Press Release No. 04/49

Press Release: IMF Executive Board Reviews Noncomplying Disbursement to The Gambia

March 8, 2004

The Executive Board of the International Monetary Fund (IMF) has reviewed matters related to two noncomplying disbursements to The Gambia, each in an amount equivalent to SDR 3.435 million (about US$5.1 million), that were made in July and December 2001 following the completion by the Executive Board of the first and second review under the third annual Poverty Reduction and Growth Facility (PRGF) arrangement. The Executive Board agreed that The Gambia would be expected to repay the two noncomplying disbursements totaling SDR 6.87 million (US$10.1 million), together with any accrued interest. The first of four equal repayments must be made within 30 days.

The issue of misreporting arose because of inaccurate information provided to the Fund relating to the end-March 2001 and end-September 2001 performance criteria on net official international reserves, net domestic assets of the central bank, net bank credit to the central government, and the central government basic primary fiscal balance. While the Executive Board had granted waivers for nonobservance of these performance criteria at the first review, and for net bank credit to the central government at the second review, these waivers were based on information provided at the time by the authorities with respect to performance under these criteria, which has subsequently been shown to be inaccurate.

Following the Executive Board's discussion on The Gambia, Agustín Carstens, Deputy Managing Director and Acting Chairman, stated:

"The provision by the Gambian authorities of inaccurate information relating to the first and second review under the third annual PRGF arrangement raises deep concern. The failure to record spending from the foreign exchange reserves and the non-delivery of foreign currency purchased from foreign exchange bureaus resulted in a misleading impression of satisfactory performance under the Fund-supported program. Furthermore, there have been extensive delays in providing information on the unrecorded spending to the Fund, despite the authorities' knowledge of the situation, and continued withholding of relevant details.

"Deviations from the performance criteria of end-March 2001 and end-September 2001 were both substantial and long-lasting and subsequent policy actions by the authorities did not correct the imbalances, resulting in a failure to meet the program objectives. Moreover, the authorities have not yet given an indication that they propose to commission a special audit of the foreign exchange activities of the central bank.

"Under these circumstances, the Executive Board has decided to require The Gambia to make full repayment of the noncomplying disbursements during 2004, together with any interest accrued thereon, with the strong expectation of early repayment," Mr. Carstens said.