The country representative of the International Monetary Fund, Ruby E.M Randall, told journalists and partners at Atlantic Hotel on Tuesday that Gambia is still at huge risk of debt distress. Randall was speaking at the launch of the IMF regional economic outlook report.
A recalculation of the monetary measure of the market value of goods and services produced in the Gambia annually (GDP) has shown that the country’s debt to GDP has gone down by 48%.
Gambia’s debt to GDP ratio was 136% prior to the rebasing by the Gambia Bureau of Statistics, an exercise that show a rise in the country’s GDP from D49.4 billion in 2013 to D69.5 billion.
Though this does not affect the country’s debt stock, it gives authorities an opportunity to access more loans from lenders who may be worried that the country can default on its debt.
“Rebasing the economy is a normal thing to do… In fact this is something that should be done in every five years. Even Nigeria rebased its economy to include Nollywood,” said 1st deputy governor of the Central Bank, Dr Saikou Jabbi.
According to the IMF regional economic outlook report, even after rebasing the GDP, Gambia remains a regional outlier with a debt to GDP ratio of 88 percent and its debt service ratios are about four times higher than the regional average.
Randall said the country’s adherence to the reform agenda will be critical in its efforts to reduce its debt pile.
Robust growth forecast
The country representative of the International Monetary Fund said the economic growth figures for The Gambia is forecasted to “remain robust and exceed the regional average if the authorities stay on course with the current reform agenda”.
About a week ago, Gambian authorities said economic growth in 2019 may average 6% as plans are hatched to enhance fiscal sustainability, restore debt sustainability, and strengthen the business climate.
Meanwhile, the regional growth figures are expected to increase to 3.1 and 3.5 percent in 2018 and 2019, respectively.
In 2017 growth in The Gambia was revised upwards from 3.5 percent to 4.6 percent in 2017, following the GDP rebasing, which broadened the scope of coverage to encompass other dynamic sectors and industries that were previously not captured in the national accounts, said IMF.
Curtailing public spending
The administration of President Adama Barrow has promised a series of reforms to remedy the ills within the economy that they have inherited from former president Yahya Jammeh.
However, Barrow administration’s promised policy to reduce the government fleet of vehicles, reduce embassies, reduce unnecessary travels and reduce loan dependence largely remain a rhetoric.
The permanent secretary at the finance ministry, Lamin Camara, said those cost-cutting measures are still on the table and they are looking into it.
The president has announced last week following a cabinet meeting that government plans on saving D1 billion with some stringent cost cutting measures.
Camara said given the limited resources available in the country, government must take loans to carryout development projects.
About 10% of country’s domestic revenue is left for developmental projects after payment of salaries, debt servicing and others, said Camara.
He said the operations of foreign embassies are particularly putting so much pressure on country’s little resources.