Poverty Alleviation as a National Priority in the Gambia’s Economic Development Compiled by the Finance Department of the APRC Government Background The year 1985/86 is a watershed in the Gambia's economic history. It witnessed the launching of the Economic Recovery Program (ERP) which sought to reverse the declining trend in the economy in the 1970s, a period characterized by declining terms of trade, oil price hikes, inappropriate economic policies, and excessive domestic absorption. These factors resulted in a consistent decline in the Gross Domestic Product (GDP), debt crisis, shortage of foreign exchange, galloping inflation, and increase in the deficit GDP ratio. The Government of the Gambia, therefore, embarked on an Economic Recovery Program in 1985/86 entailing the elimination of exchange rate and other price distortions, assigning a greater role for the private sector, rolling back the frontiers of the state and creating a conducive environment for the long term growth of the private sector and elimination of subsidies. As a result of these policy measures, economic performance improved. The Gross Domestic Product grew by an average of 4.4% per annum, the overall deficit declined from 17% of GDP in 1987/88 to 4% in 1991/92, inflation declined from a record high of 70% in 1985/86 to 5% in 1990/91. In addition, the Program for Sustained Development (PSD) was introduced in 1990 with the objective of consolidating the gains of the adjustment process. The main thrust of this program constituted the following: -Promotion of the private sector as the engine of growth; -Divestiture of public enterprises; -Rationalization of custom tariffs; and, -Streamlining of the tax system. The Transition Era The Gambian economy has been affected by three major shocks in the first half of the 1990s, namely the border closure to the re-export trade, the devaluation of the CFA and the military take-over of 1994. The first development resulted in the loss of revenue from the re-export trade while the second had the effect of loosing the Gambia's comparative advantage in the re-export trade. The take-over brought about the suspension of and balance of payment support, the withdrawal of development assistance (by 50%), a downturn in the tourism sector (by 70%) and contraction of private sector activity. These unforeseen developments impacted adversely on the economy with GDP declining by about a low of 2.15 in 1994/95 and inflation surging at 7%. Economic Developments in The New (Second) Republic It was against this background that the government began to improve the governance environment during the transition period, 1994-1996 with the holding of several polling activities, including a referendum on the draft constitution and presidential and parliamentary elections in September 1996 and January 1997 respectively. Thereafter, confidence from both foreign and domestic investors resumed culminating in the resumption of development assistance. The IMF, for example resumed its Article IV consultations with a view to engaging in policy dialogue thus setting the pace for other multilateral and bilateral development partners. Subsequently, the Government of the Gambia, in collaboration with the IMF, adopted a Medium-term Strategy and Program for the period 1998-2000. This culminated in the provision in June 1998 of an Enhanced Structural Adjustment Facility (ESAF) amounting to $27 million in support of the government's economic program. In addition, the government was able to mobilize the support and endorsement of the development partners of its macroeconomic framework and program for the Social Sectors at a Round Table Conference in Geneva in July 1998. This medium term strategy sought to re-establish macroeconomic stability and consolidate government finances by further reducing government deficit The basic economic objectives for 1998-2000 are: To achieve real GDP growth of 5 percent a year, Keep annual inflation around 3 percent, Reduce the external current account deficit (excluding official transfers) to less than 10 percent of GDP by 2000, and Keep gross official reserves above the equivalent to five months of imports. The fiscal program aims at reducing the overall budget deficit (excluding grants) to 4 percent of GDP in 1998 to 2 percent by 2000. The monetary program will continue to be tight, consistent with keeping the annual rate of inflation at about 3 percent, with the continued reliance on the use of indirect monetary instruments. The enhanced structural adjustment facility has now been re-orientated to a poverty reduction growth facility, shifting emphasis from mere structural adjustment to more social sector and poverty reduction strategy. The measures implemented under the medium term strategy yielded positive results. For the period 1995-1999, average GDP growth was 5% per annum. In 1998, the economy registered a growth rate of 4.9% compared to 4.4% in 1999 and it is projected to grow by 5% in 2000. THE GAMBIA’S HIPC DEBT RELIEF STATUS The focus of policy reform in recent years has been to restore macroeconomic stability, and implement broad-based structural reforms in support of the country’s Strategy for Poverty Alleviation (SPA). The Gambia is currently a PRGF-eligible and IDA-only country, with a per capita GDP of about US$315 in 1999. It is one of the poorest countries in the world, ranking 161st (out of 174 countries) in terms of the United Nations Development Program’s 2000 Human Development Index. On the basis of the 1998 household survey, 69 percent of the Gambia population lives in poverty and 51 percent in extreme poverty. Poverty is more prevalent in the rural areas and especially among groundnut growers. Women in the Gambia are a particularly vulnerable group. Projections indicate that The Gambia’s per capita GDP would increase to only about US$500 by 2019. Therefore, The Gambia will continue to need substantial international concessional assistance and is likely to remain a PRGF-eligible and IDA-only country in the foreseeable future. HIPC Qualification: The Gambia qualified for US$66.6 million worth of debt relief assistance, equivalent to 27.2 percent reduction in the country’s outstanding stock of debt at end 1999 after full use of traditional debt relief mechanisms. The Country reached its decision point in December 1999, and is expected to reach its completion point by 2003 by fulfilling the following conditions; Preparation and implementation of a full PRSP for at least one year; and improvement of the poverty database and monitoring capacity, as evidenced by progress in restructuring capacity building of the Central Statistics Department; The Gambia has now confirm getting Interim Relief from three of our Multilateral Creditors, namely; The World Bank, IMF and ADB in the form of debt service forgiveness until we reach completion point in 2003. For the rest of our creditors, we have yet to confirm their share of debt relief. The Gambia’s debt has the following characteristics; Paris Club Bilateral debt with Austria, Netherlands, Norway & France Non-Paris Club Bilateral with Taiwan PRC, China ROC, Kuwait Fund & Saudi Fund Multilateral debt with IMF, WD, IDB, ADF, IFAD, BADEA & OPEC These are further divided into; Paris Club Pre-cut-off/Post-cut-off Debts (any debt prior to 1986) Non-Paris Club Pre-cut-off/Post-cut-off Debts (any debt after 1986) Multilateral Post-cut-off One major characteristic of Gambia’s Paris-Club debt is that its mostly post-cut-off debt and therefore not subjects to traditional Paris Club debt relief mechanism. The Gambia currently has four Paris Club bilateral creditors and the proportion of their outstanding debt represents 28.2 per cent of the Gambia’s total debt in net present value terms. The bulk of these are owed to Austria and France whose debts constitute 7.9 per cent and 5.9 per cent respectively of the total debt owed to the Paris Club. The main objective of The Gambia by approaching these creditors will be to achieve some kind of relief for this kind of debt. The Gambia’s outstanding debt with the Non-OECD bilateral creditors stood at US$53.8 million in net present value terms as at the end of 1999, representing 21 per cent of our outstanding debt. The bulk of these loans (11 percent) are owed to Taiwan, Republic of China. The Gambia currently has nine multilateral creditors. Our multilateral debt constitutes the bulk of our external debt stock with 71% in net present value terms. Our two biggest multilateral creditors are the World Bank and African Development Bank with 46.5% and 28.3% respectively of the total multilateral debt. POVERTY ALLEVIATION PROGRAM Through out its post-independent development period, The Government of The Gambia has constantly sought to reduce Poverty. The main objective of a succession of Development plans has been to enhance the income of the farming community (the largest in The Gambia) and to provide basic social services to rural areas that comprised 80-85% of the population. The oil rises of the seventies and the ensuing dept rises of the 80s not only mollified the macaque achievements of these efforts but also put a considerable stain on Government efforts to continue providing these support services. Structural adjustment downsizing considerably reduced public sector investment in social services, leaving the poor and destitute helpless. Against this background, following an assessment of the Poverty situation in 1992, The GOTG formulated a Strategy for Poverty Alleviation. Although SPA received an encouraging welcome at the Geneva Roundtable in 1994, Donor support failed to follow suit due to the military take-over of the 22nd July of that year. Consequently, on assessment of the SPA, it was clear that Poverty (measured by both income and non-income indicators) has risen from 31% of the population to 62% between 1991 and 1998. Rural Urban Migration led to the over use of resources and services in urban areas resulting in urban poverty improved also. With renewed vigour in the fight against poverty, The Gambia developed an interim PRSP, which received acclaim, once again, from the Donor Community. Within the content of debt relief, new hopes have emerged to resolute a decisive action to reduce poverty. PRSP to be finalised by September 2001 In the meantime, thirty-two interventions in the form of programs, projects and mainstream actions are on going to reduce poverty. This is indicative of an excellent rate of implemented for poverty reduction in general, and a high absorptive rate in particular. A number of other interventions are still pending, covering the need to finalise SPA II / PRSP and expanding the scope of poverty reduction programs. Three programs appear critical for a smooth transition to SPA II, implementing these programs at this stage will have a positive impact both on poverty reduction and the efficiency in the use of HIPC resources: Most of the Gambia’s multilateral creditors, including IDA, IMF, AfDB, IFAD, OPEC Fund, ISDB, EU, and BADEA, have agreed to participate in the enhanced HIPC Initiative. The decision-making bodies of multilateral creditors will take specific decisions on the delivery of assistance to The Gambia once the Boards of the Bank and the Fund have discussed the decision point document. Along with Paris Club, which discussed The Gambia’s situation in November, these creditors represent more than 80 percent of the debt relief to be provided to The Gambia. The Gambia wants maximum debt relief from all of our multilateral creditors to give us debt service to exports ratio of 15% during the interim period. Impact of Enhanced HIPC Debt Relief The above-enhanced HIPC assistance would enable The Gambia to maintain sustainable external debt level and release resources for the social program. On the basis of the above assumptions, the total interim HIPC debt service relief would amount to an average of about US$4.4 million (about 4¾ percent of government revenue and 0.9 percent of GDP) a year for the next two years. Beyond the assumed completion point, the HIPC debt service relief would amount to about US$9.2 million a year for the ten-year period beginning 2003 equivalent to an average reduction of 1.4 percent of GDP a year. The debt service ratio would be reduced on average by about 22 percentage points during the interim period and 40 percentage points during the ten-year period following the anticipated completion point. After debt relief under the enhanced HIPC Initiative, The Gambia’s external debt at end-1999 would be reduced from US$244.9 (after traditional debt relief) to US$178.2 million. The amount of assistance under the Initiative would amount to US$66.6 million equivalent to US$90 million in nominal terms. Several Paris Club creditors have indicated possible debt relief beyond their assistance under the HIPC Initiative, through forgiveness of ODA loans. This could amount to an additional US$ 2 million in NPV terms (see Figure 1). The downside scenario in the context of enhanced HIPC assistance. The Gambia remains vulnerable to adverse shocks even with HIPC assistance; to simulate these impacts, the following were considered: lower re-export growth (0.5 percentage lower than under the baseline scenario) and lower tourist arrivals (½ of a percentage point lower than under the baseline scenario). The strongest impact would result from a lower growth rate in tourist arrivals in which case the NPV value of debt after HIPC assistance would not fall below 150 percent before 2011, while debt sustainability would be reached already in 2002 under the lower re-export growth scenario Debt service savings arising from the enhanced HIPC assistance will be used to expand the economy’s productive capacity in order to diversify the sources of income for the poor; improve the poorest access to social services; and strengthen institutional capacity to enable local communities to participate and influence developments affecting their environment. The government has identified a number of key sectors that would benefit from the enhanced HIPC assistance and be funded through a contingency budget for 2001. Three sectors that would have the strongest impact on poverty (education, health, and rural development) would absorb over 60 percent of the enhanced HIPC assistance. The specific activities to be financed under each are as follows: In the education sector, activities identified under the TESP would be implemented including the funding of girls’ education trust fund, the construction of classrooms, and the training of teachers. These activities are expected to absorb 22 percent of the enhanced HIPC assistance; In the health sector, focus will be on the elements of primary health care that are the target of the PHPNP such as vaccines, drug supplies, and the upgrading of the ambulance fleet. This is expected to absorb 18 percent of the enhanced HIPC assistance; and Rural development would benefit from initiatives in irrigation, research in crop diversification, inland fishing (a potential source of employment), well drilling, and forest conservation and replenishment (a potential source of income for the poor). This sector would account for 20 percent of enhanced HIPC assistance. Maintaining a stable macroeconomic environment as evidenced by satisfactory performance under a program supported by IMF-supervised Poverty Reduction and growth Facility (PRGF) arrangement; Making progress in strengthening public expenditure management as evidenced by issuance of annual public reports on the overall budget execution and semi-annual reports on the use of interim HIPC Initiative debt relief; Establishing a functional multi-sector regulatory agency, and bringing to the point of sale the two major public groundnut processing plants; Making progress in the implementation of sector strategies in education and health. It’s the central objective of The Government of the Gambia to use the proceeds of debt and general donor assistance to boost investments in health, education, infrastructure, energy and social protection. >From: Mr Makaveli <[log in to unmask]> >Reply-To: The Gambia and related-issues mailing list ><[log in to unmask]> >To: [log in to unmask] >Subject: Jammeh's Bizzarre 7 Years Ago Speech: Rated R >Date: Wed, 1 Aug 2001 03:14:38 -0500 > >Folks, >I don't know about you all but what I saw and heard from this moron is just >4^<k!ng incredible. It seems this guy got our entire country by the balls. >I'm taking about addressing all those dignitaries and the entire audience >as boys and girls and god knows how many doggone times he keeps repeating >"7 years ago". For a moment I thought he was making a mockery of our elders >and he was funny at some point, and he kind of reminded me of Chief >Zebudia (Nigerian comedian) with his "7 years ago" speech. He said, "7 >years, Gambians were ashamed to show visitors the old Yundum airport for >it look more like a cattle ranch and not an airport. And that today we >gambians would go to the extent of waking up those visitors, if they were >asleep, just to make sure they see our new state-of-the-art Yundum airport. > >You have to see it and hear speech for yourself, then you'll agree that >the guy should have pursued a career as a standup comedian than becoming >a president for any country. Yes, he maybe the president for now but >Jammeh is not presidential. You should have seen the reaction from the >crowd. One guy had to adjust his pair of glasses when Jammeh said without >any regard for diplomacy that the opposition and their alliance "can go to >hell" and anyone trying to instigate any kind of trouble "will not even be >able to regret it, because he or she will be six-feet deep". I know what >some of you might be thinking and hey, I probably would say it's a hearsay, >but that's why I think his website is a blessing in disguise for those in >the opposition and we thank him for making such speech available online, >unedited, raw and uncut. > >I tell you, you got to give him dues. The guy renders his speech writers >useless. No notes, no draft, no speech-writer needed. No wonder he went >bezerk. I mean the guy has added a new meaning to dictatorship and you >forget Hitler, considering how small Gambia is compared to Germany. He can >have his troops perform routine around the country in less than five >minutes just to show you small gambia is. > >His speech didn't stop there. A Jammeh's speech is off record without him >disrecpecting our parents and people old enough to be his grandpa. Noooo! >He went on telling parents how they should raise their kids, blaming >gambian workers for letting foreigners take their jobs, on and on he went.I >asked why the double standard ladies and gentlemen? For starters, the guy >is married to a foreigner( Moroccan to be expilicit). Why then did he said >we cannot allow the foreigners to feed the nation. Curious minds would then >hasten to ask Who is feeding him then? A gambian woman? Well, as he said in >his closing comments, he is the president and he has the right to exercise >his freedom of speech. Therefore I would give him the benefit of the doubt. >Nonetheless, I wished others were allow that same freedom of expression he >valued so much. > >Anyway, I'm not even going to stoop any lower than I already have into >this but I just found this mansa in his white oversized 'nyeti abdou' with >a samurai sowrd on one hand and sheik's prayer beads on the other, quite >contradicting to say the least. Hell, we may not have a glittering airport >to show off 7 years ago but we had peace and without peace and stability, >that very airport he is bragging about may fall into bits and pieces if all >indications are that what happened in Liberia and Sierra leone might >invariably and God forbid happen in the Gambia come doomsday. > >Looking through the crowd, one could easily identify some 50 to 80 yr olds >being addressed as boys and girls. Never did I hear him refer the crowd as >ladies and gentlemen but boys and girls. So what if the vast majority were >students. Just look around the number 50 years sitting at the edge of >their seats." Yahya Jammeh, Gadu Gna Bakarr". To him, they are just boys >and girls and it's either his way or six-feet deep. What gave me cramps in >my stomach was that people were cheering for him. God help us all. >As the saying goes, " Video means Wadi Whut" in wolof and here is the >'Wadi Whut' nicely packaged by his excellency for public consumption. GOTO> > >http://www.jammeh2001.org/realvideo/j22speech/j22speech2.rpm >AND http://www.jammeh2001.org/realvideo/j22speech/j22speech3.rpm > > Mr Makaveli! (o-:) >PS: Normally, I'm a little leery about hearing Jammeh speak because not >that it's the embarassment I'm bound to stomach but the fact that I'm >simply allergic to him speak, period. But try it just once like I just did. >4^<k!ng incredible.. > > > > > >Gambians Online " Designed With The Gambian People In Mind" > http://www.gambiansonline.com > >---------------------------------------------------------------------------- > >To unsubscribe/subscribe or view archives of postings, go to the Gambia-L >Web interface at: http://maelstrom.stjohns.edu/archives/gambia-l.html >You may also send subscription requests to >[log in to unmask] >if you have problems accessing the web interface and remember to write your >full name and e-mail address. >---------------------------------------------------------------------------- _________________________________________________________________ Get your FREE download of MSN Explorer at http://explorer.msn.com/intl.asp ---------------------------------------------------------------------------- To unsubscribe/subscribe or view archives of postings, go to the Gambia-L Web interface at: http://maelstrom.stjohns.edu/archives/gambia-l.html You may also send subscription requests to [log in to unmask] if you have problems accessing the web interface and remember to write your full name and e-mail address. ----------------------------------------------------------------------------