The Gambia
2008 Article IV Consultation and Third Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, and Request for Waiver of Performance Criteria: Staff Report; Staff Supplement; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for The Gambia
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International Monetary Fund
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Publication Date:
03 Oct 2008
eISBN:
9781451815627
Language:
English
Keywords:
ISCR; CR; bottom; government; PRGF loan; Gambia; development partner; balance of payments; article IV consultation; current account deficit; revenue effort; Debt relief; Capital spending
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The Gambia’s 2008 Article IV Consultation and Third Review Under the Poverty Reduction and Growth Facility are discussed. A sharp appreciation of the dalasi in 2007 has mitigated the impact of increases in world food and oil prices. The authorities’ response to the continuing rise in these world prices has been measured; while eliminating sales tax on the rise, they have raised other taxes to compensate for the revenue loss. Petroleum product prices have been adjusted to eliminate an implicit subsidy and bring them in line with import costs.

Abstract

The Gambia’s 2008 Article IV Consultation and Third Review Under the Poverty Reduction and Growth Facility are discussed. A sharp appreciation of the dalasi in 2007 has mitigated the impact of increases in world food and oil prices. The authorities’ response to the continuing rise in these world prices has been measured; while eliminating sales tax on the rise, they have raised other taxes to compensate for the revenue loss. Petroleum product prices have been adjusted to eliminate an implicit subsidy and bring them in line with import costs.

I. Introduction

1. Since the 2006 Article IV consultation, The Gambia has maintained macroeconomic stability and made progress toward achieving debt sustainability. Fiscal performance has improved, and monetary policy has been geared to maintaining low inflation. Satisfactory performance under the PRGF-supported program helped the country reach the HIPC completion point in December 2007 and thus benefit from substantial debt relief. Although debt relief has reduced The Gambia’s external debt stock by more than half (from 110 percent to 50 percent of GDP at end-2007), staffs of the Fund and World Bank assess the country to be at high risk of debt distress.

2. Per capita GDP has been growing, but poverty remains widespread. Over the last five years, annual growth in per capita GDP has averaged 3.7 percent. Based on the results of the 2003 household expenditure survey, the government estimates over 60 percent of the population live below the poverty line.

3. The Gambia’s second PRSP (PRSP II) provides the framework for the authorities’ economic development program during 2007-11 (MEFP ¶18). PRSP II reiterates the strategic priorities of the first PRSP, including: (i) macroeconomic stability and effective public resource management; (ii) promotion of pro-poor growth and employment through private sector development; and (iii) improved provision of basic services. PRSP II contains intermediate targets toward achieving the Millennium Development Goals (MDGs). The authorities have highlighted the importance of strengthened capacity in the public service for the successful implementation of PRSP II.

4. With the PRGF-supported program broadly on track, staff’s discussions with the authorities focused on policies for sustaining macroeconomic stability, maintaining external stability, and boosting long-term growth. The growth discussions centered on trade and other policies to enhance The Gambia’s international competitiveness. The discussions also touched on the authorities’ progress in reaching their poverty reduction objectives.

5. The authorities’ response to rising world food and oil prices has been measured. While reducing the sales tax on rice imports from 15 percent to 5 percent in July 2007 and eliminating it altogether in May 2008, the authorities increased other taxes (on car parts and used vehicles) to compensate for the revenue loss. The pump prices of petroleum products were increased in May 2008 by 10–24 percent to remove an implicit budget subsidy that had emerged in the preceding months. Thus, the fiscal impact has so far been limited. Appreciation of the dalasi helped cushion the impact on inflation but has lowered growth prospects for 2008.

II. Recent Developments and Performance under the Program

A. Recent Economic Developments

6. Real GDP growth has averaged about 6½ percent a year since 2004. Growth has been led by the construction, tourism and telecommunications sectors, facilitated by a steady inflow of foreign direct investment and remittances. Performance of the agriculture sector—critical for achieving the authorities’ poverty reducing objectives—has been mixed. In particular, groundnut output fell substantially in the 2007/08 season largely due to a poor pattern of rainfall. At the same time, anecdotal evidence suggests increased output of nontraditional crops—mainly cashew nuts and horticultural products. The Gambia’s overall growth performance compares favorably with other countries in the region.

Average Real GDP Growth and Inflation in Selected Sub-Saharan African Countries, 2004–07

(Percent)

article image
Source: IMF, Regional Economic Outlook, April 2008.

For inflation, excluding Zimbabwe.

7. Inflation abated after a spike in 2007 (Figure 1). Disruptions in the supply of foodstuffs from neighboring countries and rising import costs (e.g., rice) pushed the annual rate of inflation from less than 1 percent in December 2006 to 6–7 percent during most of 2007. However, tight monetary policy and appreciation of the dalasi helped to contain inflation pressures and lower the annual rate to 2.2 percent in June 2008.

Figure 1.
Figure 1.

The Gambia: Inflation, Exchange Rate, and Monetary Developments

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

Sources: Gambian authorities and staff estimates.
uA01fig01

Gambia - Fiscal Indicators

(Percent of GDP)

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

8. The overall fiscal balance improved from a 7 percent of GDP deficit in 2006 to a 0.2 percent of GDP surplus in 2007. This was achieved through a sharp fall in expenditures and net lending. Current expenditures fell by 2 percent of GDP, due primarily to a fall in domestic interest rates. Capital expenditures fell more rapidly; spending on externally financed projects fell by 5½ percent of GDP mainly due to a dispute between a contractor and a consultant that delayed the disbursement of grants for an (EU)-funded roads project (MEFP ¶4). The overall balance continued to be in surplus in the first quarter of 2008. Increased expenditure on wages—in line with the budget and aimed at helping the government retain and attract skilled employees—has been offset by a decline in external interest payments (due to debt relief) and in externally financed capital expenditures.

9. A significant slowdown in broad money growth in 2007 reflected improved government finances and stagnant lending to the private sector. Broad money growth fell from 26 percent in 2006 to 7 percent in 2007. Reserve money exhibited an even more pronounced slowdown—from 24 percent expansion in 2006 to a 4 percent decline in 2007. In June 2007, to counter emerging inflationary pressures, the CBG raised its rediscount rate from 14 percent to 15 percent. In March 2008, in response to tight monetary conditions and against a backdrop of falling inflation, the CBG reduced the statutory minimum reserve requirement of banks from 16 percent to 14 percent.

10. Yields on treasury bills have fallen substantially over the last four years but commercial banks’ lending rates remain sticky. Successful disinflation allowed the weighted yield on treasury bills to fall from over 25 percent in early 2005 to around 12 percent currently. By contrast, commercial banks’ lending rates have been stuck above 20 percent. Banks cite high operating costs and credit risks as factors behind the high lending rates and wide interest rate spread.

uA01fig02

The Gambia: Selected Interest Rates, First Quarter 2005-Fourth Quarter 2007

(Percent per annum)

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

Source: Gambian authorities.

11. After remaining relatively stable from 2004 to 2006, the dalasi appreciated significantly in 2007 and early 2008. A sharp appreciation in the third quarter of 2007 appears to have been triggered by several banks unwinding long open foreign currency positions at the same time. Intervention by the CBG halted the appreciation and the dalasi weakened somewhat in the fourth quarter. For 2007 as a whole, the dalasi appreciated by 18 percent and 24 percent in nominal and real effective terms, respectively. The dalasi appreciated by 8 percent against the U.S. dollar in the first half of 2008, reflecting strong inflow of remittances and reduced debt service payments.

uA01fig03

Nominal and Real Exchange Rates

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

12. The external current account deficit (including official transfers) widened from 11½ percent of GDP in 2006 to 12½ percent in 2007. Current transfers (mainly remittances and official transfers) fell by 4 percent of GDP, helping push down imports by about 3 percent of GDP. The deficits were financed largely by inflows of foreign direct investment. Gross official reserves increased by US$23 million in 2007, reaching 5½ months of imports at year-end.

B. Performance Under the Program

13. Performance has been satisfactory. The authorities have made solid progress on fiscal consolidation, lowering interest rates and creating fiscal space for growth-promoting and poverty-reducing expenditures. The government has improved public financial management, especially budget execution, and the CBG has strengthened its governance. The authorities made less progress deepening financial intermediation and improving the quality of economic statistics.

14. The authorities met all of the quantitative financial performance criteria for end-March 2008 (MEFP Table A1). The cumulative basic balance through end-December 2007 fell slightly short of the indicative target, but by March 2008, it was back on target. The indicative target on new external borrowing was met, and the government is ahead of schedule on elimination of domestic budgetary arrears by end-2008.

15. Four of eight structural performance criteria were implemented on time (MEFP Table A2). The two special audit reports on program monetary data (due at end-December 2007 and end-June 2008) were submitted to Fund staff with slight delays. The other two—making the credit reference bureau (CRB) fully operational, and the establishment of a register of government expenditure commitments for projects largely financed by external resources—were partially implemented. The CRB has been established but concerns about the legal basis for sharing customer information have prevented it from becoming fully operational (MEFP ¶14). The authorities have launched a review of the Financial Institutions Act with a view to amending it to allow the CRB to share customer information among banks. With regard to the register of expenditure commitments, Department of State for Financial and Economic Affairs (DoSFEA) collected information in different formats with varying degrees of completeness (MEFP ¶13). During the mission, the authorities designed a uniform format for compiling data on each project or loan, and the establishment of the register has now been set as a prior action for Board consideration of the PRGF third review. The authorities are requesting waivers for the structural performance criteria that were not observed.

III. Key Policy Challenges

16. Policy discussions addressed the following challenges to meeting the authorities’ macroeconomic objectives: (a) coping with rising world food and oil prices; (b) maintaining external stability; (c) promoting growth and reducing poverty; (d) ensuring fiscal sustainability; (e) making monetary policy more effective; and (f) enhancing financial intermediation.

A. Coping with Rising World Food and Oil Prices

17. Appreciation of the dalasi in 2007 helped contain the impact of rising world food and oil prices on inflation. Most of the food consumed in the country is imported. The authorities indicated that available stocks of rice—the main staple—should last through September. They noted that, already, the domestic price of rice was beginning to increase and that this trend would be reinforced if world prices continue their upward trajectory and/or the dalasi weakens.

18. The impact on the balance of payments is projected to be more pronounced in 2008 than in 2007 (Table 5B). The current account is projected to worsen by almost 2 percent of GDP. An up tick in inflation is also expected in the second half of 2008.

19. To forestall pressures on the price of rice, the authorities eliminated the sales tax on rice imports and took accompanying compensating revenue measures. The mission discussed possible further measures to mitigate the impact on the most vulnerable households, including expanding existing social programs such as school feeding programs. Staff recommended the government avoid general subsidies, noting they tend to be ineffective and have created budgetary problems in other countries.

20. The mission welcomed the recent adjustment of pump prices of petroleum products to avoid a massive implicit budget subsidy.1 Staff agreed that the budget could not afford to subsidize petroleum products and urged the authorities to regularly review retail prices to keep them in line with world prices. The government intends to continue to cross-subsidize kerosene through petrol and diesel prices (MEFP ¶6).

B. Maintaining External Stability

21. Staff assesses the value of the dalasi to be broadly in line with fundamentals. The mission discussed with the authorities the preliminary results of a Selected Issues Paper (SIP) that assesses The Gambia’s external stability (Box 1). Examination of balance of payments flows suggests the current account deficit is sustainable. The external sustainability approach suggests that the exchange rate is overvalued by about 8 percent while the macroeconomic balance approach suggests overvaluation of 11 percent. The equilibrium real exchange rate approach yielded results ranging from a slight overvaluation to a significant undervaluation. The analyses are hampered by severe data weaknesses, but, on balance, staff concludes that the exchange rate is broadly in line with fundamentals. The authorities welcomed the analysis and reiterated their policy of allowing the dalasi’s value to be determined in the foreign exchange market. They stressed that official intervention occurs mainly to maintain adequate international reserves or to smooth fluctuations in the exchange rate (MEFP ¶30).

Assessing External Stability in The Gambia

Different approaches to assessing The Gambia’s external stability yield different results. The external sustainability (ES) approach indicates a real depreciation of about 8 percent would be required to stabilize the NFA to GDP ratio at its current level while the macroeconomic balance approach suggests a depreciation of 11 percent is needed. The equilibrium real exchange rate (ERER) approach suggests a range of results from a 2-percent overvaluation to 33-percent undervaluation in 2007.

The Balance of Payments and REER. Except for a sharp fall in reserves in 2001, the overall balance of payments has registered surpluses averaging 2 percent per year since 1997. The current account deficit increased substantially beginning in 2004. However, this was caused by additional investment in the tourism and telecommunication sectors. After the switch to a floating exchange rate regime in 1986, the REER remained within 10 percent of its average level until 2000. A burgeoning fiscal deficit and loose monetary policy caused the REER to fall 50 percent between 2000 and 2003. Fiscal consolidation and tight monetary policy allowed the REER to stabilize from 2003 to 2007. Comparison with other countries in the region indicates the fall in the REER is consistent with lower productivity growth in The Gambia.

Underlying current account, external sustainability and macroeconomic balance approaches. The underlying current account balance is defined as the observed current account balance stripped of temporary factors. The underlying current account deficit is estimated at 11.7 percent of GDP in 2007 compared to the actual deficit of 12.5 percent of GDP.

The external sustainability approach calculates the current account balance that stabilizes the NFA to GDP ratio at today’s level. As a result of debt relief, The Gambia’s net foreign liabilities ratio fell from just under 200 percent of GDP during 2003-2006 to 56 percent of GDP at end-2007. Staff calculates the current account deficit that would stabilize the NFA ratio—given projected average nominal growth of 10 percent—at 5.9 percent of GDP. Based on estimated elasticities, The Gambia’s real exchange rate would need to depreciate by about 8 percent to bring the underlying current account deficit down to the level needed to stabilize the NFA-to-GDP ratio. The macroeconomic balance approach estimates a current account norm based on The Gambia’s economic fundamentals compared with other countries. This approach indicates a current account norm of 4 percent of GDP is appropriate for The Gambia, requiring a 11 percent depreciation.

Equilibrium real exchange rate (ERER). A single-country estimation indicates a very small overvaluation of the dalasi at end-2007. A panel regression using coefficients from 28 oil-importing sub-Saharan African countries2, indicates the real exchange was 33 percent below its fundamental value in 2007, implying that economic fundamentals cannot explain the drop in the dalasi between 2000 and 2003. The external terms of trade for goods and services, productivity relative to trading partners (defined as relative per capita real GDP), and government consumption relative to trading partners yield statistically significant estimations for both single country and panel regressions. Statistical significance notwithstanding, the outcome of this approach is subject to data uncertainties and a relatively short sample period (only 19 annual observations for estimating the REER using single-country estimation techniques).

uA01fig04

Single-country estimation of ERER

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

uA01fig05

Panel estimation of ERER

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

22. The Gambia remains at high risk of debt distress because of the high level of outstanding debt and the country’s vulnerability to shocks. An update of the LIC DSA undertaken by staff found that lower-than-expected external borrowing in 2007 and thus far in 2008 has improved key debt ratios.3 Thus, the NPV of debt-to-GDP ratio now falls comfortably below the threshold of 30 percent over the 20 year projection horizon. However, the NPV of debt-to-exports ratio still peaks at 138 percent of GDP, well above the threshold of 100 percent.

uA01fig06

NPV of debt-to-GDP ratio

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

uA01fig07

NPV of debt-to-exports ratio

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

23. The authorities indicated that they were awaiting assistance from the Commonwealth Secretariat to undertake an independent DSA which would provide input to their national debt strategy. Staff urged the authorities to expedite the formulation of their strategy and to rely mainly on grants to finance their development plans. Staff noted that The Gambia’s debt and debt service ratios are among the highest in the group of countries that have recently reached the HIPC completion point and benefited from MDRI assistance (Figure 2). The authorities responded they expect to have the debt strategy in place by end-February 2009, will ensure that new loans have a minimum grant element of 45 percent, and will respect the indicative limit on new borrowing for 2008 (MEFP ¶33).

Figure 2.
Figure 2.

External Debt Indicators before and after HIPC and MDRI Relief 1

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

Source: IMF and World Bank staff estimates.1/ The dotted and solid lines represent the thresholds for “medium” and “poor” performers, respectively.

C. Promoting Growth and Reducing Poverty

24. Enhancing the country’s international competitiveness is central to the authorities’ strategy for promoting growth. Surveys and studies suggest a broad agenda of reforms is needed to address structural constraints to growth. The Gambia ranked 131 out of 178 in the World Bank’s Doing Business Indicators for 2008 and 102 out of 131 countries in the World Economic Forum’s Competitiveness Indicators for 2007–08 (Box 2). The Gambia ranked highly on employing workers, trade, and enforcing contracts. Problem areas included paying taxes, protecting investors, innovation, health, and education. A 2006 Investment Climate Assessment done by the World Bank found that firms ranked electricity, access to credit, land access, and a heavy tax burden as the most important obstacles to doing business in the country. A Diagnostic Trade Integration Study led by the World Bank and completed in 2007, concluded that The Gambia’s role as a regional entrepot was eroding, and made wide ranging recommendations to boost the country’s international competitiveness (MEFP ¶19). The mission noted that most of the recommendations of the various studies fall outside the remit of the Fund, but highlighted tax policy as an area where the Fund could offer assistance.

The Gambia: Survey-Based Measures of Competitiveness

article image
sources: World Bank, Doing Business 2007, 2008 and World Economic Forum, Global Competitiveness Index 2007, 2008
uA01fig08

Ranking on the ease of doing business

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

25. In addition to promoting pro-poor growth, the authorities are committed to boosting poverty-reducing expenditures in the budget. The PRSP specifies that 25 percent of government revenues and 30 percent of departmental budgets should be spent on priority sectors including agriculture, education, health, and the environment. The ratio of priority spending to government revenues has risen but remains below 21 percent. The government achieved the target for the departmental budgets in 2005 and 2006.

uA01fig09

Priority Spending as a Percent of Domestic Revenues

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

uA01fig10

Priority Spending as a Percent of Departmental Budgets

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

26. Progress towards the Millennium Development Goals has been mixed (Figure 3 and Table 7). The Gambia has achieved gender equality as measured by the female to male primary school enrollment ratio and made significant progress on boosting primary school enrollments. Primary and secondary health care have expanded significantly and increased immunization has reduced mortality rates. However, the incidence of poverty has not declined, undernourishment is still a serious problem, and the incidence of malaria and tuberculosis remain high.

Figure 3.
Figure 3.

The Gambia: Progress on Selected Millennium Development Goals

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

Source: World Bank Development Indicators.

27. Financial and technical assistance from The Gambia’s development partners will be critical for the successful implementation of PRSP II. PRSP II highlights capacity weaknesses, policy slippages, and shortfalls in the delivery of aid as important factors in the poor outcomes under the first PRSP. The government presented PRSP II to a Donor Round Table Conference in February 2008, and spearheaded the establishment of an in-country Development Partners Coordination and Consultation Mechanism (MEFP ¶35–¶37). The in-country forum will be used to monitor and analyze progress using a Results Matrix that contains quantitative indicators and targets matched to PRSP objectives.

D. Ensuring Fiscal Sustainability

28. Continued fiscal consolidation will enable the authorities achieve public debt sustainability (see section III of Supplement 1). Overall fiscal deficits are projected to average 2.7 percent of GDP during 2008–13. With external financing averaging 3½ percent of GDP and domestic surpluses measuring ¾ percent of GDP, domestic debt falls by more than half from its end-2007 level of 28 percent of GDP. This allows room for some increase in domestic borrowing in the event of a shortfall in external assistance.

29. At about 21 percent of GDP, The Gambia’s revenue effort is good, but reforms are needed to make tax revenues buoyant. Improvements in revenue administration have been important in boosting government revenues over the last four years. Reforms included the creation of the Gambia Revenue Authority (GRA), establishment of a large taxpayer unit, and the introduction of taxpayer identification numbers. With the GRA now fully operational, gains from improved administration may be reaching their limit. More attention should be paid to broadening the tax base and making the tax system buoyant. The lack of buoyancy is explained by the dominance of import taxes in revenues and by the increasing proportion of imports exempt from customs duties. The authorities agreed to review the scope for reducing these exemptions.

The Gambia: Dutiable and Non-Dutiable Imports, 2004–07

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30. The fiscal impact of an Economic Partnership Agreement (EPA) with the EU should be manageable. The Gambia is involved in ongoing negotiations with the EU as part of the Economic Community of West African States. The mission presented the preliminary results of an empirical analysis of the potential revenue loss from an EPA, and advised the authorities to pursue commitments by the EU to compensate partners for net revenue losses.4 The analysis suggests that:

31. The government is considering options for a comprehensive civil service reform program, drawing on studies funded by the World Bank and other donors. It is seeking to build the capacity of the civil service to formulate and implement policies and to deliver public services efficiently. Over time, low pay and difficult working conditions have led to an exodus of professional and managerial staff which has severely undermined the functioning of the service. The reform program is expected to cover pay and benefits, career development, and job security issues (MEFP ¶23). On the basis of the available analytical studies, staff believes the macroeconomic framework can support a substantial increase in the wage bill. However, staff emphasized that the pay reform should be targeted to retaining and attracting professional and managerial staff. The authorities agreed, but said increases will be needed at lower grades too to move them towards a living wage. The government will decide on the details of the pay reform as part of the preparation of the 2009 budget.

32. Introduction of the Integrated Financial Management Information System (IFMIS) has improved expenditure management, but more reforms are needed to strengthen public financial management. In particular, the process of budget formulation needs to be strengthened to ensure that budget allocations are realistic and in line with priorities. The establishment of a register to track government’s own commitments for capital projects funded largely by donors is a key part of structural reforms under the PRGF-supported program.

E. Making Monetary Policy More Effective

33. Monetary operations are guided by a money targeting framework, using broad money as the intermediate target and reserve money as the operating target. Weekly treasury bill auctions are the CBG’s main instrument for achieving its target. The CBG uses a short-term liquidity forecasting framework to determine weekly monetary operations. Announcements about the rediscount rate at the end of bimonthly Monetary Policy Committee meetings are also used to signal its policy stance.

34. A high degree of uncertainty about monetary policy transmission mechanisms hampers monetary operations. The primary objective of monetary policy in The Gambia is price stability, and the CBG has done a good job of reining in inflation. However, a recent MCM technical assistance mission noted that the shallowness of the money market, and an environment of uncertainty about the stability, persistence and relative importance of the possible channels of monetary transmission constrain monetary policy. The mission discussed with the CBG the findings of the MCM mission as well as staff analysis that suggests that the demand for broad money may not be stable, thus casting doubt on its appropriateness as nominal anchor for monetary policy. In this regard, the mission suggested that CBG supplement its money targeting framework with a range of indicators (including the outlook for inflation and exchange rate developments).

35. The almost exclusive reliance on treasury bills for monetary operations has generated conflicting signals about monetary policy. Treasury bills have been effective at mopping up liquidity when the authorities have been willing to let interest rates rise (and signaled that willingness by raising the rediscount rate). However, the CBG’s ability to inject liquidity through the treasury bill market has been constrained by low balances in the sterilization account. Hence, on occasion, even though the liquidity forecasting framework called for injecting liquidity, the CBG issued new bills to rollover maturing bills. Staff recommended the CBG consider foreign exchange operations as an additional instrument to influence dalasi liquidity. In the judgment of staff, there is scope for higher growth in reserve money (closer to program projections) without re-igniting inflation.

uA01fig12

Reserve Money

(millions of dalasis)

Citation: IMF Staff Country Reports 2008, 324; 10.5089/9781451815627.002.A001

36. The mission discussed a work program for enhancing the monetary policy framework. The main elements are: (i) enhancing short-term liquidity forecasting by improving projections of government revenues and expenditures; (ii) carrying out analytical work to better understand the transmission mechanism of monetary policy; (iii) developing leading indicators of economic activity; and (iv) improving data quality, especially on output and interest rates of commercial banks.

F. Enhancing Financial Intermediation

37. The financial sector is sound and competition has been increasing. The entry of two new banks in 2007 brings the number of commercial banks operating in The Gambia to ten. The banks are generally profitable, adequately capitalized, and highly liquid, although profitability and liquidity ratios fell during the third quarter 2007 as banks suffered valuation losses associated with the steep appreciation of the dalasi. Interest rate spreads are high, though not out of line with levels in other countries in sub-Saharan Africa. Nonperforming loans, at 12–14 percent, are moderate by regional standards. However, the loan-to-deposit ratio (41 percent) is relatively low in part due to high risks associated with a weak legal system (MEFP ¶10).

Selected Sub-Saharan African Countries: Selected Financial Sector Indicators, 2008 1/

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Source: IMF, International Financial Statistics and Monthly Country Briefs.

Most recent data available (2007 for interest rate spreads and early 2008 for others).

Excluding The Gambia.

38. Reforms are underway to deepen financial intermediation. Making the Credit Reference Bureau operational should reduce lending risks. The authorities are also reviewing several laws (including the Financial Institutions and Mortgage Acts) to remove legal impediments to financial intermediation. The CBG reported progress in strengthening capacity in banking supervision (with technical assistance from the Fund), and in implementing the Prompt Corrective Action framework introduced in July 2007 to monitor the health of banks. After the sharp appreciation of the dalasi in late 2007, the CBG has tightened enforcement of prudential regulations on banks’ foreign currency net open positions. The CBG decided to lower banks’ reserve requirements partly to lower the cost of funds to the banks and lower barriers to financial intermediation.

IV. Program Discussions

A. Medium-Term Macroeconomic Framework

39. Revisions to the medium-term macroeconomic framework (Tables 1–5) take account of the changes in the international environment and staff’s reassessment of the outlook for external financing (including new budget support from the World Bankamounting to about US$7 million in 2009). The main features of the updated framework compared to the second review are: (i) a downward revision in GDP growth of about 1 percent in 2008 and ½ percent in 2009 due to the impact of global downturn and dalasi appreciation on tourism and remittances and poor output in the groundnut sector; (ii) inflation about one percent higher in 2008—due to the pass through of higher food and energy prices—but returning to a downward path in 2009; (iii) maintenance of the surplus on the fiscal basic balances for 2008 and 2009 of about 1½ percent of GDP but lower interest rates leading to a more rapid decline in domestic debt; (iv) broad money growth of 12 percent, slightly higher than nominal GDP growth; and (v) a deterioration in the current account balance including official transfers in 2008 due to higher world food and oil prices.

Table 1.

The Gambia: Selected Economic and Financial Indicators, 2004–13

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Sources: Gambian authorities; and IMF staff estimates and projections.

Computed based on values in U.S. dollars.

Excluding reexports and imports for reexport.

Including advances to the government in foreign currencies.

Weighted average for all maturities based on weekly auction data for the month of December; and for 2008, data are for June 2008.

Defined as domestic revenue minus expenditure and net lending, excluding externally financed capital expenditure.

Defined as domestic revenue minus expenditure and net lending, excluding interest payments and externally financed capital expenditure.

Reflects HIPC and MDRI debt relief delivered at end-2007.

Exports of goods and nonfactor services (not including reexports).

Table 2.

The Gambia: Central Government Operations, 2004–13

(Millions of dalasis, unless otherwise indicated)

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Sources: Gambian authorities; IMF staff estimates and projections.

After MDRI debt relief from 2007 onward.

The difference between financing and the overall balance of revenue and expenditure.

Domestic revenue - expenditure and net lending, excluding externally financed capital spending.

Domestic revenue - expenditure and net lending, excluding interest payments and externally financed capital spending.

Table 2.

The Gambia: Central Government Operations, 2004–13

(Percent of GDP)

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Sources: Gambian authorities; IMF staff estimates and projections.

After MDRI debt relief from 2007 onward.

The difference between financing and the overall balance of revenue and expenditure.

Domestic revenue - expenditure and net lending, excluding externally financed capital spending.

Domestic revenue - expenditure and net lending, excluding interest payments and externally financed capital spending.

Table 3.

The Gambia: Monetary Survey, 2004-13

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Sources: Gambian authorities; IMF staff estimates and projections. Note: MDRI debt relief, incorporated for end-2007, has increased net foreign assets and decreased net domestic assets by D335 millions (at current exchange rate).

Excluding advances to the government in foreign currencies.

These advances reflect previously unrecorded public spending and borrowing in 2001, financed by the Central Bank of The Gambia (CBG), and the previously unrecorded depletion of foreign exchange reserves in 2001-03 as reported by the authorities on October 28, 2003.

In March 2003, the government instructed the CBG to lend the equivalent of D137 million in U.S. dollars to a newly created public enterprise for a seismic survey of offshore oil deposits.

Claims on foreign exchange bureaus reflect the delayed delivery of foreign currency purchased on a spot basis.

Table 4.

The Gambia: Analytical Account of the Central Bank of The Gambia (CBG), 2004-13

(Millions of dalasis, unless otherwise indicated; end of period)

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Sources: Gambian authorities.

Excluding advances to the government in foreign currencies.

These advances reflect previously unrecorded public spending and borrowing in 2001, financed by the CBG, and previously unrecorded depletion of foreign exchange reserves in 2001-03 as reported by the authorities on October 28, 2003.

Advances to commercial banks and commercial banks’ holdings of central bank bills.

Claims on foreign exchange bureaus reflect the delayed delivery of foreign currency purchased on a spot basis.

Based on the current exchange rate; however, the CBG and the government agreed to use the accounting exchange rate prevailing in April 2007 to arrive at D393.9 million as the MDRI deposits.

Table 5A.

The Gambia: Balance of Payments, 2004–13

(Millions of U.S. dollars)

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Sources: Gambian authorities; IMF staff estimates and projections.

Includes debt relief from Paris Club; interim relief from multilaterals is treated as grants.

Table 5B.

The Gambia: Balance of Payments, 2004-13

(Percent of GDP)

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Sources: Gambian authorities; IMF staff estimates and projections.

Includes debt relief from Paris Club; interim relief from multilaterals is treated as grants.

B. Policies for the Rest of 2008

40. The updated macroeconomic framework envisions that the central government basic balance will remain in surplus of about 1½ percent of GDP while the overall deficit drops to 3 percent of GDP in 2008. The improvement in the overall balance compared to the second review is attributable to a downward revision in externally financed capital expenditures (in line with the revised outlook for external grants and loans). Domestic revenues are projected to remain at 21 percent of GDP with a small drop in personal and corporate taxes offset by increased revenues from the sales tax on oil imports. On the expenditure side, current expenditures are expected to remain at about 16 percent of GDP while capital expenditures fall from 13 to 10 percent of GDP. Domestic interest bearing debt is projected to fall from 28 percent of GDP at end-2007 to 22½ percent of GDP at end-2008.

41. The CBG indicated monetary policy will continue to aim at keeping inflation low. Rising world food and oil prices will pose a challenge. Improved coordination of fiscal and monetary policies will help meet the challenge.

42. The government is seeking debt relief from all its creditors. Following a Paris Club agreement in January 2008, the government has signed bilateral debt relief agreements with France and Norway, and expects to sign agreements with its two other Paris Club creditors (Austria and Netherlands) in the coming months. Kuwait has agreed to provide debt relief on comparable terms to those of the Paris Club. The authorities are following up their previous communications with other creditors.

C. Program Monitoring, Risks, and Potential Augmentation

43. The program’s quantitative targets have been extended through June 2009 (MEFP, Table A1) while the target dates for implementing some structural measures have been reset. In particular, to allow adequate time for establishing a legal basis for the CRB to share information on customers among banks, the performance criterion on making the CRB operational has been reset from end-March 2008 to end-March 2009 (MEFP ¶14). The Auditor-General delayed the submission of the report on the government’s 2000–04 accounts to the national assembly to give the Treasury Directorate an opportunity to respond to some queries and correct portions of the accounts. The final report is now scheduled to go to the national assembly in September 2008 (MEFP ¶16).

44. Structural conditionality has been streamlined. The broad areas of focus remain unchanged: (i) public financial management and accountability; (ii) central bank governance; (iii) financial intermediation; and (iv) economic statistics. In recognition of progress made to date, conditionality in the first two areas has been streamlined. There is no longer a performance criterion on monthly fiscal reporting, which has now become routine. The requirement of special audit reports of monetary data submitted to staff by the CBG for each test date has also been dropped. These reports have served their purpose of addressing reporting weaknesses.

45. The main risks to achieving program objectives include:

46. The authorities may request PRGF augmentation at the next review if world oil and food prices continue to rise (MEFP ¶41).

V. Data, Fund Technical Assistance, and Financial Sector Assessment Program (FSAP)

47. statistical data are broadly adequate for surveillance, but substantial weaknesses remain in real sector and balance of payments. The national accounts data are compiled using only the production approach, although progress has been made in developing expenditure data. Implementation of an IFMIS system has improved fiscal reporting; consolidated budget reports are now produced monthly with a one month lag. Balance of payments reporting still has several gaps, in particular for re-exports and service income. Data on private capital flows are poor but official grant and loan disbursements are relatively well recorded.

48. The authorities welcomed the appointment of a regional fiscal adviser to assist with public financial management. The adviser, based in Liberia, made his first visit to Banjul in July 2008. The authorities have requested ongoing assistance on banking supervision, statistics (national accounts, balance of payments, and financial), and compilation of a producer price index.

49. The authorities also requested that The Gambia be considered for an FsAP (MEFP ¶44).

VI. Staff Appraisal

50. The authorities are to be commended for maintaining macroeconomic stability and achieving robust growth. This resulted from prudent economic policies, including significant fiscal consolidation and monetary policy geared to maintaining low inflation.

51. Staff welcomes the authorities’ measured response to rising world food and oil prices. So far, appreciation of the dalasi has helped contain the impact inflation but this is likely to change in 2008. The authorities should continue to pass through increases in world prices while considering targeted measures to help the poor, including expanding existing social programs such as school feeding programs.

52. Staff assesses the dalasi to be broadly in line with fundamentals. Different empirical approaches yielded significantly different results—ranging from slight overvaluation to substantial undervaluation. The analyses are hampered by severe data weaknesses, but, on balance, staff concludes that the exchange rate is broadly in line with fundamentals.

53. Notwithstanding some improvement in debt indicators, The Gambia remains at high risk of debt distress. To the extent possible, the authorities should rely on grants and highly concessions loans for financing their development program. In this regard, staff welcomes the authorities’ efforts to strengthen their engagement with donors in order to mobilize resources for implementing PRSP II.

54. Further efforts are needed to improve the investment climate and The Gambia’s international competitiveness. Staff encourages the authorities to work with the World Bank and other donors for the speedy implementation of the recommendations of the DTIS, especially in relation to the business climate.

55. Reforms are needed to make the tax system buoyant. The government has made important progress on tax administration and expenditure management, but further reforms are needed to broaden the tax base and make it more buoyant. In particular, staff urges the authorities to reduce the scope of import duty exemptions.

56. Staff believes there is scope for higher growth in reserve money without fueling inflation. In view of persistent undershooting of the CBG’s reserve money path, staff recommends the use of foreign exchange operations as an additional instrument to influence dalasi liquidity.

57. Staff supports the authorities request for waivers for the nonobservance of four structural performance criteria. The delays in submitting the two special audit reports were due to circumstances beyond the authorities’ control. The authorities have initiated steps toward removing the legal obstacles to making the CRB fully operational, and the establishment of the register of government expenditure commitments is now a prior action for completing the third PRGF review.

58. Staff recommends that the next Article IV consultation take place within 24 months, in line with the Decision on consultation cycles in program countries.

Table 6.

The Gambia: Proposed Schedule of Disbursements

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The Gambia’s quota is SDR 31.10 million.

Table 7.

The Gambia: Millennium Development Goals, 1990-2006 1/

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Source: World Development Indicators database.

Figures in italics refer to periods other than those specified.

Appendix I

Banjul, The Gambia

July 30, 2008

Mr. Dominique Strauss-Kahn

Managing Director International Monetary Fund

Washington, D.C. 20431

Dear Mr. Strauss-Kahn:

1. The Gambia’s three-year Poverty Reduction and Growth Facility (PRGF) arrangement was approved by the IMF’s Executive Board in February 2007. The first and second reviews were completed on August 29 and December 19, 2007, respectively. The attached Memorandum of Economic and Financial Policies (MEFP) reviews progress in implementing the Government’s PRGF-supported program in 2007 and during the first half of 2008, and sets out the policies that the government will pursue in the rest of 2008. We are committed to continue maintaining macroeconomic stability and fostering reforms conducive to higher growth and poverty reduction.

2. Performance under the program has been quite strong. All the quantitative performance criteria for end-March 2008 were met, and four out of eight structural performance criteria scheduled for implementation between December 2007 and July 2008 were fully implemented on time. Of the remainder, two were met with a slight delay while the other two were only partially implemented. On the basis of corrective measures that have been taken (see MEFP, paragraphs 12–14), we request waivers for the nonobservance of four performance criteria.

3. In support of our policies described in the MEFP, the Government of The Gambia requests the completion of the third review and the release of the fourth disbursement under the PRGF arrangement in an amount equivalent to SDR 2 million.

4. The government believes that the policies set forth in the attached MEFP are adequate to achieve the objectives of its program. However, it will stand ready to take any additional measures that may become appropriate to meet these objectives. The Gambia will consult with the IMF on the adoption of these measures and in advance of revisions to policies contained in the MEFP, in accordance with the Fund’s policies on such consultation. The fourth and fifth reviews under the PRGF arrangement are expected to be completed by no later than end-January 2009, and end-July 2009, respectively.

5. The government intends to make the contents of this letter and the attached MEFP and Technical Memorandum of Understanding available to the public. Therefore, it authorizes the IMF to arrange for these documents to be posted on the IMF website following Executive Board conclusion of the review.

Sincerely yours,

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Attachments: Memorandum of Economic and Financial Policies Technical Memorandum of Understanding

Attachment I Memorandum of Economic and Financial Policies

I. Introduction

1. This memorandum updates the Government of The Gambia’s economic and financial program under the three-year Poverty Reduction and Growth Facility (PRGF) arrangement with the International Monetary Fund (IMF). The program, which was approved by the Executive Board of the IMF in February 2007, aims at consolidating macroeconomic stability and fostering the conditions for sustaining high economic growth and reducing poverty. The first and second reviews were successfully completed in August and December 2007, respectively. The Gambia reached completion point under the enhanced Initiative for Heavily Indebted Poor Countries (HIPC) in December 2007 and is receiving debt relief under both the HIPC Initiative and the Multilateral Debt Relief Initiative (MDRI).

II. Recent Economic Developments

2. Growth has remained strong but is expected to slow down in 2008. Real GDP grew at about 6½ percent a year in 2006 and 2007, led by telecommunications, tourism and construction. Tourist arrivals are on pace to increase by about 10 percent in the 2007/08 season compared to 2006/07; the average length of stay remained roughly the same, albeit with a changing pattern and type of accommodation. Growth in the agriculture sector declined in 2007 due to poor rains during the early part of the crop season. For 2008, overall growth is projected to slow to 5.5 percent, mainly on account of the impact of adverse international developments and dalasi appreciation on tourism and remittances.

3. After rising sharply in 2007, inflation has slowed in 2008. Driven by rising world food prices, the annual rate of inflation on a year-on-year basis rose from less than 1 percent in December 2006 to 6-7 percent during most 2007. Appreciation of the dalasi and relatively tight monetary policy helped to contain the price shocks. Year-on-year inflation was 2.2 percent in June 2008. The 12-month moving average rate fell from 5.2 percent in December 2007 to 4 percent in June 2008. In order to help keep the price of rice affordable, the government eliminated the sales tax on rice imports in May 2008; the tax had been reduced from 15 percent to 5 percent in July 2007.

4. The overall fiscal balance improved in 2007. Gains from tax administration reforms boosted revenues, while shortfalls in the projected level of external financing led to a marked contraction in capital expenditures. In particular, a dispute between the contractor and the supervising consultant delayed grant disbursements for a large European Union (EU)-supported roads project. The problem has now been resolved and implementation of the project is expected to proceed. The stock of domestic government debt fell from 32 percent of GDP at end-2006 to 28 percent of GDP at end-2007, compared to nearly 30 percent projected at the time of the second PRGF review.

5. Performance weakened somewhat in the first quarter of 2008 compared with the first quarter of 2007. Domestic revenues were down 3.5 percent while domestic expenditures increased by 16.5 percent. Nonetheless, the government was able to achieve a surplus of D51 million on the basic balance. On the revenue side, taxes on international trade fell 11 percent. At the same time, wages increased 35 percent in line with the program to help retain and attract skilled manpower to the government. This increase was partially offset by a 21 percent reduction in external interest payments due to HIPC and MDRI relief. In 2007, the government cleared more domestic arrears than programmed, and is on target to clear the remaining stock before the end of 2008.

6. The government increased retail prices of petroleum products in May 2008. The prices per liter were increased from D28 to D32 for diesel, from D30 to D33 for petrol, and from D21 to D26 for kerosene. Petrol and diesel prices were last increased in January 2006, and kerosene in June 2007. The government is committed to adjusting the prices as needed to avoid burdening the budget by subsidizing these products. However, kerosene will continue to be cross-subsidized by the other products.

7. Growth in broad money slowed down significantly in 2007 and through May 2008. Growth fell from 26 percent in 2006 to 7 percent in 2007 as a result of improved government finances. Credit to the private sector was stagnant during most of 2007. Reserve money contracted by 4 percent in 2007 after expanding by 24 percent in 2006, and fell further by 6 percent in the first half of 2008. In March 2008, in response to indications of tight liquidity conditions, and against a backdrop of falling inflation, the CBG reduced the unremunerated statutory minimum reserve requirement of banks from 16 percent to 14 percent.

8. Since the sharp appreciation during the third quarter of 2007, fluctuation of the dalasi in response to changing supply and demand conditions in the foreign exchange market has become more pronounced. The dalasi appreciated by 32 percent by end-September 2007 against the U.S. dollar, mainly due to a change in market sentiments when many banks decided to unwind their long net open positions at the same time during August and September 2007. However, a reversal of the trend occurred during the fourth quarter 2007 when the dalasi depreciated by 18 percent. The CBG acted to restore stability by actively intervening in the market during August-November. Against a backdrop of strong inflow of remittances, less need for foreign exchange to service debt (due to debt relief), and tight liquidity conditions, the dalasi appreciated by 8 percent during the first half of 2008.

9. The external current account deficit (including official transfers) widened from 11½ percent of GDP in 2006 to 12½ percent in 2007. The current account deficits were financed largely by inflows of foreign direct investment (FDI). In 2007, FDI included US$28.5 million in privatization proceeds, reflecting part payment (out of a total of US$35 million) for the sale of 50 percent of GAMTEL.

10. The financial sector is relatively sound and competition has been increasing. With the entry of two new banks since October 2007, there are now ten commercial banks operating in The Gambia and two more have been granted approval-in-principle. Generally, the banks are profitable and adequately capitalized. However, their gross earnings in 2007 were significantly lower than in 2006, reflecting, in large part, revaluation losses associated with the marked appreciation of the dalasi. The risk-weighted capital adequacy ratio has stayed in the 22–23 percent range since the first quarter of 2007, against the minimum requirement of 8 percent. Nonperforming loans fell during the first quarter of 2008 to 10 percent of gross loans (compared to about 13 percent in the fourth quarter of 2007) as banks have been making serious efforts in loan recovery and in restructuring loans. In order to satisfy the demand for an Islamic instrument, the CBG introduced the short-dated Sharia-compliant Sukuk Al-Salaam in November 2007.

III. Performance Under the Program

11. All the quantitative performance criteria for end-March 2008 were met (Table A1). New external loans contracted during October 2007-March 2008 amounted to US$10.9 million in net present value terms, compared to an indicative target of US$20.7 million.

Table A1.

The Gambia: Quantitative Targets and Projections, End-December 2006 to End-June 2009

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Source: IMF staff estimates.

MDRI debt relief took place in the fourth quarter of 2007.

March 2008, September 2008, and March 2009 are performance criteria; December 2007, June 2008, December 2008, and June 2009 are indicative targets.

Adjusted upward (downward) by the dalasi equivalent of the extent to which actual receipts fall short of (exceed) projected level of privatization receipts.

Defined as domestic revenue minus expenditure and net lending, excluding externally financed capital expenditure.

To be applied on a continuous basis.

Adjusted upward (downward) by the extent to which actual receipts exceed (fall short of) projected level of privatization receipts.

External debt contracted or guaranteed other than that with a grant element equivalent to 45 percent or more, calculated using a discount rate based on the Organization for Economic Corporation and Development (OECD) commercial interest reference rates (CIRRs). Excludes borrowing from the IMF.

Excluding normal import-related credits.

Cumulative from October 1, 2007.

12. Four out of eight structural performance criteria were met (Table A2). Of the rest, two (submission of special audit reports on program monetary data by December 2007 and June 2008) were implemented with a slight delay, while the others were only partially met. As was the case in earlier reviews, the delays on the special audit reports reflected delays experienced by the external auditor in obtaining confirmations from some of the CBG’s correspondent banks abroad.

Table A2.

The Gambia: Structural Conditionality for December 2007–July 20081

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PA, PC, and B denote prior action, performance criterion, and benchmark, respectively.

13. With respect to the establishment of a central register of capital expenditure commitments, information was collected in different formats and varying degrees of completeness for individual projects. A uniform format has now been adopted and information gaps are being filled. Completion of the register has been established as a prior action for completion of the third review (Table A2).

14. A credit reference bureau has been established but is not yet fully operational. Banks are providing information to the Bureau but concerns about the legal basis for sharing information have slowed down implementation of the project. The Financial Institutions Act (2003) prohibits the sharing of information on individual customers of banks. The Act is under review, inter alia, to address this shortcoming. In view of uncertainty about the legislative calendar, this performance criterion has been reset to end-March 2009 to provide a realistic timeframe for implementation.

15. On the basis of the remedial actions that the government and the CBG have taken, the government requests waivers for the non-observance of the four performance criteria indicated above.

16. With respect to structural benchmarks, there has been a delay in the submission of the Auditor-General’s report on the government’s 2000-04 accounts to the national assembly (scheduled for end-December 2007). In January 2008, the Auditor-General provided an interim report to the Department of State for Finance and Economic Affairs (DoSFEA) to allow the Treasury Directorate an opportunity to respond to some queries and correct portions of the accounts. DoSFEA responded in May, and the Auditor-General now expects to complete a review and submit his final report to the national assembly by end-October 2008.

17. Work is progressing well on rebasing the national accounts to 2004 prices and on beginning to estimate GDP by the expenditure approach. Full implementation of this benchmark is now expected by end-September 2008.

IV. Medium-Term Objectives and Strategy

18. The government’s medium-term objectives and strategy are contained in The Gambia’s second Poverty Reduction Strategy Paper (PRSP II). PRSP II, which covers 200711, provides the framework for poverty reduction efforts in The Gambia and also sets the development agenda towards meeting the Millennium Development Goals (MDGs) by 2015. Strategic priorities include: (i) macroeconomic stability and effective public resource management; (ii) promotion of pro-poor growth and employment through private sector development; and (iii) improved provision of basic social services. Successful implementation of PRSP II requires significant strengthening of capacity in the civil service, improvements in the budget process (formulation, monitoring), and the mobilization of highly concessional external resources.

19. A Diagnostic Trade Integration Study (DTIS) led by the World Bank was approved by the government in August 2007, following the validation of its findings by stakeholders. It found that re-export trade (on which a large part of the economy and public finances depend) was in decline as a result of The Gambia losing some of the advantages which made it an attractive regional entrepot. In particular, harmonization of imports and sales taxes in the region and improvements in ports and customs operations in Senegal and other neighboring countries have eroded The Gambia’s competitive edge. The DTIS contains a wide range of recommendations to enhance The Gambia’s international competitiveness through sector-specific reforms and cross-cutting measures to improve the investment climate. Key areas of focus include infrastructure (e.g., transport, energy), tourism, and agricultural export diversification. The government is seeking funding to implement the highest priority recommendations of the DTIS, including those related to reinforcing trade facilitation services.

20. The Gambia has preserved macroeconomic stability in the last two and a half years with strong growth, relatively low inflation, and adequate international reserves. The government will continue to maintain prudent macroeconomic policies in the face of challenging global economic and financial conditions. The main objectives and assumptions underlying the medium term macroeconomic framework are:

21. The baseline scenario takes into account the importance of preserving fiscal discipline, containing inflation, and ensuring the sustainability of the external current account. It seeks to reduce the burden of domestic debt to ease upward pressure on interest rates and create fiscal space for poverty-reducing expenditures. The current account path reflects the medium-term projections of capital inflows.

22. Resources freed by debt relief under the HIPC and MDR Initiatives will be used to increase poverty-reducing expenditures, in line with PRSP II priorities. They will be allocated among various uses, including increased social sector expenditures, reduced domestic debt, and civil service pay and pension reform.

23. The government has established a Task Force to prepare recommendations for a comprehensive civil service reform program for The Gambia, drawing on studies supported by the World Bank and other donors. The main aim of the reform is to rebuild the capacity of the civil service to formulate and implement policies needed for effective delivery of public services. A heavy loss of professional and managerial staff has undermined the effectiveness of the civil service. To reverse this, the reform program is expected to address issues related to pay and benefits, as well as career development. In the short run (within one year), the reform will focus on pay reform, developing a pension reform strategy, and strengthening payroll and establishment controls. Over the medium-term (2–5 years), activities will include functional review of all departments, overhaul of job descriptions and schemes of service, and implementation of the pension reform.

24. The CBG will continue to take steps to promote the development and deepening of the financial sector. The CBG will encourage competition among financial institutions in order to lower interest rate spreads, increase the provision of services, expand the branch network in all parts of the country, and enhance growth and development. The CBG has taken a number of legal initiatives to promote a safe and vibrant financial system in The Gambia. To that end, it: (1) is preparing a draft Banking Act to replace the Financial Institutions Act 2003; (2) has prepared a new Non-Bank Financial Institutions Bill to encourage nonbanks to provide financial services; (3) has proposed amendments to Mortgage and Sheriff Acts that will reduce legal risks for banks, thereby promoting lending to the private sector. The CBG Board also has approved two new initiatives to promote foreign exchange operations. They are: (1) a code of conduct of foreign exchange market operators; and (2) establishing a system of market makers in foreign exchange, similar to the primary market dealership in treasury bills. The CBG will continue to implement the Prompt Corrective Action (PCA) framework, introduced in March 2007, to guide and help troubled banks. The CBG is setting up a new Financial Intelligence Unit (FIU) to combat money laundering.

V. Policies for the rest of 2008

25. A major challenge for economic management in the second half of 2008 will be coping with the impact of rising world food and oil prices. Thus far, appreciation of the dalasi has helped contain the impact of the price increases. At the same time, it has adversely affected the prospects for the upcoming tourist season.

A. Fiscal policy

26. Revenue is broadly on track to meet the targets set in the government’s 2008 budget. On the expenditure side, efforts will be made to speed up the disbursements for externally financed capital expenditures. The government may consider expanding social programs (e.g., school feeding program) to mitigate the impact of rising world food prices on the poor.

27. Preparation for the 2009 budget has begun with the issuance of the call circular in June. Key elements of the preparations will include government decisions on civil service and pension reforms. The government is also in discussions with the AfDB, EU, and the World Bank for assistance in the form of budget support.

28. The CBG and DoSFEA have enhanced their coordination of fiscal and monetary policies. Further to signing a memorandum of understanding last year to guide domestic debt management and monetary operations, the government has undertaken the following to strengthen the CBG’s financial position and its ability to conduct monetary policy. It will: (1) take over a nonperforming loan of the CBG to the Gambia National Petroleum Corporation of D136.9 million and clear the loan within four years at equal installments with the first one beginning in the last quarter of 2008; (2) continue to replenish the CBG’s capital by D20 million each year to the total of D100 million; of which, contributions for 2006–07 and half of the amount for 2008 have already been made; (3) reach agreement with the CBG in the near future on the timing and the amount of replenishment of the treasury bill special deposit account. Currently, this account has a very low balance, thereby limiting the CBG’s options to conduct monetary policy. DoSFEA and the CBG will agree on concrete proposals by end–October 2008.

B. Monetary and Exchange Rate Policies

29. The CBG will continue to use a money targeting framework to pursue its price stability objective. It will also use its rediscount rate to signal changes in its policy stance. In setting the rediscount rate, the CBG will analyze developments in the economy and the inflation outlook. It will strengthen the short-term liquidity forecasting framework through efforts to improve forecasts of government revenues and expenditures.

30. The exchange rate of the dalasi is market determined. The CBG will intervene in the foreign exchange market from time to time to: (1) accumulate foreign reserve assets to meet targets or prevent reserves from being depleted, which is essential to build investor confidence and strengthen the government’s debt repayment capacity and external liquidity conditions; (2) correct misalignment of the exchange rate of the domestic currency; and (3) calm disorderly markets, including exchange rate volatility and market illiquidity.

31. The second half of 2008 will be a challenging period for monetary policy making as The Gambia faces the impact of the increase in international food and oil prices. CBG policy will continue to be based on maintaining price stability. The CBG will use all the available instruments at its disposal to reach this goal.

C. External Debt

32. The HIPC and MDRI relief has significantly reduced The Gambia’s external debt burden. In net present value terms, the stock of debt fell from $439 million (68 percent of GDP) to $165 million (24 percent of GDP) at end-2007. Paris Club creditors have confirmed that they will provide the debt relief they promised. The government is making efforts to obtain debt relief from all non-Paris Club bilateral creditors.

33. The government is committed to the careful management of external debt to maintain external stability. To this end, it promotes a strategy of donor engagement and prudent debt management to attain PRSP priorities without compromising debt sustainability. It will be prudent with new borrowing and will respect the indicative targets for 2008 ($50 million) under the program. The limit for 2009 ($25 million) will be revisited in the context of program reviews, which will take into account the result of the government’s own debt sustainability analysis (DSA). Support is being sought from the Commonwealth Secretariat for technical assistance to undertake a DSA and to build capacity. Results of the DSA are expected by October 2008. The government will also ensure that new loans have a minimum grant element of 45 percent.

34. The results of the DSA will feed into the design of a national debt management strategy which will be prepared by end-February 2009. The strategy will be in line with best international practice and will incorporate the following principles: (1) a clear definition of debt management objectives; (2) a well-defined institutional framework; (3) an adequate mechanism to prevent the accumulation of arrears and monitor contingent liabilities; and (4) a commitment to implement cost effective cash management policies.

D. PRSP II Implementation and Aid Effectiveness

35. PRSP II was the focus of a Round Table Conference on The Gambia held in London in February 2008. The government has established mechanisms to monitor and analyze progress implementing PRSP II. In particular, the government has prepared a Results Matrix providing quantitative indicators and targets that can be matched to development results. A draft of the Annual Poverty Report for 2007 has been completed, and a final version will be published after it has been validated by stakeholders. A draft of the Poverty Reduction Expenditure Report for 2007 is also under preparation, and is expected to be finalized by end-August 2008.

36. Under the government’s ownership and leadership, an in-country Development Partners Coordination and Consultation Mechanism has been established under the Chairmanship of the Secretary of State for Finance and Economic Affairs. This mechanism is to facilitate and deepen development dialogue with The Gambia’s partners, bring about positive changes to aid practices, and encourage more effective use of aid resources for greater development impact for the implementation of PRSP II.

37. At the first consultation and coordination meeting held in April 2008, the government presented to its development partners a draft Aid Effectiveness Action Plan. The Action Plan adapted the Paris Declaration principles of Ownership, Alignment, Harmonization, Management for Results, and Mutual Accountability to the situation of The Gambia. The meeting noted the positive steps taken by some multilateral donors to have a joint Country Assistance Strategy for The Gambia and called on other development partners to develop similar joint and harmonized programming activities for the country. Consultation and coordination meetings will be held quarterly. At the next meeting, the Aid Effectiveness Action Plan will be finalized. The government informed development partners of plans to hold sector specific consultation and coordination meetings starting with Health and Education in the course of 2008.

VI. Program Monitoring and Access Level

38. The program will continue to be monitored based on agreed quantitative targets (Table A1), a set of structural performance criteria and benchmarks (Table A3), and program reviews. The quantitative financial targets for end-September 2008 and end-March 2009 are performance criteria; and those for end-December 2008, and end-June 2009 are indicative targets. The fourth and fifth program reviews are scheduled to be completed by end-January 2009 and end-July 2009, respectively. Definition of all targeted variables and reporting requirements are contained in the attached technical memorandum of understanding (TMU).

Table A3.

The Gambia: Structural Conditionality for September 2008–September 20091

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PC and B denote performance criterion and benchmark, respectively.

39. The CBG has strengthened its internal control and audit. In lieu of the special audits, the CBG proposes to implement alternative measures that would provide assurances to the IMF that financial controls at the CBG have been strengthened. These measures include: (1) preparation of pro-forma financial statements for 2007 based on the International Financial Reporting Standards (IFRS), which should be reviewed by the CBG’s external auditor, and (2) internal audit reports verifying the accuracy of monetary program data for test dates (September 2008 and March 2009). As the contract of the current external auditors expired after the audit of the 2007 financial statements, the CBG and the Auditor-General (who is responsible for appointing the CBG’s external auditor) are discussing an audit rotation and selection policy appropriate for The Gambia’s circumstances (few options available locally).

40. To ensure effective monitoring of program implementation, the PRGF Monitoring Committee, headed by the Secretary of State for Finance and Economic Affairs will continue to meet regularly to review performance under the program. It will also ensure that data are reported to the IMF as per the schedule agreed in the TMU and will provide any other information deemed necessary or requested by IMF staff in order to monitor the program. The committee will also take remedial actions in the event there are gaps or delays in reporting reliable statistics.

41. The government will monitor the impact of rising world food and oil prices on The Gambia’s balance of payments in the coming months. If the balance of payments deteriorates significantly on account of adverse price developments, the government may request an augmentation of the level of access to IMF resources under the PRGF arrangement. The government intends to take this up with the next review mission, currently scheduled for October/November 2008.

VII. Requests for Technical Assistance and FSAP

42. The government is grateful for the technical assistance that the IMF has provided to The Gambia. It welcomes the resumption of assistance in public financial management with the appointment of a new regional advisor based in Liberia whose work will complement the work of other macro-fiscal and debt management experts in DoSFEA, who are being supported under an AfDB technical assistance grant.

43. The government and the CBG welcome the continuation of assistance on financial, balance of payments, and national accounts statistics. The government requests that the IMF provide assistance to the Gambia Bureau of Statistics in the compilation of producer prices.

44. Technical assistance from the IMF has also contributed to the strengthening of banking supervision at the CBG. In view of the increasing number of banks and the introduction of new products in the financial sector, we request The Gambia be considered for an FSAP.

Attachment II Technical Memorandum of Understanding

(July 2008–September 2008)

I. Introduction

1. This memorandum sets out the understandings between the Gambian authorities and staff of the International Monetary Fund (IMF) regarding the definitions of quantitative performance criteria, indicative targets, structural performance criteria, and structural benchmarks that will be used to monitor the Poverty Reduction and Growth Facility (PRGF)- supported program covering the period of 2007–09. It also sets out the related reporting requirements and describes the adjusters that will be applied to certain quantitative performance criteria of the program.

II. Quantitative Performance Criteria

A. Net Domestic Assets of the Central Bank

2. Definition: The net domestic assets of the CBG are defined as the difference between reserve money and the net foreign assets of the CBG. Reserve money is defined as the sum of currency issued by the CBG (i.e., currency in circulation) and the deposits of commercial banks at the CBG. Net foreign assets are defined as foreign assets minus foreign liabilities. Foreign assets and foreign liabilities are defined as claims on nonresidents and liabilities to nonresidents, respectively.

3. For program monitoring purposes, in the calculation of the net domestic assets of the CBG, foreign assets and liabilities will be converted first into U.S. dollars at the prevailing cross-rates and then converted into dalasi using the D/USD program exchange rate of 22. This is an accounting exchange rate only and should not be construed as a projection.

4. Adjuster: The net domestic assets of the CBG will be adjusted upward (downward) by the dalasi equivalent of the extent to which actual receipts fall short of (exceed) the projected level of privatization receipts.

5. Supporting material: Net domestic assets of the central bank will be transmitted as part of the balance sheet of the CBG (compiled based on the TMU rate) on a monthly basis within four weeks of the end of each month. For analytical purposes, the balance sheet of the CBG compiled on a current-rate basis will also be submitted.

6. Supporting material: The CBG will report data on privatization receipts in the currency it is received in as well as equivalent amounts in U.S. dollars and in dalasis on a monthly basis within two weeks of the end of the month. The Department of State for Finance and Economic Affairs (DoSFEA) will report data on a monthly basis within two week of the end of the month on expenditures made from the privatization receipts.

B. Basic Balance of the Central Government

7. Definition: The basic balance of the central government is defined as revenue (tax and nontax) minus total expenditure and net lending, excluding externally financed capital expenditure. Central government excludes local and regional governments and public enterprises.

8. Supporting material: Reporting on the basic balance will form part of the consolidated budget report described in paragraph 30 below.

C. New External Payments Arrears of the Central Government

9. Definition: External payments arrears are defined as the stock of external arrears on loans contracted or guaranteed by the central government, except on debts subject to rescheduling or a stock of debt operation. Debts subject to rescheduling include debts covered under traditional mechanisms (bilateral creditors, such as the Paris Club members) or HIPC. External payments arrears occur when undisputed interest and amortization payments on the above-referenced loans are not made within the terms of the debt contract or in conformity with the terms for interim relief provided under the enhanced HIPC Initiative. This performance criterion will be assessed on a continuous basis.

10. Supporting material: An accounting of nonreschedulable external arrears (if any) by creditor countries, with detailed explanations, will be transmitted on a monthly basis within four weeks of the end of each month. This accounting would include, separately, arrears owed by the central government and other public sector entities to Paris Club and non-Paris-Club creditors.

D. Net Usable International Reserves of the Central Bank of The Gambia

11. Definition: Net usable international reserves (NIR) of the CBG are defined as the difference between usable reserve assets and reserve liabilities. Usable reserve assets are readily available claims on nonresidents denominated in foreign convertible currencies. They include the CBG holdings of SDRs, foreign currency cash, foreign currency securities, deposits abroad, and the country’s reserve position at the IMF. Excluded are any assets that are pledged, collateralized, or otherwise encumbered, claims on residents, claims in foreign exchange arising from derivatives in foreign currencies vis-à-vis domestic currency (such as futures, forwards, swaps, and options), precious metals, assets in nonconvertible currencies, and illiquid assets (including capital shares in international organizations). Reserve liabilities are all foreign exchange liabilities to residents and nonresidents, including commitments to sell foreign exchange arising from derivatives (such as futures, forwards, swaps, and options), and all credit outstanding from the IMF.

12. Adjuster: Net usable international reserves of the CBG will be adjusted upward (downward) by the extent to which actual receipts in foreign currency exceed (fall short of) the projected level of privatization receipts in foreign currency.

13. Supporting material: End-month data on net usable international reserves of the CBG will be transmitted within seven days of the end of each month. The CBG will identify the U.S. dollar equivalent of privatization receipts within net usable international reserves as a memorandum item.

E. New Nonconcessional Debt Contracted or Guaranteed by the Central Government with Original Maturity of More Than one Year

14. Definition: This target refers to new nonconcessional external debt with original maturity of more than one year contracted or guaranteed by the central government. It applies not only to debt as defined in point No. 9 of the Guidelines on Performance Criteria with Respect to Foreign Debt, adopted by the Executive Board of the IMF on August 24, 2000 (Decision No. 12274–00/85), but also to commitments contracted or guaranteed for which value has not been received. Excluded from this target are loans or purchases from the IMF and debts with a grant element of at least 45 percent.

15. 1 Also excluded are two loans from the OPEC Fund for International Development with grant elements of 39.5 percent each, which were approved in the first half of 2007.

16. Supporting material: A comprehensive record, including a loan-by-loan accounting of all new concessional and nonconcessional debt contracted or guaranteed by the central government with detailed explanations, will be transmitted on a quarterly basis within four weeks of the end of each quarter. Nonconcessional external debt over one year includes financial leases and other instruments giving rise to external liabilities, contingent or otherwise, on nonconcessional terms.

F. Outstanding Stock of External Public Debt with Original Maturity of One Year or Less

17. Definition: This target refers to the stock of outstanding external public sector debt with original maturity of one year or less, owed or guaranteed by the central government.2 Public sector consists of the central and regional governments and other public agencies, including the CBG. Excluded from this target are normal import-related credits.

18. Supporting material: A comprehensive record of all external debt with original maturity of less than one year owed or contracted by the public sector, with detailed explanations, will be transmitted on a quarterly basis within four weeks of the end of each quarter.

III. Quantitative Indicative Targets

A. Domestic Budgetary Arrears

19. Definition: Domestic budgetary arrears are defined as the sum of all bills that have been received by a central government spending unit or line ministry under the recurrent expenditure budget (including rents and utilities) or the development expenditure budget, and for which payment has not been made within 30 days. Arrears can be cleared in cash or through debt swaps.

20. supporting material: A comprehensive record of all domestic budgetary arrears, with detailed explanations, will be transmitted on a quarterly basis within four weeks of the end of each quarter.

B. Net Present Value of New Contracted External Debt

21. Definition: The net present value (NPV) of new external debt contracted or guaranteed by the government from October 2007 onward is calculated by discounting the future stream of payments of debt service due by the country-specific commercial interest reference rates (CIRRs) as published by the Organization for Economic Cooperation and Development (OECD). The new external debt will be measured by the U.S. dollar nominal sum of all loan agreements that have been contracted. Disbursed debt will be converted to U.S. dollars, based on prevailing WEO test date exchange rates; for loans contracted but not yet disbursed, the profile disbursement will be measured at the actual exchange rate at the test date, based on the projected drawdown consistent with the medium-term fiscal framework as discussed with the Fund staff.

22. Supporting material: Data on the NPV of the stock of outstanding external debt contracted or guaranteed by the government since October 2007 will be provided on a monthly basis within five weeks of the end of each month.

IV. Structural Performance Criteria and Benchmarks

A. Central Register of Capital Expenditure Commitments

23. Definition: The register in the Central Project Management and Aid Coordination Directorate of the Department of State for Finance and Economic Affairs is deemed established when the directorate compiles and maintains an up-to-date database on capital expenditure commitments made by the government in relation to ongoing and new externally financed projects.

24. Supporting material: A comprehensive record of capital expenditure commitments made by the government in relation to ongoing and new externally financed projects will be transmitted on a quarterly basis within four weeks of the end of each quarter. The record shall explicitly identify commitments made for each project.

B. Pro-Forma Financial Statements

25. The CBG shall prepare pro-forma financial statements based on the International Financial Reporting Standards (IFRS) for the 2007 financial statement by end-September 2008. The pro-forma financial statement shall include IFRS-required disclosures and balances valued in accordance with the IFRS. It shall be reviewed by the external auditors, who shall prepare a report summarizing their findings from the review and recommended next steps to achieve full compliance.

C. Credit Reference Bureau

26. The Bureau is deemed operational when it is staffed, begins compiling a database on commercial bank customers, and commercial banks are able to share information from the database. The legal basis for sharing such information should be formalized by amending Section 60 of the Financial Institutions Act (2003).

D. Quarterly Balance of Payments Statistics

27. Supporting material: Quarterly balance of payments data transmitted to the IMF with a one quarter lag.

E. National accounts

28. Supporting material: Gambia Bureau of Statistics publication of national accounts series showing expenditure components (consumption, investment, net exports) as well as sector of origin of GDP, in both current and constant (2004) market prices.

V. Other Data Requirements and Reporting Standards

29. In addition to providing the data needed to monitor program implementation in relation to the program’s performance criteria, indicative targets, and benchmarks, as set out above, the authorities will transmit the following data within the time frame specified below:

A. Prices

30. The monthly disaggregated consumer price index, including weights for each major category, with August 2004 = 100, will be transmitted within four weeks of the end of each month.

B. Government Accounts Data

31. A monthly consolidated central government budget report (i.e., the analytical table) on budget execution during the month and cumulatively from the beginning of the year, will be transmitted to the IMF within four weeks of the end of the month. The report will comprise: (i) revenue data by major item, including tax (direct tax, taxes on domestic goods and services, and taxes on international trade) and nontax; (ii) external grants by type (e.g., project, program); (iii) details of recurrent expenditure (including data on wages and salaries, interest payments, and other charges); (iv) details of capital expenditure and net lending (including data on externally financed capital expenditure, expenditures from the Gambia Local Fund, and net lending); (v) the overall balance and the basic balance (defined in paragraph 7); and (vi) details of budget financing (including net domestic borrowing and its gross components, external grants, net external borrowing and its gross components, utilization of privatization proceeds, and arrears).

32. Net domestic borrowing by the central government over a given period is defined as the difference between the net domestic debt at the end of the period and the net domestic debt at the beginning of the period. The central government’s net domestic debt is defined as: claims on the central government by the banking system minus deposits of the central government with the banking system plus claims by the nonbanking sector, including public enterprises. Central government excludes local and regional governments and public enterprises. The banking system comprises the CBG and commercial banks.

C. Poverty Reducing Expenditures

33. A monthly report on poverty-reducing expenditures, by functional and economic classifications, will be transmitted within four weeks of the end of each month. Poverty-reducing expenditures comprise line items in the budget that have been specifically tagged as PRSP-related. For 2007, they include expenditure on the construction of trunk roads.

D. Monetary Sector Data

34. The balance sheets of the CBG, prepared on the basis of current and program exchange rates, will be transmitted on a monthly basis to the IMF within four weeks of the end of each month. The balance sheet should explicitly identify all claims on, and liabilities to, the government. Claims include overdrafts, holdings of treasury bills, interest and noninterest-bearing government bonds, advances to the government in foreign currency, and other claims. Liabilities include balances in the treasury main, treasury expenditure, consolidated revenue fund and other revenue accounts, treasury bill special deposit, privatization, special projects, foreign projects, and other deposit accounts.

35. The consolidated balance sheet of the commercial banks and a monetary survey (i.e., consolidation of the accounts of the CBG and the commercial banks), including foreign currency deposits held by residents of The Gambia with commercial banks, will be transmitted within four weeks of the end of each month.

36. The CBG will also forward, within four weeks of the end of each month, data on banks’ reserves held at the CBG to meet statutory reserve requirements during the last week of each month (broken down by total reserves, and excess reserves or deficits). Data will be provided for each commercial bank as well as for the industry as a whole.

37. The CBG will also forward within four weeks of the end of each month, data on government borrowing from the CBG as defined in the CBG Act 2005. The data shall indicate the limit on government borrowing from the CBG based on the government’s tax revenues in the preceding year.

E. Treasury Bills

38. Weekly data on the amount offered, issued, net issuance, over/under subscription, and yields (interest rates) of the various instruments will be transmitted on a monthly basis within seven days of the end of the month. Data on treasury bills outstanding (including information on the distribution by bank and nonbank holders) will be transmitted on a monthly basis within six weeks of the end of each month. The monthly Liquidity Management Report, reflecting the data as of the last working day of the month, will be transmitted within seven days after the end of each month.

F. External Sector Data

39. The following standards will be adhered to in reporting data on exchange rates: (i) the interbank market exchange rates, defined as the simple average of the weekly weighted average buying and selling rates, will be transmitted on a weekly basis within five business days of the end of the week; and (ii) the CBG’s published monthly average and end-month exchange rates, including those for all currencies in which foreign assets and liabilities are denominated, will be transmitted within two weeks of the end of the month.

40. The CBG will also forward monthly data on volume of transactions (purchases, sales, and total) in the foreign exchange market by each major group of participants (CBG, commercial banks, and foreign exchange bureaus) in dalasis within two weeks of the end of the month.

G. CBG Report on Monetary Program Data

41. The CBG shall forward a report prepared by the Internal Audit Department verifying the accuracy of monetary data submitted to the IMF. The report shall be submitted within one quarter after each test date. The first test date for which the report to be prepared is September 2008.
1

The price build up formula includes an excise tax and a sales tax, as well as a residual element that operates like a virtual stabilization fund. A positive residual is interpreted as a windfall tax, while a negative residual is considered an implicit subsidy.

2

Chudik and Mongardini (2007).

3

The lower than expected external borrowing was the result of a slower than expected pace concluding negotiations with lenders. The debt sustainability assessment is presented in Supplement 1.

4

See SIP chapter on fiscal implications of an economic partnership agreement.

1

A loan is concessional if its grant element is at least 35 percent, calculated on the basis of the commercial interest reference rates (CIRR) and following the methodology set out in staff paper on Limits on External Debt or Borrowing in Fund Arrangements – Proposed Change in Implementation of the Revised Guidelines approved by the IMF Executive Board on April 15, 1996.

2

The term “debt” has the meaning set forth in point No. 9 of the Guidelines on Performance Criteria with Respect to Foreign Debt, adopted by the Executive Board of the IMF on August 24, 2000 (Decision No. 12274–00/85).

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Cover IMF Staff Country Reports
The Gambia: 2008 Article IV Consultation and Third Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, and Request for Waiver of Performance Criteria: Staff Report; Staff Supplement; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for The Gambia
Author:
International Monetary Fund
Volume/Issue:
Volume 2008: Issue 324
Publisher:
International Monetary Fund
ISBN:
9781451815627
ISSN:
1934-7685
Pages:
94
DOI:
https://doi.org/10.5089/9781451815627.002
Figure 1.

The Gambia: Inflation, Exchange Rate, and Monetary Developments

Gambia - Fiscal Indicators

(Percent of GDP)

The Gambia: Selected Interest Rates, First Quarter 2005-Fourth Quarter 2007

(Percent per annum)

Nominal and Real Exchange Rates

Single-country estimation of ERER

Panel estimation of ERER

NPV of debt-to-GDP ratio

NPV of debt-to-exports ratio
Figure 2.

External Debt Indicators before and after HIPC and MDRI Relief 1

Ranking on the ease of doing business

Priority Spending as a Percent of Domestic Revenues

Priority Spending as a Percent of Departmental Budgets
Figure 3.

The Gambia: Progress on Selected Millennium Development Goals

Reserve Money

(millions of dalasis)