For six consecutive years, the economy of The Gambia has registered a sustained growth rate of 5-6 per cent, and inflation has also been in single digit for the last four years.

The inflationary impact of rising world market prices for food and fuel have been mostly contained up to July 2008 through tight monetary policy, and appreciation of the dalasi. But the situation has started to change, and new challenges are emerging. Fiscal policy, over the last five years, has been aligned with macroeconomic stability, and debt sustainability, and has contributed to economic growth.

The basic balance, in the past years, has been in substantial surplus, and the overall fiscal deficit has decreased significantly from 9.2 per cent of GDP in 2005 to a surplus of 0.5 per cent in 2007. In fact, the government of The Gambia has been repaying domestic debt on a net basis in 2007 and 2008.

The country’s international reserves position has been comfortably stable, average 4-5 months of imports cover” these were the introductory remarks by Mousa Gibril Bala Gaye, secretary of state for Finance and Economic Affairs last Friday while presenting the 2009 budget of The Gambia at the National Assembly.

The budget provides for the services of The Gambia, for the period 1st January, 2009, to 31st December, 2009.

During the presentation, he began by breaking down the performance of the Gambia’s economy in 2008 - Developments on the domestic economy, outturn for the 2008 budget, monetary policy and financial developments, price movements, foreign exchange, balance of payments and financial sector developments, the developments in the domestic financial sector, the external sector developments, the developments in the social sectors of the economy namely health, agriculture and education, Information, Communication and Technology development, population and women in development , trade policies and tourism , the performance of the public enterprises,  namely SSHFC, GPA, GCCA, GPTC, NAWEC, MSA, GMA, AMRC, GPPC, GIA, Gamtel and Gamcel.

According to SOS   Gaye, in   exactly one year, The Gambia reached completion point under the Enhanced Highly Indebted Poor Country Initiative (HIPC) and also qualified for Debt Relief under the Multilateral Debt Relief Initiative (MDRI), with substantial debt relief to be spread over a period of 9 years. He said that this provided the much needed fiscal space for the government to improve service delivery to its people, to channel and target more resources towards the social sectors for poverty alleviation, and to help in achieving the Millennium Development Goals and Vision 2020 objectives.

The Finance and Economic Affairs secretary of state then stated that The Gambia government is cautiously optimistic that growth will be maintained and macroeconomic stability sustained in the medium-to-long term.

2009 projections
Breaking down the 2009 revenues, recurrent, and development expenditure projections, SOS Gaye said the assumption for the 2009 budget have taken into account the likely negative impacts of the food and fuel price increases, and the global financial crises on The Gambian economy from tourism receipts, remittance, foreign direct investments and foreign aid flows.

He added “consequently, growth in 2009 is projected to slow down to 4.6 per cent- 6 per cent from the higher projected growth rate of 6.1 per cent in 2008. Inflation is projected to recede to at least 5 per cent in 2009, from the higher rate of about 8 per cent in 2008. The international reserves of the country will still be at around 3.5-5 months of import cover, and the basic balance will reduce from a projected surplus position of D35 million in 2008 to a deficit position of D100 million” he said.

Revenues in 2009
Here, SOS   Gaye   said,   the 2009 budget, total revenues and grants are estimated at D4,582 million adding that total revenues are projected at D3,771 million, which represents 22 per cent of GDP. According to him, out of domestic revenues, tax revenue constitutes D3, 391 million or 90 per cent of domestic revenues, or 18.8 per cent of GDP, while non-tax revenue is estimated at D380 million. He added that the total amount of grants is estimated at D811 million, of which project grants stand at D513 million, and direct budget support and debt relief is estimated at D298 million.

Expenditure in 2009
Expenditure and Net-Lending according to him, is projected at D5, 363 million by end December 2009, which is equivalent to 26.7 per cent of GDP. “Of this amount, current expenditure is estimated at D3, 466 million, representing 65 per cent of total expenditure and net lending. Salaries, wages and other personnel expenditures are projected at D1, 034 million, representing 30 per cent of current expenditure.

Other charges are estimated at D1, 586 million, of which goods and services are D1, 066 million and current transfers are D520 million. The debt interest is projected at D845 million, equivalent to 4.2 per cent of GDP. Furthermore, loan disbursements are projected at D979 million, representing 4.9 per cent of GDP. As a result, the basic balance deficit is estimated at D100 million, or 0.5 per cent of GDP. The share of poverty reducing expenditures has increased from 46.6 per cent in 2008 to 55.01 per cent in the 2009 budget” he said.

Financing
The 2009 budget according to him, is a fully financed budget and the financing is comprised of a domestic borrowing of D167 Million, a net external financing of D676 million, repayment of domestic loans of D117 million, capital revenues of D24 million, and privatisation proceeds of D31 million.

He then stated that, for the last six consecutive years, the Gambian economy has performed magnificently, but serious challenges from outside have started to emerge in 2008, and the situation may continue into 2009. Caution and restrain, but with the will, courage, determination and right policies for progress he said, is the path to follow.

He recognised the great sacrifices by the Gambian people in the recent past and overcame great difficulties, when the country was left on its own to manage its own survival and development. This, he added, is the genius of the Gambian people and society.

Seconding the motion, Hon. Sellu Bah, National Assembly member for Basse described the budget as realistic taking into account the global financial crises and the credit crunch. According to him, it is now for all Gambians to determine to move the country forward citing the positive response by all to Professor Jammeh’s back-to-the-land call resulting to the bumper harvest highlighted in the budget. He thanked the secretary of state for Finance and Economic Affairs and staff for such a good job.

Speaker Fatoumatta Jahumpa-Ceesay also thanked the SOS and team. She then adjourned the session to today, Monday 22nd December 2009 for proper discussion on the budget. Present at the Assembly where  the  Vice President Dr Aja Isatou Njie-Saidy, secretaries of state, security chiefs, religious leaders, diplomats among others.

Read more on the 2009 budget in our subsequent publications.