The Gambia recieves $6.7mn from IMF to stabilise economy

The Gambia, a small West African nation, has received a significant boost with the approval of a $6.7 million extended credit facility from the International Monetary Fund (IMF). The loan is aimed at helping the country meet its balance-of-payments and fiscal financing needs amidst a challenging economic environment exacerbated by the impact of the Ukraine war and the ongoing effects of the COVID-19 pandemic. To shed light on the implications of this development, Alieu Secka, a Transformation Specialist at ABSS Consulting, shared insights in an interview with CNBC Africa. Secka highlighted the multifaceted challenges facing the Gambian economy, including the effects of the global economic landscape on the country's growth trajectory. Prior to the current crises, The Gambia was experiencing growth rates of 5 to 6%, which have now moderated to around 4% due to global economic challenges and the Ukraine war. These factors have created hurdles for investors and consumers in The Gambia, necessitating external financial support. The IMF's disbursement comes at a critical time when The Gambia is seeking to stabilize its economy and drive growth across key sectors beyond tourism. The IMF projects economic growth rates of 5.6% in 2023 and 6.3% in 2024, with a focus on sectors such as remittances, agriculture, information technology, and construction. Secka emphasized the importance of enhancing policies to attract foreign direct investment, including ensuring forex stability and creating an enabling environment for private sector growth. Addressing inflationary pressures, Secka noted the central bank's steps to tighten monetary policy by increasing the NPR rate, highlighting the need for sustained efforts to manage inflation and stabilize the forex market. The conversation also delved into the issue of youth unemployment, with Secka underscoring the significance of empowering Gambian youth through entrepreneurial opportunities and government-led initiatives to boost job creation. The Gambian government faces the challenge of balancing structural reforms, fiscal prudence, and addressing exogenous shocks to sustain economic stability in the long term. Secka pointed out critical areas for improvement, such as restructuring state-owned enterprises and enhancing forex availability to mitigate inflation challenges. Despite efforts to drive economic recovery, concerns persist around debt sustainability and mobilizing domestic revenues. The Gambia grapples with high debt ratios and rising borrowing costs, necessitating prudent debt management strategies while investing in key public infrastructure projects to stimulate economic growth. Looking ahead, Secka acknowledged the ongoing challenges that The Gambia faces and the likelihood of requiring further assistance in the future due to the country's narrow revenue base and external economic pressures. While the IMF loan offers a temporary reprieve, sustained economic reforms and global recovery are essential for The Gambia's long-term financial resilience.