IMF Considers Gambia Bail-out

Amadou colleyJammeh government’s empty rhetoric and spinning of documents showing the economy doing well were nothing short of a fruitless exercise. For every economy to do well, its engines of growth must be seen running well, which is not the case in the Gambia where the private sector continued to be marginalised or elbowed out. Instead of serving as the engine of economic growth, the Gambia’s private sector players fear their own safety, for they dare not invest in certain areas of the economy. That means opening an all-out war with the President-turned-businessman. As a player and referee, Mr. Jammeh loses the neutrality credentials and uses the state machinery, apparatus and influence to pin down any businessman who storms the no-go areas.

How do we expect the economy to do well when no private investor invests in diapers, flour, cement or rice?

But the result now is this article by The Economist that the IMF lacks total confidence in the Gambian economy to the extent that it is now considering a bail-out. As you will see in the article, the country’s indiscipline of borrowing is not only unsustainable but also disturbing and meaningless. If the debt has had positive impact on the economy, we would not have complained but that is not the case. We will raise the red flag since the rope of debt hangs on the necks of even babies yet unborn.

Read The Economist below:

TIMES are tough in Africa. Ebola, in addition to claiming many lives, has also damaged economies. Tourism is suffering as frightened foreigners stay away. Falling commodity prices are also taking a toll. Investors are pulling money out of riskier spots, prompted by the prospect of rising interest rates in America. The IMF is cutting its growth forecasts. So is the unfolding public-debt crisis in the Gambia, which has suffered from all these trends, a harbinger of things to come?

In mid-January the IMF announced that it is considering a bail-out for the Gambia. In part, the problems of the tiny west African country of 2m stem from a 60% fall in tourism, the source of 30% of its export earnings. (Although it has not suffered a single case of Ebola, it is close to Guinea, one of the most affected countries.) Falling commodity prices mean that exports of wood and nuts will also bring in less. No wonder the local currency, the dalasi, fell by 12% against the dollar last year.

A weak currency is a worry, since Gambians rely heavily on imported food. Two-thirds of the public debt is denominated in foreign currency. To prop up the dalasi the central bank has raised interest rates from 12% to 22% over the past two years.

But it is mismanagement of the government’s finances that has pushed the Gambia over the edge. From 2009 to 2014 its debt-to-GDP ratio increased by 18 percentage points, more than all other countries in sub-Saharan Africa except Cape Verde and Ghana. Now 80%, it is one of the highest in the region. It is likely to increase further thanks to the latest budget, released in December, which boosts spending by 11%.

The Gambia’s debts are not just growing; they are of unusually short maturity. The cost of servicing them has therefore jumped very quickly as rates have risen. A rule of thumb favoured by the IMF suggests that a poor country’s debt is unsustainable when the government is devoting more than 20% of its revenue to paying it back. In 2009 the Gambia devoted 15% of revenue to debt-service; in 2014, 23%. Forecasts from the Economist Intelligence Unit, a sister company of The Economist, put this year’s figure higher still.

A few other African economies are under similar pressure. In June Zambia, which has suffered from low copper prices, turned to the IMF. It was soon followed by Ghana, which devotes a massive 36% of government revenue to debt-service. Malawi and Eritrea may be the next casualties: they have big deficits and must make hefty payments on the public debt every year.

Happily, debt problems like the Gambia’s are increasingly rare. Thanks to a series of debt-relief programmes the continent’s debt-to-GDP ratio is 38 percentage points lower than it was in 2000. At 30%, it is about one-third the level of the euro zone’s. No sub-Saharan countries except Eritrea fall foul of another indicator of imminent debt problems, when the ratio of debt-service to exports tops 20% (though these numbers are worsening, thanks to falling commodity prices). Budget deficits are lower than in 2009, the last time commodity prices dived and the dollar rose. Most African currencies held up well in the past year, another sign that investors are not panicking. Times are tough, but only a few countries are really struggling.



  1. Lafia Touray la Manju

    Crazy! Unfortunately though, the average voter don’t understand this and would buy any story that is thrown at them through GRTS. So the regime will not be bothered about an immediate voter backlash especially given that the opposition does not have the capacity to mount an aggressive, efficient and sustained voter sensitisation.


    • This IMF report is just the tip of the iceberg…. Not only our economy but Devilish yaya Jammeh will suck our blood dry if we don’t move faster by ANY means necessary…. The Gambia gateway international calls for example, are being closely monitored NOT because of economic sabotage & loss to Gambia by the people who are being prosecuted for illegally diverting calls BUT because ALL international calls to the Gambian are paid directly into an illegal account the kanilai devilish murderer set up by using its proxies… The currency exchange rates too in Gambia are pegged & controlled by kanilai murderous devil because of its money laundering enterprises but has to open up to the recent fall in depreciation of the Dalasi because apart from international remuneration transfers for our suffering families back home, people have decided to hold on to their valuable foreign currencies which was feeding the kanilai devilish predator’s illegitimate syndicate; this is why the kanilai devil frequently sends its murderous elements time & again, to raid & thief from the local money exchangers & whoever is suspected to be having money…. Gambians will NOT know the exact damage the kanilai predatory murderer has done to our economy, our lives & country until when it is apprehended…. God help Gambia & bless our noble struggle to reclaim our suffering motherland from the jaws of murderous tyrannical kanilai devil Tony DAFATABA! Ameen.

    • Deyda Haidara

      Lafia your last statement shoud read: “So the regime will not be bothered about an immediate voter backlash especially given that the opposition does not have the OPPORTUNITY and the freedom to mount an aggressive, efficient and sustained voter sensitisation.”
      The use of words is important to send a message.
      You know what Lafia, I have seen so-called big men begging for fish money. I thought they were joking as one of them nearly shed tears, I felt cold and sad.
      Times are really hard in Gambia. Hunger has already knock lot of doors. The remittances sent from the diaspora is the shockabsorber keeping majority of gambians alive.
      Jammeh should respect the diaspora as the sustainer of his regime.

  2. Papa Kumba Loum

    I believe that these are some of the important issues that Gambians should spend more time discussing and sensitizing each other about rather than posturing on which religion or sects within religion is the right or wrong one. The more we see ourselves as Gambians with a common interest rather than who is a Muslim, Christian, Ahmadiyah, Catholic, Anglican. Animist etc,etc and or who is a Mandinka, Jola, Wollof, Fulla, Manjagoe etc the better
    I have observed that most regular online contributors are mute when serious issues concerning our commonalities as Gambians are mentioned but will go to town when it concerns for example which religion is right and who supports what religion and issues concerning Islam versus the West.

    We Gambians should know that we are neither Arabs nor Europeans/Westerners and as a matter of fact most of these powers and religious blocks regard us black Africans as sub-human, slaves and backward despite our belief and romantic notion that we have been Arabised or Westernized. Perhaps the more we become secular and less tribalist when we discuss our fate as Gambian the better. I have however observed much bigotry from Gambians who are supposed to be open-minded and tolerant of each other people. Guys let us leave behind our villages and hamlets and look at the bigger picture.


    IMF will not be bailing out Gambia but bailing the president and his wife

  4. There is no doubt the Ebola outbreak has disrupted the cash flow and profitability of West Africa’s capacity to earn a living. The after shock is likely to hit revenues and international investment confidence for several years to come.

    My fears about the IMF’s advice to introduce Value Added Tax on a rural farming and tourism based economy, that imports twice as much as it exports.. appear to have been realised.?

    This tax on profit is indiscriminate and affects the poor far more than the rich. It is a mechanism that increases wholesale and retail prices, with the sole intention of increasing taxation revenues.

    So what next?

    Are we to witness the Gambia’s debt to be extended from a repayment period of 48 years to….whatever?

    Or are we to witness a Greek style stand off ?

    Some very difficult decisions are about to be faced.

    I very much doubt President Jammeh is a leader who will be easily intimidated.

    Cancellation of the Gambia’s debt, is a reasonable platform on which to begin negotiations. But the worlds money brokers do like there pound of flesh.

    Clearly West Africa is in great need of a ” Marshal plan”


  5. Lafia Touray la Manju

    Scales, the international community have always put respect for human rights as a pre requisite for debt relief for third world countries. Given what the U.S. state Department and UK’s FCO are saying about Gambia’s human rights records not to mention the reports of the various international Human Rights Organisations on Gambia, debt relief is not on the table.

    Moreover, debt relief seems to be a solution for the long term. The short term problem requires a cash injection to keep things going, and a strong dalasi to keep basic commodity prices relatively affordable. This requires more revenue, more foreign exchange earnings, less or no borrowing, a reduced government spending especially on these silly so called national celebrations, and an increased export trade to narrow down the gaping trade deficit.

    In the real world of Gambians politics, these things don’t matter, am afraid, because the locals don’t understand anything about political economy and public finance. They will make them to believe that it is God who is responsible for all these and that as believers, we should accept it as that; the will of almighty God.


    • @ Lafia Touray la Manju= I completely agree with you. The average Gambian don’t understand about political economy, i would say the average African. These World Bank/IMF loans are killing us, and all we can pay is the interests on those loans let alone the principal. This are monies we could have use for other development programs.

      One of the components of the Structural Adjustments Programs (SAP) they imposed on us to pay off these debts, is the Liberalized Agricultural Trading and issues of Subsidies. Eliminating or reduce Tariffs, quotas and regulations. An open market policies hurting our economies and certainly not good for our domestic producers and our food security.

      It is a moral duty and human rights for these international organizations to bail us out and bail the entire developing countries

  6. Thankyou Lafia.

    I don’t agree that Gambians, do not understand “home economics”

    My extensive market reasearch indicated positively that Gambian’s {especially your women} were very impressive in wealth creation even at the most basic daily level.

    If we consider the daily hours they work, to produce less than 2 dollars of income per day, a womans personal productivity, remains of exceptionally high value to the Gambian economy.

    The point I was making is that…if taxation rises but wages remain stagnant, those at the bottom of the pay scale are hardest hit.

    A woman working from dawn to dusk in the field, who also runs a household…can not increase her productivity or her income.

    In the richer western economies, economic improvement, based upon consumer spending, can refill the nations coffers and stimulate employment.

    But for Gambia…even if cash could be found to spend….such an increase in spend..would only draw in more imports, which does not benefit the Gambian economy, its foreign exchange requirements or its balance of payments deficet.

    While I appreciate the building of infrastructure does stimulate short term jobs and incomes in the construction industry. They do not generate, the industrial base, factories, and consumer goods that are the large and consistant foreign exchange earners and tax streams required to address the balancing of the Gambia’s books.

    To keep borrowing money to build concrete jungles, and neglect manufacturing is to squander the future prosperity of all Gambian’s and its next generation.

    There is nothing wrong in borrowing money. But you must put it to work.

    But I think from what you have written… you agree with me?

  7. Lafia Touray la Manju

    That is Home economics you are talking about, Mr. Scales. Talk to them about GDP and the rest of it, and probably think that political economy and public finance are terms unheard of in The Gambia. The president told them he is financing government projects from Allah’s Bank and they praise him as if they owe him a debt of gratitude.

    We are in agreement with all the fundamental points about Gambian economy. You probably need to send us a Vince Cable.


    • We can all agree that Yaya Jammeh and his APRC has aggravated the worsening economic woes of the country, but it will be dishonest to entirely place the blame of our situation on them..The fact of the matter is that The Gambia. like all former colonies, inherited an economy that was tailored to play a specific role in the global economic setup..We have always played that role,from Independence to date…The IMF will “bail” The Gambia,regardless of the governance record of the regime, because we are playing our role within the Global Capitalist system very well…As long as Jammeh fulfills his role as the “Tax collector” of the International Money Lenders,whose interest is represented by the IMF, he will continue to be their partner…That’s a definite…

      The question though, is how does your party plan to reverse this trend without worsening the conditions of the people…?

  8. Yes, is a moral duty for the World Bank/IMF and their Structural Adjustment Program (SAP) to bail out Gambia and the African Continent as whole. These loans are killing us, and the only payment we were able to afford is the interest let alone the principal. One of the conditions of these loans is Liberalized Agricultural Trade and issues of subsidies, which is not good for our economies and certainly not good for our domestic producers and our food security

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