The International Monetary Fund (IMF) said GDP growth of The Gambia in 2022 is expected to decline to 4.5 percent in 2022 from earlier projection of 5.6 percent.
This is indicated by the head of IMF mission team head Mr. Ivohasina Fizara Razafimahefa, who visited the country between September 21–October 4, 2022. “Owing to the repercussions of the war in Ukraine and the lingering effects of the COVID-19 pandemic, GDP is forecast to grow by 4.5 percent in 2022, a downward revision from the 5.6 percent forecast at the time of the 4th ECF review,” he said.
Nonetheless, some sectors, including tourism, construction and agriculture, have shown positive signs. The inflation rate entered two-digits territory in April 2022 and reached 12.9 percent in August 2022, mainly driven by global high food and energy prices induced by the war in Ukraine, combined with supply chain disruptions and high freight costs,” said Mr. Ivohasina Fizara Razafimahefa.
“The authorities are taking measures to address the implications of the multiple and large exogenous shocks. Revenue collection on fuel products was reduced to contain domestic fuel price increases. Improved collection of non-oil related taxes and prudent budget execution helped contain the overall fiscal balance at 2.4 percent of GDP at end-June 2022. Nonetheless, pressures have intensified, and some budgetary slippages were noted at end-September 2022.”
He stated that to tame inflation and anchor inflation expectations, the Central Bank increased the policy rate twice by a total of 2 percentage points, bringing the rate to 12 percent. “The monetary policy stance will be tightened further, as needed to contain inflation. To address foreign exchange market pressures, the CBG will henceforth ensure a smooth functioning of the forex market, and the exchange rate policy will aim at restoring the equilibrium between supply and demand.”
“The Gambian authorities continue to fulfill their commitments to transparency requirements for COVID-19-related spending. They resumed the reporting of COVID-19 spending in the monthly budget execution report. The National Audit Office (NAO) will soon complete the second phase of an ex-post audit of the COVID-19-related spending. Good progress has also been made on revenue administration and public financial management, including the digitalization of tax collection systems, and budget and debt management processes.”
“Meanwhile going forward, economic growth of the Gambia is expected at 6 percent in 2023 and 6.5 percent in 2024, according to Mr. Ivohasina Fizara Razafimahefa.
“These projections are predicated on a dissipation of commodity price shocks, a non-occurrence of an abrupt global slowdown or recession, full recovery of the tourism sector, and continued good performance of private construction and agriculture. Risks to the outlook are tilted to the downside, including the uncertainty about the war in Ukraine, the path of the COVID-19 pandemic, and the vagaries of climate change, which pose significant threats to the economy,” he said.
In summary the IMF team has listed the following three key points in relation to the economy of The Gambia.
• The repercussions of the war in Ukraine are threatening economic and social stability as the economic recovery is weaker than anticipated, inflation is accelerating, and pressures are emerging in the foreign exchange market.
• The government is taking measures to address the external shocks; the monetary policy stance will be tightened further, as needed to contain inflation; the exchange rate policy will aim at restoring the equilibrium between supply and demand.
• Structural reforms are progressing, including on public procurement, the transparency of COVID-19 spending, other areas of public financial management, and revenue administration.