Following an International Monetary Fund (IMF) staff mission to The Gambia, from 11-25 May 2008, to conduct discussions for the 2008 Article IV consultation and the third review under the Poverty Reduction and Growth facility (PRGF) arrangement, IMF has again lauded the economic performance of the Gambia over the years.

During their mission to The Gambia, the team, led by Mr Tsidi Tsikata, met Mousa Gibril Bala-Gaye, secretary of state for Finance and Economic Affairs, Momodou Bamba Saho, governor of the Central Bank of The Gambia, Alieu Ngum, chairman of the National Planning Commission, Mrs Fatoumatta Jahumpa-Ceesay, the Speaker of the National Assembly, NAMs, representatives of the business community, civil society, The Gambia’s development partners and other senior officals of the government.

In a diapatch issued Tuesday, after the conclusion of the visit, the mission stated that since the last article 1V consultation in 2006, government’s policy strategy has been successful in maintaing macroeconomic stability, and sustaining high growth and fiscal performance has been good, monetary policy has been geared to maintaining low inflation.

“Real GDP growth has been strong at over 6 percent a year, a performance that compares favorably with the record of other countries in the region.  Growth has been led by the construction, tourism, and telecommunications sectors, facilitated by a steady inflow of foreign direct investment and remittance.

A relatively tight monetary policy stance and appreciation of the dalasi have helped contain the impact of rising world food and oil prices on inflation in the Gambia. Inflation rose to 6-7 percent during most of 2007, from less than 1 percent in December 2006, but has been falling thus far in 2008.  

However, this trend may be reversed if world prices remain high.  The mission commended the government for adjusting the pump price of petroleum products in order to safeguard the budget from the heavy burden that would be associated with subsidizing these products, which would tend to benefit the better off segment of the population more than the poor”, the IMF mission highlighted.  

The mission then unveiled its understanding of the government’s recent decision to remove the sales tax on rice imports in order to provide some relief, especially to poor households. They also acknowledged the great improvement of the national currency, stating “ the marked appreciation of the dalasi over the last year appears to have reduced the profitability of the tourism industry and the re-export trade, and would likely contribute to slower growth in 2008.  

The main factors affecting the  Gambia’s international competitiveness, however, include weak infrastructure, lack of access to long-term financing, and the burden of a multiplicity of taxes and local government charges.  These problems will need to be addressed through further structural reforms.

The mission welcomed the government’s intention to use the savings from debt relief to boost poverty reducing expenditures in line with the priorities in the PRSP and also to pay down domestic debt in order to put downward pressure on interest rates.

The mission urged the authorities to speed up the preparation of a national debt strategy to help the country avoid falling back into debt distress. With regard to the PRGF-supported program, the mission found that performance against the quantitative financial targets has been strong.  However, progress has been slower than expected in implementing some structural reform measures such as establishing a fully functioning credit reference bureau”, the dispatch noted.

The executive board of the IMF then highlighted that the report of the mission will be discussed in early August 2008 and express its gratitude to the authorities for their hospitality and the very constructive spirit in which the discussions were held.