The public debt of Gambia is expected to decline by 12% from its unsustainable level of 124% to the gross domestic product to 112%, International Monetary Funds recent regional report published in October has stated.
Gambia is currently struggling under a D49 billion debt, highest in Africa per GDP ratio and two times more than the regional average.
“The IMF is projecting a decline in Gambia’s debt to GDP ratio from 120% in 2016 to 112% in 2017. Further decline is expected to 108% in 2018,” the IMF regional economic outlook stated.
The report was presented before key officials from the government, banks, civil society and the media at the Ocean Bay hotel on Tuesday.
The IMF country representative, Ruby Randall, said the projected decline in the country debt is attributed to government’s cut in spending and support from international funding partners that addressed the budget deficit.
“The debt service to the GDP ratio has risen from 22% to 46% in 2016. The country has seen a sharp decrease in treasury bill rate due to budget support,” Randall said.
However, the decline in the government borrowing within the domestic economy has pushed down interest at a lower level that is beginning to affect commercial banks that were relying on the Treasury Bills.
Experts said there were only 3 banks in the country that get 40% of their revenue from treasury bills and those were the lowest.
“There were banks that get up to 78% of their revenue from treasury bills,” said Bernard Mendy, an IMF economist.
The permanent secretary 2 at the finance ministry said the banks have to adjust to making right investment decisions instead of relying on treasury bill.
“So why not you look into other areas of investment… We are talking about diversification and the banks can look into areas such as agriculture and others,” Lamin Camara argued.
Camara said with increase cuts in mind, the government is also trying to reduce its fleet of vehicles whose maintenance cost them millions.
Meanwhile, the IMF said the growth in the region is expected to pick up to 2.6 in 2017 with Gambia registering 3% due to recovery in tourism and agriculture.
The Gambian tourism has recovered from last year’s decline to with almost 100% of the hotel in the small nation booked, tourism officials have said.
Last year, Gambian tourism season has seen an incredible decline due to the 2015 Ebola outbreak which scared most tourists away.
IMF said the economic growth recovery in Gambia and other countries in the region is subdued and it is expected to remain that way until 2018.