An International Monetary Fund (IMF) mission led by David Dunn visited The Gambia during June 4-17, 2013 to conduct discussions for the 2013 Article IV consultations. The members of the mission met with the Ministers of Finance and Economic Affairs, Energy, and Information and Communication Infrastructure, the Governor of the Central Bank of The Gambia (CBG), other senior government and CBG officials, as well as representatives from civil society organizations, labor unions, the business and banking sectors, and development partners.
At the conclusion of the mission, Mr. Dunn issued the following words:
"The Gambian economy is still recovering from the severe drought of 2011. In 2012, real growth in gross domestic production (GDP) is estimated to have been just over 5 percent, driven by a strong performance in tourism and a partial rebound in agriculture. However, with crop production still well below normal, the balance of payments has remained weakened and the Gambian dalasi has continued to face depreciation pressures. In late May, the Central Bank of The Gambia acted to tighten monetary policy, which has helped to stem the rate of depreciation.
"The mission endorses the authorities' tight monetary stance and decision to refrain from the CBG's financing of the fiscal deficit. This will likely lead to higher Treasury bill yields, which should also help stabilize the dalasi. However, reducing Government's domestic borrowing to 1½ percent of GDP in 2013-as previously planned-will be critical to eventually ease the current pressure on inflation and interest rates. The mission is encouraged by the government's immediate actions to achieve the necessary fiscal discipline.
"Despite current tensions surrounding the exchange rate, The Gambia's economic outlook is generally positive, as long as the authorities implement prudent policies. Real GDP growth is expected to rise to about 8-9 percent a year during 2013-14, driven by a projected continuation of the recovery in agriculture. Although inflation has picked up during 2013, it is projected to stabilize at around 5 percent a year by 2014. In the mission's view, reducing Government's net domestic borrowing further during this period will be critical to ensure confidence.
"Over the medium term, the main challenges for The Gambia are to strengthen economic and financial stability, enhance growth prospects, and reduce poverty, in line with the authorities' Programme for Accelerated Growth and Employment (PAGE). The mission believes that tax reforms with a view to broadening the base and simplifying the tax system could play an important role in creating room for growth-enhancing expenditures, while also improving the business environment by allowing for lower tax rates over time. Large commitments of support by development partners for investments in the agriculture and transportation sectors offer the promise of higher and more inclusive growth going forward. Also with assistance from development partners, the mission encourages the authorities to act expeditiously to formulate strategic plans for the energy and telecom sectors to ensure that infrastructure supports high growth and employment, especially for the youth.
"The mission welcomes progress by the CBG in its efforts to improve access to financial services and strengthen banking supervision. To enhance oversight of the Social Security and Housing Finance Corporation through greater transparency, the mission recommends that the authorities make the annual report of the external auditor more widely available, such as by posting it on a government website.
"The IMF Executive Board is expected to conclude the Article IV consultation discussions in late August 2013.
"The mission thanks the authorities for candid and constructive discussions and expresses its appreciation for the excellent cooperation during its visit."
