Gambia
Politics | Economy - Development
Economy, governance "far off track" in The Gambia 
HYPERLINK "http://www.afrol.com"afrol News, 18 May - Gambian authorities
are facing heavy critiques from the International Monetary Fund (IMF) as
the national economy has grown out of control. The economy is detracting
and poverty is on the rise as government has overspent and economic
policy programmes had not been followed up. Economic data for 2001-2003
had been misreported. 
The IMF has expressed "strong disappointment" with Gambian authorities
after national economic policies were "far off track." In a March review
of the Gambian economy and governance, published today, the Fund
deplored the "poor execution of monetary and fiscal policy, reflecting
serious deficiencies in governance."

Economic performance in The Gambia deteriorated substantially in
2002-2003, the IMF consultants found. A collapse of the groundnut
harvest in 2002 had led to a contraction of real GDP by 3 percent, while
also affecting export revenues in 2003. This had however been seriously
deteriorated by the lack of financial control by Gambian authorities. 

During the last years, The Gambia had overspent. In 2002, the reported
overall fiscal deficit - excluding grants - reached 8.1 percent of GDP,
compared with a target of 5.0 percent. Last year, the fiscal deficit is
estimated to have declined somewhat to 6.0 percent of GDP, compared with
a budget target of 4.5 percent, according to the IMF.

As spending grew too high, tax collection had not reached its targets.
The deficit was funded by printing more dalasi bill, causing the
exchange rate to depreciate and inflation to surge. The dalasi
depreciated by 60 percent in terms of the euro and by 45 percent in
terms of the dollar in the two years to end December 2003, and the
consumer price index rose by 18 percent in the year to December 2003. 

The IMF also criticised Gambian authorities for a "limited progress"
with structural reforms during 2002-03. The Fund "regretted" that the
IMF-funded poverty reduction programme had "gone far off track during
2003." This would lead to less IMF funds and a delay in debt
cancellation as creditor demand a completed poverty reduction programme
before negotiating debt reductions.

Given the poor performance of the Gambian economy, the IMF held it was
"likely that poverty has increased markedly since 2001, owing to the
crop failures of 2002, rising inflation, and limited provision of income
support and social services." In 2001, The Gambia ranked 149th on the
human development index.

Causing most stir was however the discovery that Gambian authorities had
left out data about their overspending in earlier reports to the IMF. In
October last year, IMF staff had been informed of "a series of
substantial errors in data transmitted to the IMF for the period
2001-2003," the IMF said.

The "forgotten" data included public spending of US$ 28.5 million from
the foreign exchange reserves in 2001. This had never been officially
registered by central government or in central bank accounts. Further,
in 2001-2003, there existed receipts of some US$ 16 million from foreign
exchange bureaus which had not been delivered. Finally, there was
lacking documentation of transaction commissions of nearly US$ 2
million. 

Subsequently, the situation of the Gambian economy in 2001-2003 was
substantially worse than previously reported and Gambian authorities
were further out of line with targets set together with the IMF. The IMF
Executive emphasized that the Gambia's "compliance with the Fund's
safeguards assessment policy is critical to regaining access to Fund
resources."

The IMF was nevertheless encouraging Gambian authorities to receive
"technical assistance" from the Fund to help improve governance. Several
reforms were now underway in The Gambia, which could improve control
with financial policies, the IMF noted.

Other advices included thoughts on how to improve the performance of
agriculture, including groundnuts. "A coordinated policy approach to
ensure the security of high-quality seed supply and other agricultural
inputs, and extended irrigation schemes and improved marketing
arrangements could lessen substantially the adverse impact of inevitable
weather-related shocks," the IMF held. 
By staff writers
© afrol News
 

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