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IMF Country Report No. 20/131

THE GAMBIA

REQUESTS FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY AND MODIFICATION OF PERFORMANCE CRITERIA UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT— PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR THE GAMBIA

April 2020

In the context of the Requests for Disbursement Under the Rapid Credit Facility and Modification of Performance Criteria Under the Extended Credit Facility Arrangement, the following documents have been released and are included in this package:

  • A Press Release including a statement by the Chair of the Executive Board.

  • The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on April 15, 2020, following discussions that ended on April 3, 2020, with the officials of The Gambia on economic developments and policies underpinning the IMF arrangements under the Rapid Credit Facility and the Extended Credit Facility. Based on information available at the time of these discussions, the staff report was completed on April 8, 2020.

  • A Debt Sustainability Analysis prepared by the staffs of the IMF and the World Bank.

  • A Statement by the Executive Director for the Gambia.

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THE GAMBIA

REQUESTS FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY AND MODIFICATION OF PERFORMANCE CRITERIA UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT

April 8, 2020

Executive Summary

Context. On March 23, 2020, the Executive Board of the IMF approved a 39-month Extended Credit Facility (ECF) arrangement for The Gambia in the amount of SDR 35.0 million (equivalent to 56.3 percent of quota). Faced with the COVID-19 pandemic, the authorities’ initial policy response has focused on public health preparedness and containment. Staff has lowered the 2020 real GDP growth projection for The Gambia from 6.3 percent to 2.5 percent, although this assessment is subject to elevated downside risks.

Request for IMF Support. The authorities are seeking financial assistance in the amount of SDR 15.55 million (25 percent of quota) under the exogenous shock window of the Rapid Credit Facility (RCF) to address their urgent BOP need and request that the RCF disbursement be on-lent to supplement budget resources. The Gambia meets the RCF eligibility requirements; and the requested level of access is adequate and consistent with debt sustainability and with The Gambia’s capacity to repay the Fund. The Gambia is also eligible for debt relief under the Catastrophe Containment and Relief Trust (CCRT) which, once delivered, will further strengthen its capacity to repay. Staff supports the authorities’ request for IMF support, including the request that the RCF disbursement be on-lent to the Treasury to help address emergency fiscal needs.

Request for modification of performance criteria under the ECF-supported program. Preliminary data indicate that the end-March indicative program targets are likely to have been met. Going forward, the authorities request that the quarterly NUIR and NDA targets (and the related end-June and end-December performance criteria) be revised to accommodate the deterioration in the BOP outlook. Staff supports the request for the modification of performance criteria at this stage.

Key policy recommendations

  • Fiscal policy to focus first and foremost on meeting priorities related to the epidemic.

  • Greater exchange rate flexibility is desirable to maintain adequate reserves.

Approved By

Annalisa Fedelino (AFR) and Craig Beaumont (SPR)

An IMF team comprising: J. Wieczorek (head), M. Barry, H. Devine, F. Kumah, M. Norat (all AFR), W. Daal (FAD), and S. Khan (SPR) held discussions with The Gambian authorities via teleconferences led by Finance Minister Njie, Central Bank Governor Jammeh, and other senior government officials on March 25 and April 3, 2020. Ms. Quartey assisted in the preparation of this report.

Contents

  • BACKGROUND

  • PRE-COVID-19 ECONOMIC DEVELOPMENTS

  • IMPACT OF THE COVID-19 PANDEMIC

  • A. Initial Response and Impacts

  • B. Risks to the Outlook

  • POLICY ISSUES

  • ACCESS AND CAPACITY TO REPAY THE FUND

  • A. Access Level, Modalities, and Modification of Program Targets

  • B. Capacity to Repay and Safeguards Assessment

  • STAFF APPRAISAL

  • TABLES

  • 1. Selected Economic Indicators, 2018–22

  • 2. Balance of Payments, 2018–22 (Millions of U.S. dollars)

  • 3. Balance of Payments, 2018–22 (Percent of GDP)

  • 4. Statement of Central Government Operations, 2018–22 (Millions of local currency

  • 5. Statement of Central Government Operations, 2018–22 (Percent of GDP)

  • 6. Monetary Accounts, 2018–21 (Millions of local currency)

  • 7. Monetary Accounts, 2018–21 (Units as indicated)

  • 8. Financial Soundness Indicators for the Banking Sector, 2015–19

  • 9. External Financing Requirements and Sources, 2020–23

  • 10. Indicators of Capacity to Repay the Fund, 2019–32

  • APPENDIX

  • I. Letter of Intent

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THE GAMBIA

REQUESTS FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY AND MODIFICATION OF PERFORMANCE CRITERIA UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT—DEBT SUSTAINABILITY ANALYSIS1

Approved By:

April 8, 2020

Annalisa Fedelino, Craig Beaumont (IMF), and Marcello Estevão (IDA)

Prepared by the staffs of the International Monetary Fund and the International Development Association