On January 20, 1986, an interbank market for foreign exchange was introduced, and since then the exchange rate has been determined by market forces. Effective June 30, 2002, the exchange rate arrangement of The Gambia was reclassified from independently floating to managed float with no preannounced path. As of December 31, 2006, the midpoint exchange rate in the interbank market was D28.0469 per U.S. dollar.

The Gambia has been part of the exchange rate mechanism of the West African Monetary Zone (WAMZ) since April 2002.

Last Article IV consultation

The Executive Board concluded the 2006 Article IV consultation on October 13, 2006 (see IMF Country Report No. 06/444 of December 2006).

Technical assistance

The Fund has been providing The Gambia with extensive technical assistance in macroeconomic, fiscal, and monetary areas, and in improving the compilation of macroeconomic statistics. Specific technical assistance projects are the following:

Fiscal Affairs Department

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Monetary and Capital Markets Department/ Monetary and Financial Systems Department /Monetary and Exchange Affairs Department

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Statistics Department

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Resident Representative

Mr. Alex Segura-Ubiergo was appointed the Fund’s first Resident Representative to The Gambia in September 2006. He is also the Resident Representative to Senegal and is based in Dakar.

The Gambia: Relations with the World Bank Group

(As of January 5, 2007)

The Bank and the Fund cooperate closely in providing support for the implementation of The Gambia’s development strategy. The country’s strategy is set forth in the Poverty Reduction Strategy Paper (PRSP), called the “Strategy for Poverty Alleviation II”, which was finalized in April 2002 and endorsed by the Boards of the World Bank and IMF in July 2002. It outlines a medium-term development strategy to reduce poverty through the following five key objectives: (1) macroeconomic stability and effective public resource management; (2) promotion of pro-poor growth and employment through private sector development, particularly in the rural agricultural sector; (3) improved basic social services and infrastructure; (4) capacity building of local communities and civil society organizations (CSOs); and (5) strengthened multisectoral programs to reduce population growth, gender inequality, HIV/AIDS, malnutrition, and environmental degradation. The PRSP includes a multidimensional poverty analysis, an outline of a monitoring and evaluation framework, preliminary performance indicators and targets, estimates of the cost of implementation, and an indicative financing gap. The PRSP covered the period from 2003 to 2005. The authorities are in the final stages of preparing the second PRSP. The new PRSP covers 2007 to 2011.

The Bank’s support to The Gambia is outlined in its Country Assistance Strategy (CAS). The CAS is aligned with the PRSP, particularly in the following areas: (1) establishing a macroeconomic and sectoral environment conducive to economic growth; (2) rehabilitating and building infrastructure; (3) enhancing human capital by providing more efficient social services; and (4) building capacity in departments responsible for economic management. The Bank’s direct support in recent years has mainly been sector-based investment projects and analytical work. The Fund has traditionally led the dialogue on macroeconomic policy, including fiscal, monetary, and exchange rate policies. Areas of close collaboration include public expenditure management reform and government statistics. Collaboration on trade issues should soon increase with the planned Integrated Framework analysis led by the Bank. The next CAS is being prepared in FY07.

As of January 5, 2007, IDA had approved 34 credits worth a total of about US$296 million. The current portfolio consists of five projects in capacity building for economic management, private sector development (trade gateway), education, community-driven development, and locust prevention (regional), totaling US$52.9 million, of which US$33.8 million is undisbursed.

A Capacity Building for Economic Management Project was approved in July 2001 to help build (1) government capacity for economic planning, policy formulation, and execution, and (2) the capacity of the judicial and financial systems to facilitate private sector development. Reforms supported by the project include establishment of the Revenue Authority, implementation of the Integrated Financial Management Information System (IFMIS), capacity building and restructuring of the Central Statistics Department (CSD), and establishment of an alternative dispute resolution (ADR) court system.

The Trade Gateway Project was approved in February 2002 to help the country establish itself as a globally competitive business park by laying the foundations for expanded private investment, export-oriented production, and employment through a free zone and an improved institutional environment.

The second phase of the Education Project was approved on June 1, 2006, to help The Gambia improve conditions for teaching and learning in basic education by (1) improving the performance of students, teachers, and schools, (2) strengthening capacity building and performance management, and enhancing monitoring and evaluation, and (3) expanding access to underserved communities.

A Community-Driven Development Project was approved on August 31, 2006, to help rural communities, in partnership with local government authorities, plan, implement and maintain their priority social and economic investments.

A regional Emergency Locust Project covering Burkina Faso, Chad, Mali, Mauritania, Niger, Senegal, and The Gambia was approved in December 2004. To help reduce the hardships imposed on people and the environment by current and future locust invasions, the project supports improved strategies for prevention, early warning, reaction, and mitigation at both the national and regional levels.

In addition to investment projects, the Bank is currently conducting several analytical initiatives, some of them jointly with other donors: (i) civil service reform and capacity assessment; (ii) poverty assessment; (iii) Diagnostic Trade Integrated Framework (DTIS) study; and (iv) Investment Climate Assessment (ICA).

As of July 31, 2006, the IFC’s portfolio had three investments in The Gambia with a balance of about US$0.75 million. The investments are for a medical clinic (Ndebaan) and commercial fishing (Lyefish).

IDA, MIGA, and the IFC will continue to coordinate their efforts to support development activities in The Gambia. Their activities are enhanced by the IFC office in Dakar, which also oversees IFC activities in The Gambia.

Summary of IDA Credits in The Gambia

(As of January 5, 2007; millions of U.S. dollars)

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Source: The World Bank Integrated Controller’s System.

The Gambia: IFC’s Held and Disbursed Portfolio

(As of July 31, 2006; millions of U.S. dollars)

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Source: IFC.

Questions may be referred to Mr. Soh Hoon (email: or Ms. Françoise Perrot (email:

The Gambia: Relations with the African Development Bank

(As of November 30, 2006)

The African Development Bank (AfDB) Group began lending to The Gambia in 1974. As of November 30, 2006, it had approved, 53 operations with total commitments, net of cancellations of UA205.2 million (US$305.5 million) in the following sectors: transport (25 percent); agriculture (21.7 percent); social (24.6 percent); public utilities (12.1 percent); multisectoral (8.8 percent); environment (5.8 percent); and industry (2.0 percent).5 About 84.7 percent of the Bank Group’s net commitments were made from the resources of the African Development Fund (ADF), 8.6 percent from the AfDB nonconcessional window, and 6.7 percent from the Nigeria Trust Fund (NTF).

As of November 30, 2006, 35 operations had been completed, 3 were cancelled at the government’s request, and 15 others continue, including 3 multinational projects, all in agriculture. Implementation of the portfolio is generally satisfactory; it achieved a rating score of 2.01 (on a scale from 0 to 3) during the Bank Group’s 2005 portfolio review. The portfolio has a relatively low project-at-risk (PAR) rate of 33.3 percent, which compares well with the Bank-wide average of 43.3 percent stated in the AfDB’s 2004 Annual Portfolio Performance Review (APPR). Total disbursement rates for the portfolio are also satisfactory. By the end of August 2006, they were 84.3 percent (overall), 100 percent (AfDB-financed projects), 83.8 percent (ADF), and 44.5 percent (NTF). The satisfactory performance of the portfolio is attributed to the supervision missions conducted by the AfDB, especially since 2003.

The AfDB is also a major participant in The Gambia’s enhanced Heavily Indebted Poor Countries (HIPC) Initiative program, under which it is due to grant debt relief of US$15.7 million in net present value (NPV) terms (23.6 percent of total debt relief under the program).

The AfDB’s strategy for The Gambia for the period 2005-09 is still being prepared and is awaiting finalization of the country’s new Poverty Reduction Strategy Paper (PRSP). The draft Country Strategy Paper (CSP) proposes to improve productive capacity through microfinance management and credit projects and to enhance economic management. The CSP has yet to be approved. The last CSP for The Gambia, which covered 2002-04, was designed to help the country in its efforts to meet the Millennium Development Goals (MDGs) by addressing specific institutional and human capacity constraints. The plan is based on The Gambia’s poverty reduction strategy (SPA-II), and the base-case scenario focuses on the interventions shown in the table below.

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Under ADF-X, The Gambia is a grants-only recipient. Additional resources can be made available if there is improvement in both performance under the Country Policy Institutional Assessment (CPIA) and portfolio performance.

The AfDB’s strategy is implemented through both lending and nonlending activities. The extent of lending depends on finalization of the new PRSP, satisfactory performance under the IMF-supported PRGF, progress toward reaching the HIPC Initiative completion point, advances in strengthening public expenditure management, and improved performance of AfDB-sponsored projects. Nonlending intervention is designed to strengthen policy dialogue between the government and stakeholders and focuses mainly on studies, funded through grants, to improve governance, mainstream gender, fight HIV/AIDS and communicable diseases, and improve the energy supply.

The Gambia: Statistical Issues

The poor quality of some data and complete lack of others hamper the analysis of economic developments. There are substantial weaknesses in The Gambia’s economic and financial statistics, especially in national accounts, balance of payments, and external debt statistics. Data reporting by the authorities to the Fund is somewhat irregular. The Gambia participates in the General Data Dissemination System (GDDS) and its metadata were posted on the Fund’s Dissemination Standards Bulletin Board on May 22, 2000 and updated in the second half of 2003.

A data ROSC mission visited The Gambia in February 2005 to assess data quality in four main areas of macroeconomic statistics (national accounts, government finance, monetary, and balance of payments) based on the Fund’s Data Quality Assessment Framework (DQAF, July 2003). Data dissemination was also assessed in terms of the GDDS recommendations. The mission recommended establishment of an interim Statistics Council to spearhead passage of the Statistics Act, eventual creation of an autonomous The Gambia Bureau of Statistics (GBOS), and preparation of a comprehensive statistics reform package. Accordingly, the National Assembly passed a new statistics act in December 2005. Work began in June 2006 to implement the plan for transforming the Central Statistics Department (CSD) to GBOS. Recently, Statistics Council and Statistician General have been appointed.

Real sector

Annual national account estimates are compiled using only the production approach. In the absence of more comprehensive information, they rely heavily on indicators. In response to STA assistance on national accounts, the CSD prepared a program to (1) improve the quality of source statistics by improving and expanding existing surveys; (2) improve the coverage and methodology of GDP estimates, including implementation of the System of National Accounts (1993 SNA); (3) rebase the constant price estimates—the current baseline is 1976/77—to a more recent period; and (4) make independent estimates of expenditure aggregates. An STA peripatetic adviser helped the authorities to compile national accounts and price statistics.

Currently, the GBOS produces data on the consumer price index (CPI) based only on the 1976/77 weights for the low-income population of the greater Banjul area. The World Bank has been providing technical assistance to the GBOS to update CPI weights using the 2003 household expenditure survey to better reflect current consumption patterns, and update the national accounts and expand the compilation to include independent estimates of gross domestic expenditure. The authorities are making progress in these efforts. As in the case of the national accounts, improvements in the CPI will require that the GBOS have adequate resources.

Government finance

The authorities release data on central government transactions with a lag of about eight weeks for both revenue and expenditure. Reporting in the treasury ledger is subject to considerable delay; the central government accounts for 1991–99 were not audited until 2005. Inadequacies persist in compiling data on an economic basis and in tracking foreign-financed expenditure, including HIPC debt relief. Monthly data on domestic government financing are available with a delay of six to eight weeks.

Monetary data

The CBG has improved its data reporting to the Fund, but sometimes it reports data with delay. The commercial banks follow a uniform chart of accounts to report financial data to the CBG. They also transmit flash reports of key monetary data to the CBG on a weekly basis. Several times over the past few years, the CBG has reclassified the monetary accounts to improve sectorization and coverage, as well as to harmonize the data reported to STA and AFR. In particular, there were substantial revisions to data on foreign exchange transactions and lending to the central government for 2001-03. The monetary and financial statistics mission in April-May 2006 made further recommendations to expand the coverage of depository corporations to include credit unions. The mission also recommended that accrued interest be included in the value of financial instruments. Given the significant influence of the Social Security and Housing Development Corporation in monetary developments, the mission recommended compilation of a financial survey. To improve the accuracy and classification of government accounts, it designed a supplementary form for reporting government positions at the CBG, to be reported to the IMF monthly. It also introduced standardized report forms to make it easier for the authorities to report data to the Fund for the use of both AFR and STA.

Balance of payments

A significant proportion of The Gambia’s external transactions, including reexports, are informal. Including reexport trade in the balance of payments assumes that reexports are a fixed share of total imports. Tourism receipts are derived from a simple function of tourist arrivals and average length of stay in The Gambia. Data on private capital flows are poor but the CBG has taken recent initiatives to improve on them. Official grant and loan disbursements and repayments are relatively well recorded, but there are some gaps in project disbursements. Data on the gross and net CBG international reserves bank are available with a short lag, but had to be substantially revised for 2001-03.

STA provided technical assistance on balance of payment statistics in June-July 1999, September 2000, and February 2006. Until the February 2005 ROSC mission, progress in implementing STA recommendations on balance of payments had been slow.

On the recommendation of the ROSC mission, the CBG revamped the balance of payments unit by elevating it to a full section with additional staff. To strengthen capacity to compile balance of payments data, the Fund provided substantial training to the CBG staff in 2005-06. A member of the CBG staff attended STA’s Balance of Payments Statistics course in May-June 2005 and another attended in May-June 2006. CBG staff also participated in the regional balance of payments seminar offered by STA in Banjul early in 2006.

In line with the recommendations of the February 2006 balance of payments technical assistance mission, the CBG has speeded up the process of compiling balance of payments statistics according to the Balance of Payments Manual, 5th edition (BPM5). The authorities submitted the preliminary data for 2003-05 in October 2006, which were published in the November 2006 issue of International Financial Statistics for the first time. With assistance from the U.K. Department for International Development, the CBG conducted an enterprise survey in March 2006 to collect data for the International Investment Position. In April 2006, the CBG also initiated a survey funded by the World Bank to collect data on selected components of the current account.

The government, with the assistance of the World Bank, recently installed the new version of the Commonwealth Secretariat’s debt-reporting and management system.


The CBG has begun to regularly disseminate some macroeconomic statistics on its website; until 2005, macroeconomic data were provided to the public only through references in the annual budget speech. The CBG has also resumed the publication of its annual reports and quarterly bulletins by posting in August 2006 its annual reports for 2003 and 2004 as well as several quarterly bulletins for 2004 and 2005. The CSD/GBOS’s publications are not issued on a regular basis.

There has been no reporting of data for publication in the Government Finance Statistics Yearbook since 1993 or in the International Financial Statistics (IFS), other than monetary and CPI data, since 1997. As reported above, the authorities have just reported balance of payments statistics for 2003-05 for publication in Balance of Payments Statistics Yearbook and in International Financial Statistics.

The Gambia: Table of Common Indicators Required for Surveillance

(As of January 24, 2007)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially determined, including discount rates, money market rates, and rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extrabudgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A); irregular (I); not available (NA).

Reflects the assessment provided in the data ROSC published on November 8, 2005, and based on the findings of the mission in February 2005. For the dataset corresponding to the variable in each row, the assessment indicates whether international standards concerning (respectively) concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO), or not observed (NO).

Same as footnote 7, except referring to international standards concerning (respectively) source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs, and revision studies.


The Fund approved the decision on 12/15/2000 as Decision 12365-(00/126). The World Bank Board decision was taken on 12/14/2000.


Assistance committed under the enhanced HIPC Initiative is expressed in net present value (NPV) terms at the decision point.


Under the enhanced HIPC Initiative, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed the interim.


A summary of its findings and recommendations is outlined in Box 3 of the 2003 Article IV consultation report (see IMF Country Report No. 04/143 of May 2004).


UA stands for unit of account = 1 SDR (currently equivalent to about $1.49).