The International Monetary Fund (IMF) on Friday approved a new financial credit for The Gambia under the ”Extended Credit Facility (ECF)” amounting to about US$ 28.3 million.
In a statement, the IMF said that following its executive board’s decision to make the grant, there will be an immediate disbursement of 9.33 million SDR (about US$ 14.2 million) by the Gambian government.
According to the fund, the authorities’ programme is aimed at meeting an ”acute balance of payments arising from the recent crop failure due to drought, and helping to catalyze support from development partners for Gambia’s new poverty reduction strategy, the Programme for Accelerated Growth and Employment (PAGE).”
The credit will also enable the Gambia ease its heavy debt burden through fiscal adjustment, while implementing a strong economic reform agenda in support of PAGE.
Mr. Naoyuki Shinohara, IMF’s Deputy Managing Director, said The Gambian economy had made ”good progress in achieving strong growth” and making a substantial reduction in poverty.
”However, major crop failure due to the drought has created hardship and calls for effective and timely delivery of assistance for the most vulnerable households.”
He stated that Gambia’s heavy debt burden posed high costs for the government and risks for the economy.
”To address this problem, the authorities’ new ECF-supported programme rightly focuses on fiscal adjustment to curb government’s domestic borrowing.”
The IMF official said limiting external borrowing to concessional loans was also necessary to reduce the risk of debt distress.
“Progress towards eliminating fiscal dominance has enhanced the independence of the Central Bank of The Gambia and its capacity to conduct sound monetary policy. The central bank will continue to build capacity for effective financial sector supervision, particularly for stress testing,” he added.