The International Monetary Fund says the Gambia is hard hit by shocks that are suffocating its economy after emerging from two months of political turmoil.
The IMF’s Ulrich Jacoby met with Gambia’s President Adama Barrow to secure support through a Rapid Credit Facility.
IMF and Gambian authorities are discussing plans to support economic policy implementation and the possibility of establishing a Staff Monitored Program (SMP), a program, which had been in place since the regional Ebola epidemic disrupted the economy.
“Addressing the effects of these shocks and restoring economic stability will require concerted policy efforts as well as support from the international community. The key priority is to bring public spending in line with available resources, thereby drastically reducing domestic borrowing and interest cost,” according to the IMF.
Significant economic challenges lie ahead. Economic growth in 2016 is now estimated to have reached only 2.2 percent, down from 4.3 percent in 2015, due to limited availability of foreign exchange, weak agricultural output and the effect of the political impasse on tourism during high season.
Gambia annual inflation stands at 8.8 percent in February 2017, driven by higher food prices and the recent depreciation of the dalasi, which increases the domestic price of imported goods.
The situation is compounded by economic mismanagement and massive embezzlement of funds during the previous regime. Gambia’s former President Yahya Jammeh made away with at least US$12 million and left the state’s treasury with less than $15.
The country’s Finance Minister, Amadou Sanneh said Jammeh had embezzled more than $150 million in the last two years of his rule. Authorities are investigating his financial and business transactions after it emerged billions were siphoned.
“The international community has been quick to re-engage with The Gambia, and development partners have indicated that substantial financial support may be forthcoming,” said Jacoby.
Such financial support will assist The Gambia in its reforms but will need to be accompanied by significant domestic efforts to ensure a return to economic growth and stability.
The EU has given the Gambia at least $85 million in development aid and released some $37 million in funds that were frozen over the former regime’s deteriorating human rights conditions.
At least 318 Gambians, who were journeying across the Sahara to be smuggled via the Mediterranean to reach Europe for better economic opportunities have returned home since the EU gave $17 million to help create jobs.
(Reporting and Writing by Ebrima Sawaneh; Additional Reporting and Writing by Sam Phatey; Editing by Sam Phatey)