Press Release No. 24/264

THE GAMBIA: IMF Executive Board Completes the First Review Under the Extended Credit Facility

July 9, 2024

• The IMF Executive Board completed today the first review under the Extended Credit Facility (ECF) arrangement for The Gambia, enabling a disbursement of about US$10.95 million.
• Economic activity continued to recover robustly. Inflation eased but remains well above the central bank’s medium-term objective.
• Performance under program has been satisfactory. Continued implementation of the reforms will help address medium- and long-term macroeconomic challenges and catalyze additional financing from development partners and the private sector.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the first review under the Extended Credit Facility (ECF) arrangement, approved by the IMF Executive Board on January 12, 2024, in the amount of SDR74.64 million (about US$98.7 million). The completion of the review allows for an immediate disbursement of SDR 8.29 million (about US$10.95 million) bringing the total disbursement under the arrangement to about SDR16.6 million (US$21.9 million).

Economic activity continued to recover robustly. Economic growth is estimated at 5.3 percent in 2023, supported by good performance of the agriculture, services, telecommunication, and construction sectors. Tourist arrivals continued to increase in 2023 but remain slightly below pre-pandemic levels. Remittance inflows also showed a sustained good performance. Headline inflation eased from a peak of 18.5 percent (year-on-year) in September 2023 to 11 percent in April 2024 mainly due to declining global food and energy prices, but it remains well above the central bank’s medium-term objective of 5 percent. The introduction of a new foreign exchange policy in December 2023 helped to largely close the wedge between the official and parallel market exchange rates and to ease foreign exchange shortages. International reserves remain at a comfortable level of above 4.5 months of imports. The outlook remains subject to downside risks from the repercussions of global and regional conflicts. Such risks include international commodity price volatility, lower tourist arrivals, and weak remittance inflows.

Following the Executive Board’s discussion, Deputy Managing Director Bo Li issued the following statement:

“The Gambian authorities continue democratic and justice reforms. Economic recovery is strengthening while inflation is progressively decelerating albeit remaining high. Program performance under the Extended Credit Facility (ECF) arrangement has been satisfactory despite the challenging environment.

“The central bank has appropriately maintained its tight monetary policy stance to fight inflationary pressures. Foreign exchange shortages have eased following the introduction of the new foreign exchange policy. Going forward, the central bank is encouraged to make full use of its policy toolkit to fight inflation, and continue to ensure a market-based exchange rate and smooth functioning of the foreign exchange market.

“The fiscal outturns in 2023 reflected good revenue performance but the fiscal deficit and public debt exceeded projections due to an accelerated execution of some infrastructure projects. The fiscal policy in 2024 remains anchored on the approved budget. Efforts to bolster domestic revenue mobilization and reprioritize spending should continue. To reduce debt vulnerabilities, it will be critical to adhere to the agreed borrowing plan, focus on grants and concessional loans, limit fiscal risks from SOEs and PPPs, and implement a strong medium-term fiscal framework. Additionally, strong external buffers are needed to prepare for the upcoming expiration of debt service deferrals.

“The authorities are encouraged to build on recent progress and pursue further structural reforms. The adoption of the anti-corruption bill by the National Assembly was an important milestone. Further progress remains critical, including on enhancing governance and improving the business environment to foster a strong recovery and inclusive growth. Adopting strong climate-related policies would be essential to build The Gambia’s resilience to climate risks. “