- The Gambia's economy is expected to reach the 7% growth in 2007, the International
Monetary Fund (IMF) predicts. This report is a far cry from the previous one.
This is contained in a report by the IMF's mission to the West African country. The team that had talked to officials of all walks of life in the country, including the donor partners, civil societies and the government, is headed by Mr. Tsidi Tsikata.
The mission opened weeks of discussions on the first review under The Gambia's Poverty Reduction and Growth Facility (PRGF) arrangement (2007-2009), and completion point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
The government's "success in sustaining macroecnomic stability over the last few years has contributed to a substantial inflow of foreign direct investment and vibrant economic activity. Growth is projected to reach 7 percent in 2007, led by strong performance in theconstruction, telecommunications and tourism sectors."
Despite the projected growth, consumer inflation, which is mainly fuelled by sharp increases in the international prices of some key imported commodities, has been on the rise since January 2007. It reached an annual rate of 6.7% in May.
However, the strengthening of the local currency, the Dalasi, against major international currencies in recent months has resulted to a surge in foreign exchange inflow and is expected to help lower inflation to about 5%by December.
The Central Bank officials assured the IMF mission of their readiness to closely monitor and take appropriate action inflation so that it can be contained to the lowest single digit levels - a strategy that gets the mission's endorsement.
"Fiscal performance has been strong in the first half of the year, reflecting higher than-expected revenues and lower-than-programmed expenditures. The introduction of the Integrated Financial Management Information System at the beginning of 2007 has helped enforce budget discipline and strengthen overall public financial management.
The mission encouraged the authorities to continue their prudent fiscal policies with a view to reducing domestic debt and facilitating the gradual reduction in domestic interest rates," the IMF report said.
"The mission commended the authorities for making solid progress in implementing structural reforms critical for progress toward achieving the Millennium Development Goals. Reforms under the PRGF-supported program span the areas of public finance management, central bank governance and operational independence, and financial deepening. In addition, they include steps to improve statistics in order to better inform economic policy making and the general public."
The Gambia has also been commended for recording remarkable progress toward meeting almost all the conditions for the completion point under the enhanced HIPC Initiative.
However, the mission reported that condition related to privatizing public assets in the groundnut sub-sector has not been met. The IMF and World Bank will engage the government on discussions on reforms in the groundnut sector in the coming weeks.
"The mission welcomed the authorities' plans to strictly limit new debt accumulation, including after the granting of debt relief under the enhanced HIPC and Multilateral DebtRelief Initiatives. The authorities noted that new borrowing would be only on highly concessional terms, and effective debt management should benefit from the planned adoption of a new debt strategy."
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