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© 2009 International Monetary Fund
August 2009
IMF Country Report No. 09/268
The Gambia—Fifth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, and Request for a Waiver of Nonobservance of Performance Criterion—Staff Report; and Press Release
In the context of the fifth review under the three-year arrangement under the Poverty Reduction and Growth Facility for The Gambia and its request for a waiver of nonobservance of performance criterion, The following documents have been released and are included in this package:
The staff report for the Fifth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, and Request for a Waiver of Nonobservance of Performance Criterion, prepared by a staff team of the IMF, following discussions that ended on May 21, 2009, with the officials of The Gambia on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on July 21, 2009. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.
A Press Release summarizing the views of the Executive Board.
The documents listed below have been or will be separately released.
Letter of Intent sent to the IMF by The Gambian authorities.*
Memorandum of Economic and Financial Policies by the Gambian authorities*
Technical Memorandum of Understanding*
*Also included in the Staff Report
The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.
Copies of this report are available to the public from
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International Monetary Fund
Washington, D.C.
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INTERNATIONAL MONETARY FUND
THE GAMBIA
Fifth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility and Request for Waiver of Nonobservance of Performance Criterion
Prepared by the African Department (In consultation with other departments)
Approved by Roger Nord and Dominique Desruelle
July 21, 2009
Discussions: The discussions were held in Banjul May 8–21, 2009. The staff team comprised Mr. Powell (head), Mr. Dwight, Mr. Pamu, Mr. Reinke (all AFR), Mr. Obiora (SPR), and Mr. Segura (resident representative, based in Dakar). The team met then-Minister of Finance Mousa Gibril Bala-Gaye, Central Bank Governor Momodou Mamba Saho, other senior officials, and representatives of commercial banks, the business community, nongovernmental organizations, and The Gambia’s development partners. Mr. Abdou Kolley was appointed as Minister for Finance and Economic Affairs effective June 19, 2009.
PRGF arrangement: The current three-year PRGF arrangement was approved in February 2007 in the amount of SDR 14 million (45 percent of quota). The fourth review and augmentation of access (20 percent of quota) was completed February 18, 2009. The authorities are requesting the sixth disbursement (SDR 5.11 million).
Contents
Executive Summary
I. Introduction
II. Recent Economic Developments and Progress
III. Policy Discussions
A. Medium-Term Macroeconomic Framework
B. Fiscal Policy
C. Debt Sustainability
D. Monetary and Exchange Rate Policies
E. Promoting Growth and Reducing Poverty
F. Risks
G. Program Monitoring
IV. Staff Appraisal
Appendix I. Letter of Intent
Attachment I. Memorandum of Economic and Financial Policies
Attachment II. Technical Memorandum of Understanding
Tables
1. Selected Economic and Financial Indicators, 2006–10
2. Central Government Operations, 2006–10 (Millions of Dalasis)
3. Central Government Operations, 2006–10 (Percent of GDP)
4. Monetary Survey, 2006–10
5. Analytical Account of the Central Bank of The Gambia, 2006–10
6. Balance of Payments, 2006–10 (Millions of U.S. dollars)
7. Balance of Payments, 2006–10 (Percent of GDP)
8. Proposed Schedule of Disbursements
9. Indicators of Capacity to Repay the Fund, 2007–15
Figures
1. Recent Economic Developments
2. The Gambia in Regional Perspective
3. Medium-Term Outlook
4. PV of Debt to Export Ratio
Boxes
1. Why is The Gambia Still at High Risk of Debt Distress?
Executive Summary
Performance on the PRGF-supported program has been generally satisfactory. All quantitative performance criteria for end-March 2009 were met and the structural measures scheduled through March were implemented (some with a delay). Staff supports the authorities’ request for a waiver for the nonobservance of the performance criterion for making the credit reference bureau operational and conclusion of the 5th review.
The global economic crisis is undermining growth and the external balance. GDP growth is expected to decline from about 6 percent in 2008 to 3½ percent in 2009, and tourism and remittances are expected to fall by about 20 percent. Nonetheless, the government met its fiscal target for March 2009. Both revenues and expenditures so far in 2009 are in line with budget projections and, with donor support (including the earlier PRGF augmentation), gross international reserves are projected to increase to about 4.6 months of imports by year-end.
The Gambia’s external debt position has worsened recently. Even after HIPC and MDRI debt relief, the country is at high risk of debt distress. Staff urged the authorities to complete a comprehensive debt strategy by September and to rely primarily on grants to finance development spending.
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INTERNATIONAL MONETARY FUND
THE GAMBIA
Fifth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility and Request for Waiver of Nonobservance of Performance Criterion Informational Annex
Prepared by the African Department (In consultation with other departments)
Approved by Roger Nord and Dominique Desruelle
July 21, 2009
Relations with the Fund. Describes financial and technical assistance from the Fund and provides information on the safeguards assessment and exchange rate system. Outstanding purchases and loans amounted to SDR 13.11 million (42.15 percent of quota) at end-May 2009.
Joint Bank-Fund Work Program. Lists the work program of the Bank and the Fund on The Gambia during January–December 2009.
Relations with the African Development Bank. Describes the African Development Bank Group program and portfolio.
Statistical Issues. Assesses the quality of statistical data. The authorities have made progress in improving the compilation of economic and financial statistics. However, weaknesses in a broad range of economic statistics are hampering the analyses of economic developments in the country.
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Press Release No 09/279
FOR IMMEDIATE RELEASE
August 7, 2009
International Monetary Fund
Washington, D.C. 20431 USA
