Gambia's fiscal position witnesses some slippages - Finance Minister

Gambia's finance and economic affairs minister, Abdou Kolley, has stated that the fiscal position of the country witnessed some slippages largely caused by unplanned expenditures in the second quarter of 2009 resulting to a negative basic balance of D61 million at the end September 2009.

Kolley made this revelation during his presentation of estimates of revenues, recurrent and development expenditures for the Fiscal Year 2010 to lawmakers on Wednesday at the National Assembly building in Banjul.

He said the higher than expected revenue performance, particularly for international trade taxes, could not match the huge expenditure overruns in the second quarter of 2009.

“The Ministry of Finance and Economic Affairs is committed to improving on fiscal management so that the position of the basic balance does not exceed negative D190.5 million by end December 2009”, he said, adding that it is important to note that there is a greater need to restrain government in spending within its available resources so as to reduce the stock of domestic debt and the interest rate of the debt.

According to Mr Kolley, the domestic debt-to-GDP ratio currently stands at 25 percent which, he said, is worrying if government’s appetite for spending is not contained. He said debt interest consumes around 20 percent of our domestic resources, which limits government’s efforts to increase resources for spending on social programs and projects.

He also said there are plans to restructure the terms of our treasury bills instruments in order to generate greater fiscal space for spending on investments.

He pointed out that the performance under the PRGF-supported program is generally positive for both quantitative targets and structural benchmarks -- all the quantitative targets were met except for the basic balance.

Kolley added that both the net international usable reserves and the domestic assets of the Central Bank of The Gambia were met with comfortable margins.

He noted that all the structural reforms such as the establishment of a credit reference bureau, the publication of quarterly balance of payments statistics and the presentation of a national debt sustainability strategy to cabinet has also been met.

Finance minister Kolley was optimistic that total revenue and grants are estimated to increase from an approved level of D4.582 billion in 2009 to D5.439 billion in 2010, representing 25.32 percent of the GDP. This increase is attributed to both the increases in domestic revenues and external grants, adding that domestic tax revenue is estimated to increase from the approved figure of D3.391 billion in 2009 to D3.991 billion in 2010.

He also said project grants is estimated to increase from D513.1 million in 2009 to D636.2 million in 2010. In addition, the budget support mainly from the EU and HIPC is also projected to increase from D290 million in 2009 to D424.8 million in 2010.

Kolley further said total Expenditure and Net-lending are also estimated to increase from D5.363 billion in 2009 to D6.039 billion in 2010, representing 28.12 percent of GDP, saying the increase is mainly caused by increases in personnel emoluments, other charges and externally financed expenditures.

Accordingly, debt interest is projected to drop from D845.2 million in 2009 to D762.4 million, and the share of debt interest to GDP also continues to fall.

“The decline interest payment is attributed to the projected fall in the yield on interest and the restructuring of the terms of the Treasury Bills instruments. The attainment of this premised mainly on prudent fiscal management.

Other non-interest expenditure is projected to increase because of the increases in grants and domestic revenues. Personnel expenditures is estimated to increase from it’s approved level of D1.035 billion in 2009 to D1.497 billion in 2010. The share of personnel expenditures to GDP increases from 5.16 percent in 2009 to 6.97 percent in 2010”, he noted

Kolley said the fiscal deficit is however, projected to fall from D781 or 3.89 percent of the GDP in 2009 to D599.9 million, or 2.79 percent of GDP in 2010. Government will strengthen its efforts to enhance public finance management in order to limit government domestic borrowing requirements.