The Gambia authorities will now be able to meet their urgent balance of payment and fiscal needs after the Executive Board of the International Monetary Fund (IMF) approved emergency financial assistance under the Rapid Credit Facility (RCF) 1 in the amount equivalent to SDR7.775 million (about US$10.8 million).
The IMF financial assistance is intended to address urgent balance of payments needs that have arisen on account of the shock. It will help fill budgetary gaps while the authorities implement economic and structural policies aimed at restoring macroeconomic stability, and reducing poverty. The Executive Board’s approval of the RCF disbursement will also enable the authorities to engage in further discussions with the donor community regarding assistance to meet their remaining financing needs. The Board’s approval enables the immediate disbursement of the full amount of the RCF loan, which is equivalent to 25 percent of The Gambia’s quota in the IMF.
The Executive Board noted the authorities’ cancellation of the Extended Credit Facility (ECF) arrangement for The Gambia that was approved on May 25, 2012 to support the government’s economic program. In addition, the Board was informed about the IMF Managing Director’s approval of a one-year staff-monitored program (SMP)2 to guide policy implementation.
Though The Gambia remains completely free of Ebola, the crisis has caused a deep decline in tourism related activities, the economy’s principal foreign currency earner. A projected decline of about 60 percent in tourism, The Gambia’s principal export, will strain the country’s balance of payments. The shocks, coming in the wake of an extended period of weak policy implementation have exacerbated an already fragile macroeconomic situation. To address their difficulties, the Gambian authorities have taken bold steps in their 2015 budget, developed an ambitious reform agenda for public enterprises in the energy and telecommunication sectors, and made strong efforts to secure donor support.
Following the Executive Board discussion, Mr. Min Zhu, Deputy Managing Director and Acting Chair, issued the following statement:“The Gambia is facing urgent balance of payments needs triggered mostly by the impact of the regional Ebola outbreak on tourism. Although the country remains free of Ebola, the regional outbreak is expected to cut by more than half tourism receipts for the 2014/15 season, giving rise to an urgent balance of payments need. At the same time, the delayed summer rain has led to a significant drop in agricultural production with serious implications for growth in 2014 and food security. Policy slippages and persistent financial difficulties in public enterprises have exacerbated the problems and pushed The Gambia’s Extended Credit Facility (ECF) arrangement off track.