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afrol.com, 5 February - The International Monetary Foundation today released its assessment of the economic developments in The Gambia, leading to the decision of granting the HIPC dept relief in December. The conclusion is that things are going well in The Gambia, although inequity and poverty seem to be on the rise. GDP growth has been averaging about 5 percent during 1997-99 5 compared with an average of about 1 percent during 1993/94-1995/96. The key objectives of the IMF/Gambian policy are further "to accelerate real GDP growth". Favourable weather in this Sahelian country "contributed to the rebound in agricultural growth, and tourist arrivals increased substantially, contributing to a significant growth in tourism and related services," according to the IMF assessment. Regarding structural reforms, the authorities liberalized and reduced external tariffs, lowering the top rate from 90 percent in 1998 to 18 percent in 2000. Privatisation and regulatory legislation was drafted and advanced toward submission to parliament, with a view to encouraging private sector growth. According to the IMF, there were, however, "some missteps, notably the January 1999 government's seizure of the property of The Gambia Groundnut Corporation (GGC) - a private marketing monopoly - and the flawed introduction of the preshipment import inspection scheme in October 1999." According to the report, the government has been "taking steps to address a number of weaknesses in the area of governance and transparency. An agreement was reached in October 2000, through bilateral negotiations, to resolve the governance issue arising from the seizure of the assets of the GGC, which should help restore investor confidence." Severe problems in public management however remain. In particular, "the combined effects of lack of skills, low salaries, and high turnover among senior civil officials limit the effectiveness of public sector management and the pace of structural reforms," the report states. The Gambian agricultural sector employs about 70 percent of the population, but contributes only 27 percent of GDP. Groundnut production declined from 145,000 tons in 1974 to 55,000 tons in 1992, "as a result of erratic weather conditions, declining terms of trade, and the breakdown of the marketing, extension, and credit services to the sector over the years." Gambian farmers seem to have shifted from classical cash crops to food crops, securing food access. The Gambia remains one of the world's poorest countries. Especially in terms of such dimensions as food security, access to basic services and assets, and powerlessness, poverty is very widespread. There is also evidence that suggest that extreme poverty may have sharply deteriorated between 1992 and 1998. Inequity is on the rise. The highest income quintile now has an income 13.8 times higher than those in the lowest income quintile. As far back as 1992 however, The Gambian government has taken the initiative to develop a comprehensive Strategy for Poverty Alleviation. So far, policies have focused on achieving sustainable growth with macroeconomic stability, a policy where the IMF gives the Gambian government an overall positive assessment. The second stage of alleviating poverty, however remains to produce results. The Gambia in effective being very much obedient to IMF policies and strategies, thus in many ways can be seen as a showcase of its policy. Macroeconomic indicators are positive in general, but the rural majority in The Gambia, as in most of rural Africa, does not play an active role in these indicators. The real experiment thus only is in its beginning. Will the positive macroeconomic trends and the debt relief have a positive effect on poverty in rural areas? Does it only promote enhanced short time inequity and later an economic development for everybody, or will enhanced inequity become a more permanent feature? The IMF says its policies are to "accelerate real GDP growth by focusing on developing the productive capacity of the poor and improving the targeting of social services." Consistent with this overall strategy, the main macroeconomic objectives for 2000-03 should be "a further recovery in agriculture, made possible by the planned rehabilitation of the groundnut sector, increased tourism, and a continued revival of the reexport trade." Actually, this is a policy that has been followed by the government in Banjul or Bathurst (as the capital was called in colonial day) for decades. The only word in these objectives that has been allowed to change in the different periods is "planned" - a word that has been 'out' for a decade, but now has reached IMF planners in their new poverty outlook. A surprising fact, however, remains. It will be a mystery to the neighbouring Senegalese government why the IMF supports the Gambian government in its plans to recover the reexport trade, which is mainly aimed at undermining the Senegalese importation protectionism. Import taxes have been lower in The Gambia than in neighbouring countries fro a long time, as nothing worthwhile protecting is produced in The Gambia. The country thus had parasitic incomes on reexporting to neighbour countries with higher tax barriers until these closed the Gambian borders some five years ago. Undermining Senegalese taxes can hardly be seen as an IMF objective, although one of the World Trade Organisation (WTO). It is therefore surprising that the IMF personnel treating The Gambia also interferes with the sovereignty of neighbouring Senegal.
Source: Based on IMF
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