Abstract
This paper discusses key findings of the First Review Under the Poverty Reduction and Growth Facility (PRGF). Overall performance under the program has been strong. All but one of the quantitative performance criteria and indicative targets were met. Fiscal performance has been impressive, reflecting higher-than-projected revenues and strengthened expenditure control. However, two structural performance criteria were not observed. The medium-term macroeconomic framework underlying the program has been modified slightly. Maintaining fiscal discipline remains key to lowering domestic public debt and protecting poverty-reducing expenditures.
The Executive Board of the International Monetary Fund (IMF) has completed the first review of The Gambia’s economic performance under a program supported by a three-year Poverty Reduction and Growth Facility (PRGF) arrangement. In completing the review, the Board approved the authorities’ request for waivers of nonobservance of two structural performance criteria pertaining to the submission of an audit report on monetary data and the implementation of the Central Project Management and Aid Coordination Directorate (CPMACD), and one quantitative performance criterion relating to the nonaccumulation of external payments arrears. The completion of the first review enables the release of an amount equivalent to SDR 2 million (about US$3.1 million).
The Gambia’s PRGF arrangement was approved on February 21, 2007 (see Press Release No 07/28) for an amount equivalent to SDR 14 million (about US$21.5 million).
Following the Executive Board discussion of The Gambia’s economic performance, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, made the following statement:
“The Gambia has made good progress toward macroeconomic stability and higher economic growth. Performance under the PRGF-supported program has been strong.
“Fiscal discipline will be vital to achieving debt sustainability and protecting social spending. The government is seeking to curtail its domestic borrowing requirement in order to keep real interest rates down and stimulate private investment. To this end, it will continue to strengthen tax administration, fully implement the Integrated Financial Management Information System that has been crucial in keeping expenditures in line with appropriations, and avoid extra-budgetary spending. Budget formulation and execution will be guided by the priorities set out in the new Poverty Reduction Strategy Paper.
“The government is committed to maintaining price stability and increasing the effectiveness of monetary policy. To this end, steps are underway to strengthen the operational independence of the Central Bank of The Gambia (CBG), including implementation of an Action Plan to bring CBG lending to the government within statutory limits. The CBG and the government are also working toward improving the coordination of fiscal and monetary operations in order to enhance the effectiveness of the CBG’s liquidity management.
“The authorities have made good progress toward reaching the completion point under the enhanced Heavily Indebted Poor Countries Initiative. Reaching the completion point will also make The Gambia eligible for assistance under the Multilateral Debt Relief Initiative. In order to ensure that debt relief moves the country’s external debt to a sustainable path, the authorities intend to rely as much as possible on grants rather than external loans to finance their development program. To the extent that loans are contracted, they would be on highly concessional terms,” Mr. Portugal said.