Gambia: Gambia Finance Profile

Following the 2011 drought-induced contraction of the Gambia’s gross domestic product (GDP), the country’s economy recovered moderately in 2012 and in 2013. GDP increase in 2014 is estimated to have contracted to about -0.7%, compared to before estimated GDP increase of 7%. The principal factors behind the poor increase outturn are the decline in tourism earnings and reduced agricultural outputs due to delayed rains in 2014. The Ebola epidemic in the sub-region has had an adverse result on tourism and related sectors, with hotel cancellation rates reaching 60% for the 2014/15 winter season. Delayed and erratic rainfall in 2014 is expected to lead to a significant decline in crop production.

Macroeconomic policy slippages as evident in continued large fiscal deficits and heavy deficit burden (estimated at 8.7% and 100% of GDP, respectively, in 2014) continue to pose major challenges. In particular, interest payments consume about 22.5% of government revenues (inclunding 81% devoted to domestic deficit). The net domestic borrowing (NDB) rate is expected to reach 12% of GDP at the end of 2014 against the less than 2.5% projected at the beginning of the year. As of end-2014, the major targets stipulated in the IMF Extended Credit Facility (ECF) were off track.

The IMF has confirmed its willingness to grant a Rapid Credit Facility (RCF) and provide emergency financial assistance to respond to the country’s external shocks (Ebola and the drought) provided that the authorities implement a series of policy measures inclunding in particular restructuring the energy sector.

With 173.6 persons per km², the Gambia is one of the majority densely populated nations in Africa, which exerts extreme pressure on the country’s limited productive land and prevents social services from being adequately provided. Owing to a rapid people increase, a high urbanisation rate and divergent increase in gain and wealth, spatial inequality remains a critical issue in the Gambia. Despite the development of legal frameworks to counter it, there is a large urban-rural gap in gain and wealth. In addition, unplanned rapid urbanisation is taking place, resulting in significant environmental degradation. The major reasons for the relatively weak outcome of decentralisation and local development include inconsistent policies related to local-government responsibilities and autonomy, and poor implementation of decentralisation and local-government policies, in particular of the 2004 Local Government Finance and Audit Act.

Economic increase contracted from 4.3% in 2013 to an estimated -0.7% in 2014 due to the effects of Ebola on tourism-related activities, the delayed rains experienced in 2014 and continued macroeconomic policy challenges.

• The fiscal balance continued to deteriorate in 2014 while international reserves were under pressure from the massive injection of liquidity on account of the country’s net domestic borrowing.
• Local and physical development policies are central in the Gambia’s development schedule but are not fully implemented, resulting in poor service delivery and a significant rural-urban imbalance.