The estimates of revenues and expenditures for 2024 tabled before Lawmakers are characterised by costly mistakes, massive misstatements and deliberate omissions, thereby putting the credibility of the entire budget process into question. It would be illusory to address the growing fiscal deficit credibly and accurately under such misleading circumstances.
With a projected fiscal deficit of D4.45 billion, representing 2.55% of GDP in 2024, the Government will need to borrow more money domestically from the private commercial banks to finance the widening budget deficit with the consequences of further increasing the country’s debt portfolio.
The debt to GDP is more than 81 per cent, and the debt interest charges for the year have increased from D3.5 billion to D7.5 billion. This is more than the combined allocations for the social priority sectors such as Health, Education, and Agriculture. There is no doubt that the economic trajectory of the country is not going in the right direction.
The International Monetary Fund has established a benchmark of close to 70 % for developing countries, meaning low-income countries like the Gambia surpassing the specified debt ceiling set by the IMF must do everything possible to stay within the acceptable limits.
In 2021/2022, the Gambia reported the highest debt-to-GDP figure. The table below will show the ratio of other countries in the region.
Debt to GDP 2021/22
Country
Debt to GDP
1. Gambia 83% 2. Ghana 81%
3. Guinea Bissau. 41%
4. Nigeria 38%. 5. Senegal 75%
6. Sierra Leone 79%
Source: IMF website
Contrary to the finance minister’s statement on the debt situation of other countries, our debt portfolio is among the highest in the region. Nigeria’s debt in 2022 accounted for 38.4%, the lowest so far among other countries in the region.
The year 2024 will be stressful as essential health services and charges for passport, ID cards and vehicle license fees, as well as road tax, are expected to increase substantially in the coming year, consistent with the Government’s plans to boost non-tax revenues on essential services. Last year, the increases in revenue measures were mainly from immigration fees for non-Gambians, plus environmental taxes on tobacco products.
Also, a revision was made to duty-waiver application fees. Despite all the revenue measures taken in 2023, the deficit stubbornly refused to disappear and has now increased from D3.9 billion in 2023 to D4.5 billion in 2024. What is this telling us about the growing indebtedness of the country?
It means that the economic trajectory of the government is not on course, and we are not getting the right results. Plans to contain the fiscal deficit must include measures to tackle wasteful spending on discretionary expenditures and overseas travel.
Despite the recent introduction of a travel ban, the Government is shamelessly going to spend close to D400 million on international travel and seminars in 2024 without due regard to the vast increases in the country’s rising debt levels. This does not augur well for a country trying to curtail years of fiscal profligacy and economic mismanagement.
The increase in the public debt amounting to more than 81 per cent of GDP in 2023 has become problematic as a significant part of these debts relates to public entities such as NAWEC, GAMTEL and GCCA, for which the Government has undertaken to settle as the guarantor for these loans.
It sounds incredulous that the government has taken total responsibility to service the debts of the energy and telecommunication companies yet to contribute anything to the national budget, not to mention paying out the required dividend to the Government. These SOEs continue to pose significant fiscal risks to the government.
Without a doubt, the most significant expectations from this year’s budget concern improving the affordability of essential services from NAWEC, having increased electricity charges by over 30 per cent this year. Many were hoping that with these painful increments, we would soon start getting better value for money from the services of the nation’s electricity and water suppliers. But are we?
Power outages, water shortages, depleted road networks, and ageing telecommunications infrastructure continue to hurt the economy. Lowering the taxes that ordinary people have to pay, which could ease the difficult economic circumstances for the public, should be the government’s primary concern.
Within the past months, the dalasi has depreciated remarkably against major international currencies, including the dollar and CFA, with the resultant effect on the impacting prices of essential commodities. Inflation has reached 18%, a record in the country’s economic history. At the same time, interest rates, the price we pay for borrowing from the banks, are at an all-time high and will continue to rise given the recent increases in the central bank policy rate, now set at seventeen per cent.
The economic outlook for the country in the medium term lacks the necessary preconditions for sustainable economic development. Efficient tax mobilisation and ineffective reform strategies to increase the fiscal space, which could minimise the heavy reliance on donor support, plus the lack of coherent economic policies and programs to assist in the country’s development process for attaining the NDP goals, are all proving elusive.
Even the euphemism that surrounded the recycling agreement of the Senegambia Bridge is beginning to wane. During the year, the government introduced toll fees at the Basse Bridge. Similarly, it would not be an exaggeration to predict with reasonable accuracy that the Berthil Harding highway, when completed, will be transformed with the point of sale for toll fees, making it ready as a suitable candidate for asset recycling.
The question needed to be asked: why did the proceeds from the sale of the Senegambia bridge fail to impact positively the fiscal deficit?
We are now facing the reality of a stressful year where every Gambian is forced to struggle to make ends meet whilst those who are supposed to better the lives and livelihoods of the people are busy travelling expensively on business class, augmenting their statutory salaries and allowances with travel per diems and kickbacks.
If it were not for those Gambians in the diaspora ready to help their family members and friends back home contributing stupendously in remittances, which, as of last year, generated inflows of up to $ 564 million or D33.846 billion, the poverty levels would have been alarming.
How the growing economic deprivations of ordinary Gambians failed to be addressed sufficiently in the controversial 2024 draft budget remains unanswered. Touching the untouchable budget estimates of those independent entities such as the Ombudsman, NAO, the National Assembly, and the IEC is unconstitutional.
It is an undeniable truism that the Government of Adama Barrow and his finance minister will continue to rely heavily on commercial banks to finance the budget deficit ad infinitum. Stricter financial measures have to be taken if we want to contain the growing public indebtedness of the country.
By: Morro Gaye
International Consultant!
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