Press Release No. 24/496

The Gambia: IMF Executive Board Completes the Second Review Under the Extended Credit Facility

December 20, 2024

• The IMF Executive Board completed today the second review under The Gambia’s Extended Credit Facility (ECF) arrangement, enabling the immediate disbursement of about US$10.8 million to help meet financing needs and bolster inclusive, sustainable growth.
• Economic recovery is strengthening, and inflation is gradually decreasing, although the pace remains slow. The country remains vulnerable to global shocks.
• Program performance has been affected by fiscal pressures and delays in reform implementation, but the authorities remain committed to overall program targets. Steadfast implementation of the policy and reform agenda will be essential to safeguard macroeconomic gains and debt sustainability.

Washington, DC – December 20, 2024: The Executive Board of the International Monetary Fund (IMF) completed today the second review under The Gambia’s Extended Credit Facility (ECF) arrangement, approved by the IMF Executive Board on January 12, 2024, in the amount of SDR74.64 million (about US$97.3 million). The completion of the review allows for the immediate disbursement of SDR 8.29 million (about US$10.8 million), bringing total disbursements under the arrangement to about SDR 24.87 million (US$32.4 million).

The economic recovery in The Gambia is strengthening. Real GDP growth is expected to reach 5.8 percent in 2024, supported by a broad-based rebound in economic activity. In particular, tourist arrivals are recovering and nearing pre-pandemic levels, while remittance inflows remain strong. Headline inflation has decreased significantly from a peak of 18.5 percent in September 2023, although energy prices led to a small uptick in inflation to 10 percent in October 2024.

While the authorities remain committed to the objectives set out in the program and revenue collection has been strong, spending pressures from the Organization of Islamic Cooperation (OIC) Summit and emergency support to the public utility company NAWEC have weighed on fiscal balances. The new foreign exchange policy is working well, and international reserves exceeded targets by the end of September.  

Based on the strength of the macroeconomic program, growth is projected at 5.9 percent in 2025 and around 5 percent in the medium term, though risks remain from global conflicts, commodity price shocks, and fluctuations in tourism and remittance flows. Steadfast implementation of the policy and reform agenda will be essential to safeguard macroeconomic gains and debt sustainability.

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

“The Gambia’s economic recovery is strengthening while inflation has trended down. Program implementation was mixed, reflecting broadly satisfactory adherence to quantitative performance criteria and indicative targets but delays in implementing structural benchmarks. The authorities remain committed to their reform agenda, despite global economic headwinds. 

“Continued commitment to fiscal consolidation is critical to reduce fiscal risks and preserve debt sustainability. Finalizing and implementing the Domestic Revenue Mobilization Strategy will help secure consolidation gains and lower reliance on costly domestic and external financing. Improving the structure of expenditures will help maintain social services and space for growth-enhancing capital expenditures. Strengthening public financial management, including by preventing domestic arrears accumulation, and improving the performance of state-owned enterprises will help contain fiscal risks. To reduce debt vulnerabilities, it is crucial to adhere to the agreed fiscal targets, focus on grants and concessional loans, limit fiscal risks from PPPs, and implement a strong medium-term fiscal framework.

“The Central Bank of The Gambia has appropriately maintained its tight monetary policy stance and is encouraged to remain vigilant and data dependent to ensure that inflation converges to the central bank’s medium-term target. The foreign exchange market has performed well following the introduction of the new foreign exchange policy. Going forward, the central bank is encouraged to continue pursuing an exchange rate that fully reflects market forces. The central bank’s commitment to cease financial support to public entities is welcome to prevent risks to its balance sheet.

“Progress with structural reforms will be essential, including to enhance governance and further improve the business environment to promote private sector development and job creation. The publication of the action plan for the implementation of the recommendations of the governance diagnostic report as a prior action for this review was an important milestone. Adopting strong climate-related policies including through a possible RSF arrangement will be essential to build The Gambia’s resilience to climate risks.”