By Sanna Camara
Executive directives on fixing exchange rates of foreign currencies in The Gambia during the past two years have caused policy slippages and loss of “almost a decade of consolidation efforts” of the country’s economy, the IMF said.
Emanating mainly from the president’s office, this state of affairs means less resources for priority public investment and other development spending, high interest rates, less lending to private sector, less productive investment by private business, and lower economic dynamism (i.e. economic growth), the Fund observed.
According to the IMF country rep in Banjul, who held a briefing session with members of the country’s private sector operators this week, it also means no private jobs creation resulting in higher unemployment (especially for the youth) and less personal and family incomes to take home, causing more poverty.
Currently, IMF warns that there is less public investment, less lending to private sector, fewer jobs creation and more poverty in the country: “With very high Treasury-bill rates, interest costs increases rapidly, costing the state budget about a third of revenue collected by Gambia Revenue Authority in 2014.”
Counterproductive impacts extend to the government
“Central Bank of The Gambia was unable to purchase forex to rebuild reserves even when forex was available because of overvalued rates,” Mr. Gaston K. Mpatswe said, noting that the counterproductive of these impacts extend to the government too:
“Loss on import duties because of lower Dalasi value… With donors’ support not forthcoming and continuing fiscal slippages, net domestic borrowing is rising at GMD1.8 billion as of Sept 18 or 4.7% the projected 2015 GDP,” he outlined.
The end-year target of 1% committed-to under the 2015 budget, even after adjusting for shortfalls of budget supports, has also gone off-track. Hence the IMF is urging Gambian authorities to lift the directive and focus on the fundamentals of the economy.