Abstract
The Gambian economy performed well in the face of external shocks under the Extended Credit Facility. Executive Directors welcomed the 2011 budget, which focuses mainly on revenue enhancement, limiting government’s domestic borrowing, and reduction of poverty. They agreed that IMF engagement has helped in anchoring the macroeconomic policy framework, fiscal adjustment, and signaling the donor community. Directors noted the recommendations of the Ex Post Assessment update and agreed that IMF engagement with The Gambia had a positive impact and granted an extension of the current arrangement.
The Executive Board of the International Monetary Fund (IMF) today completed the seventh review of The Gambia’s economic performance under a program supported by the Extended Credit Facility (ECF). The Board also approved waivers for the nonobservance of the end-March 2010 performance criteria on the floor on the basic balance and on the floor on the net usable international reserves of the Central Bank.
The Board’s decision enables the immediate disbursement of an amount equivalent to SDR 2.3325 million (about US$ 3.56 million), bringing total disbursements under the ECF to The Gambia to an amount equivalent to SDR 22.55 million (about US$ 34.38 million).
At the conclusion of the Executive Board’s discussion on The Gambia, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
“The Gambian economy has continued to perform well under the Extended Credit Facility, with growth set to remain at about 5½ to 6 percent a year, while inflation is kept in check. The authorities have taken measures to correct the fiscal slippages of the first half of last year and adjust to a reduced resource envelope.
“The 2011 budget will be anchored on limiting government’s domestic borrowing to ease pressure on inflation, interest rates, and the exchange rate and to achieve substantial fiscal savings. To help implement this agenda, the authorities intend to stabilize revenue through the introduction of a new formula for fuel price adjustments that would allow for greater pass-through of movements in import prices. The authorities are also taking steps to ensure a smooth introduction of a VAT by January 2013. The budget includes allocations for poverty reducing expenditures, which could also help garner greater donor support.
“Key structural reforms will contribute to maintaining macroeconomic stability and strong growth. In particular, reforms in public financial management will enhance fiscal discipline and better control government expenditures. Steps to strengthen bank supervision will help to ensure stability in the financial sector,” Mr. Portugal added.