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Honourable Speaker, The legal requirements for the presentation of a Supplementary Appropriation Bill to the National Assembly are detailed out in the 1997 Constitution, and the Public Finance Act of 2014 Section 153 (1) of the 1997 Constitution of The Republic of The Gambia requires a Supplementary Estimate be laid before the National Assembly for approval if the amount appropriated under the Appropriation Act is insufficient or that a need has arisen for a purpose for which no amount has been appropriated by that Act.
Furthermore, Section 30 (2) of the Public Finance Act equally requires the Minister to submit a Supplementary Budget to the National Assembly when substantial changes in the economic and social conditions require large expenditure than original and revised budgets allow, and that the Supplementary Budget should detail out the additional expenditures and sources of their financing.
On March 27, 2020, The President of the Republic declared a State of Public Emergency including the closure of all non-essential public and private businesses owing to the severity of the global coronavirus outbreak. As recent as July 1st, the state of emergency was extended for an additional period of one week. During this period, the Government has outlined a number of measures aimed at protecting the population and safeguarding the functioning of society and the economy.
As a country, The Gambia recorded its first case on 16th March 2020, and as of 2nd July 2020, fifty-five (55) cases have been recorded within the country, of which twenty-seven (27) have recovered, with two (2) fatality, and the remaining twenty-six (26) are currently undergoing medical treatment. A total of eight hundred and thirty-four (834) people have completed quarantine, whilst three hundred and fifty-three (353) people still remain quarantined. The number of Covid-19 tests conducted across the country has also been ramped up over the past few weeks, with a total of three thousand, one hundred and forty-two (3142) individual tested.
It is evident that we are in unchartered territory, as we bear witness to the devastation caused by this pandemic. Not only has the Coronavirus affected the lives and livelihoods of people across the globe, it is poised to have a detrimental effect on the world economy.
As of end-April 2020, more than 65% of the global economy was under some form of lockdown or quarantine, and this continues to impact economic activity worldwide, regardless of national infection rates. Thus, there is a strong possibility of a global recession arising from the Coronavirus pandemic, and like most countries, The Gambia continues to feel the negative social and economic impact of this pandemic.
The World Health Organisation (WHO) has projected that Africa will reach its Covid-19 peak between May and July, and of late, the number of positive cases has surged across the country. As a result, we conducted a rapid assessment of the macro-fiscal impact of the pandemic to gauge its impact on GDP, revenue, expenditure, and the 2020 Budget.
Preliminary assessment of the impact of the Coronavirus (COVID-19) suggests that economic growth in 2020 will be 5.8 per cent lower than the initial estimate of 6.3 per cent at the beginning of the year. The decline in economic growth is estimated to emanate from Trade, Remittances, Construction, Hotels and Restaurants. In addition, mild effects are anticipated in the local manufacturing sector -as supply side constraints through the lower supply of production inputs and other supplies will run low for most factory floors.
Initial estimates indicate that growth in the service sector will decline from 3.5 per cent initially estimated to 0.6 per cent, with tourism (Hotels and Restaurants) estimated to contract by at least -19 .5 per cent from the 4.5 per cent initially projected. As the sector with the largest contribution to GDP ( approximately 20 per cent in 2019), its contraction will also substantially affect our growth prospects. However, should the virus continue to spread globally and locally, the Gambia economy will likely take a strong hit and possibly enter into a recession.
Trade volumes are also expected to slow down as a result of the coronavirus pandemic and the longer this pandemic continues, the more severe the reductions will be. We are also likely to observe a reduction in the container traffic at the Gambia Ports Authority (GPA) in the medium term due to many countries restricting their exports during this pandemic. Remittances, which is a key driver to our economy, will also take a hit due to uncertainties associated with the Corona Virus in more advanced economies.
Expenditure The Ministry of Finance and Economic Affairs (MOFEA) has embarked on expenditure re-prioritization to the tune of D 1.345 billion, all geared towards combating the COVID-19 pandemic. Also, an Emergency Food Package was distributed to 84% of the population. As a result, MOFEA has committed to provide resources only to Ministries, Departments and agencies (MDAs) for statutory expenditures ie personal emoluments, Debt Service, Pension and minimum operational expenses.
This commitment has availed the Government the opportunity to re-allocate D500 million from various Budget Entities (BEs) and channelled them to the Ministry of Health to fight against COVID-19. The bulk of the savings came from Travel, Training, the National Health Insurance Scheme, and the Program for Accelerated Community Development (PACD). In addition, D845 million was also re-allocated from deferred Debt Service payments to finance the Emergency Food Package recently distributed across the country.
As the adverse effects of the COVID-19 continue to unfold MOFEA assessment suggests that a total of D3 billion in revenue will be lost if the pandemic does not drastically subside by the end of the third quarter. This indicates a 19.0 per cent decline from an initial revenue target of D12.45 billion, compared to a revised revenue forecast of D9 .45 billion.
The MOFEA will therefore update its 2020 Medium Term Economic and Fiscal Framework (MTEFF) to reflect the fiscal impact of the coronavirus, as this document underpins the formulation of the 2021 Budget.
Based on the above synopsis, it is evident that this Covid-19 pandemic has the potential to severely distort the Social and Economic environment of this country. The devastating effects of the pandemic are nondiscriminatory and affects every person, government operations, businesses and companies.
The social welfare and future of this country therefore relies heavily on the policy actions and decisions to be made at this crucial juncture. We are committed to steering the economy towards a sustainable path, while prioritizing the needs of our citizens. It is therefore imperative that the economy must be strong and stable enough to sustain the security of the nation. The Government has therefore decided to extend its support to the country through the provision of a set of policy response action plan. Henceforth, our policy response must be matched against whatever resources are currently available along with the assistance provided by our development partners.
So far the Government has taken the following steps:
- State of Emergency declared on the 27th of March, and later extended for an additional 45 days on the 3rd of April. On July 1st, it was extended for an additional 7 days.
- Central Government has limited its workforce to only essential staff
- Suspension of all overseas travel by public officials;
- Emergency powers were used to freeze prices of essential commodities such as rice, meat, fish, cooking oil, soap, sanitizers and cement in order to avoid price gouging and hoarding.
- The Ministry of Basic Education has partnered with media houses to provide educational lessons via the media (T. V and radio) to benefit students as schools remain close;
- The Gambia Revenue Authority (GRA) has extended the period for businesses to file their returns and make payments for an additional two months
- GRA is allowing businesses to negotiate a payment plan on their tax obligations. The authority will also deduct Covid related expenditure of businesses from their tax liabilities.
- GRA has reduced the CIF values of all essential commodities by 20 per cent;
- The Government has provided support to the most vulnerable of the population by distributing a bag of rice, a bag of sugar and 10/20 litres of cooking oil to each household that is considered vulnerable;
- D500 million was reallocated from within the budget and earmarked to support the Ministry of Health towards its National Preparedness and Response Plan;
- The monetary policy rate has been reduced by 50 basis points at end-February 2020 to 12 per cent and the standing deposit facility rate has been increased to 3 per cent
The focus of this Supplementary Budget proposal is on covering costs arising from the need to combat the Corona Virus outbreak, as well as other essential and urgent budgetary needs that are directly or indirectly related to the pandemic. Furthermore, there is a need to support the private sector, in particular, the Tourism and Hospitality sector, so they may cope with the effects of the pandemic.
The Supplementary Estimates is also formulated to address specific needs that may not necessarily be associated with the Covid-19 Pandemic, including payments owed to Kharafi and Shapoorji, Rehabilitation of the Basse and Brikama Markets, construction of a Mausoleum for our founding father, the late Sir Dawda Kairaba Jawara, Rural roads project, Recapitalizing the Central Bank, arid the settlement of the International.
Trade Finance Corporation (ITFC) facility on behalf of the Gambia Groundnut Corporation (GGC). I will now get into the details of this specific Supplementary Estimates.
Given the difficulty in predicting the duration of this pandemic, coupled with the fact that Government has already introduced various measures, such as the closure of non-essential businesses, to-control the spread of the Corona Virus, we therefore deem it fit to provide some sort of humanitarian assistance to the general public. As we all know, almost half of our population live below the poverty level (less than $1.25/day), and a meaningful sector of the economy is in the informal sector where most people earn daily income/wages to feed their families. As a result, we have factored D845 million (including contingency and logistics) on this SAB to cater for the provision of Rice, Sugar and Vegetable Oil to be distributed to the most vulnerable households across the country.
The distribution mechanism was deduced on the basis of the 2013 Integrated House Survey (IHS) adjusted by a recent survey conducted by the National Assembly members in collaboration with local government authorities and the National Disaster Management Agency (NDMA) that reached out to all rural communities to ascertain the true impact of the COVID-19 pandemic. This exercise indicated that a total of 201,600 households displayed a high level of vulnerability. Of these, 84 per cent (169,344 households) are in the rural communities and 16 per cent (32,256 households) in the urban areas.
In addition to the Humanitarian support recently given, Government is also working with the World Food Programme (WFP) and the World Bank to provide additional food assistance to the most vulnerable people. The intervention will target the 733,000 most vulnerable and food-insecure people (91,625 households) for three months July-September, providing rice, cash transfer to cover beans, oil and salt. Cash transfers will be delivered through mobile digital payments. The project is estimated at D337 million, and the Government has committed to contribute D224 million.
As earlier highlighted, the hospitality industry is among the worst-hit sector of the economy due to the Covid-19 Pandemic, as the Tourism sector has come to a halt due to travel restrictions across the globe. As a result, we intend to assist the Tourism industry in this difficult time by settling some of their liabilities owed to the Gambia Tourism Board (GT Board) in the form of Operational Licenses, as well as the various Rate Fees owed to the various municipalities.
The total amount owed to GT Board amounts to D5.6 million, whereas Rate Fees owed to Municipalities amounts to D20 million, thereby totalling D25 .6 million. With the approval of this Supplementary Estimate request, the Government intends to settle these fees on behalf of the Tourism industry.
Furthermore, we have factored an additional D100 million on this SAB geared towards a post covid recovery plan for the Tourism sector.
Certain Public Enterprises (PEs) are also feeling the effect of this pandemic on their basic operations. Among the most affected PEs are The Gambia Civil Aviation Authority (GCAA), The Gambia Maritime Agency (GMA), The Gambia International Agency (GIA), GAMPOST, and the Gambia Ferry Services (GFS). The GCAA, which primarily depends on airport traffic as its main source of income, is reeling from the effect of the closure of the airport. Similarly, the revenue capacity of the GIA has markedly deteriorated due to significant slowdown in international travel.
Meanwhile, the GFS and the GMA have also been affected by the border closure and a state of emergency that limits crowd size to ten people or less. As a result, all the above mentioned PEs currently have serious financial constraints and need urgent assistance from the Government in order to sustain their operations, including the payment of salaries to their employees. Under this Supplementary Estimates, it is proposed that the operating expenses of these PEs be settled by Government with a bailout to the tune of D121 million to sustain their operations for a period of three months.
In order to strengthen the Central Bank’s Balance Sheet, we have factored D180 million to Recapitalise the Bank. This will enhance the operational independence of the Central Bank, capable of attaining price stability without resorting to financial repression.
This Supplementary Appropriation request has also factored D435 million to cater for the bailing out of the Gambia Groundnut Corporation (GGC) to settle their upcoming payment due to the International Trade Finance Corporation (ITFC) of the Islamic Development Bank (IsDB). GGCs management has already informed us that due to the precarious state of their finances, they will not be in a position to settle this upcoming payment. Failure to settle this payment to the ITFC will have a profound effect on all IsDB financed projects in this country, including Agriculture projects, as all disbursements from the IsDB will be suspended.
In addition to Covid-19 related expenses, this SAB also intends to address various infrastructure projects, some of which were exhaustively discussed with this August assembly during the 2020 Budget approval process, whilst others are deemed relevant to implement, as they will serve as a crucial input to strong, sustainable, and long term growth of our economy. It is our fervent view that implementing these infrastructure projects has the potential to lift incomes, create opportunities, support economic development and help alleviate poverty. They will also provide communities with market access for agriculture and other produce, open corridors for domestic trade and help businesses reap economies of scale.
To address the need to boost internal trade within the country, it is proposed that we embark on a Rural Roads project at a cost of D500 million. This amount represents just a fraction of the total cost of the project, nevertheless, we intend to commence works this year. Some of the projects have the potential to generate meaningful employment, and will also connect approximately 50 villages within the Nuimi region. Access to critical healthcare facilities will be enhanced, whilst tourism will also receive a major boost as a result of the construction of these vital roads.
As we are all aware, the recent fires that destroyed the bulk of the Basse and Brikama markets have wreaked havoc on the livelihoods of individuals whose primary source of income depended on the functioning of these markets. Not only do these markets serve as domestic commercial centres, they also attract businesses from all over the region due to their strategic locations. We have therefore considered a total amount of D50 million for the rehabilitation of these markets on this Supplementary Appropriation, D40 million for the Basse market and D 10 million for the Brikama market. Embarking on such a project will not only create jobs during this difficult period, but it will also avail us the opportunity to construct modern, and resilient markets that we can all be proud of.
A total of D 15 million is proposed for the construction of a Mausoleum for our founding father, the late Alhagie Sir Dawda Kairaba Jawara. The construction of this Mausoleum, which will include a Presidential library, will leave a lasting legacy for a man who has embodied the principles of humility, patience, discipline, tolerance, virtuous leadership, and above all, the will to sacrifice for the betterment of this nation.
Government is currently implementing the Gambia Electricity Restoration and Modernisation Project (GERMP), which aims to increase electricity production across the country. The project has nonetheless encroached on land previously allocated by Government, and as a result, a settlement fee totalling D87 million has been agreed with the relevant stakeholders. An amount equivalent to D1O million has been disbursed to date, with an additional D77 million balance still outstanding. This balance has been factored on this SAB.
Since the outbreak of the Covid-19 pandemic, many Gambian students abroad have contacted their respective Gambian Embassies and High Commissioners to request for financial support in order to mitigate the impact the pandemic on their livelihoods. So far, the Government has responded to their needs by availing almost D18 million to these deserving students. However, after our initial disbursement, more students have registered with the respective Gambian foreign missions and are also asking for similar support previously given to Gambian students studying in different countries. As a result, we would like to avail an additional D20 million to these students, which is therefore factored on this Supplementary Estimates.
There is also a need to consider an additional D20 million as Consultancy Fees for various ongoing projects, including the Greater Banjul Rehabilitation Project (GBRP). The GBRP is currently at an advanced stage, whilst other road projects, such as the Hakalang, Sabach Sanjal-Kaur and Sankandi projects are moving into the design, tendering and evaluation stage. Retention Fees totalling D25 million is also being proposed under this SAB. These fees are due as per the clauses of their respective contracts following the completion of the Gambisara road Project, Sting Corner Road Project, and the Governor’s Residence in Central River Region (CRR).
Additional resources to the tune of D144 million is hereby catered for the settlement of MA Kharafi arrears. This will address our outstanding quarterly payments for the year. It could be recalled that I did raise this specific issue with this August Assembly during the 2020 budget process, albeit, at the tail end of the budget process, hence it could not be incorporated into the budget.
As promised, I will once again seek your approval for these payments to be considered on this Supplementary Appropriation request.
Similar to the MA Kharafi arrears, I did discuss the arrears owed to Sharpoorji during the budget process and have now factored D24 million on this SAB as the final payment/retention fee towards Shapoorji for the construction of the National Assembly building.
In our bid to streamline our Foreign Missions, we have taken relevant steps towards closing our Malaysia and Algeria missions. These two missions were expected to wind down their operations by the first half of this year. However, due to the global coronavirus pandemic that has severely impacted international movements, we will have to extend the timelines given to them to return home. In addition, the Government has also recalled several diplomatic personnel this year, who are still unable to return home at this current juncture.
This Supplementary Appropriation thereby factors a total of D50 million to maintain the Malaysia and Algeria mission for an additional six months, as well as cater for the repatriation of diplomatic personnel, who have been recalled home with their families.
The final item on this Supplementary Appropriation proposal is the consideration of a D30 million land compensation fee for the Upper River Region (URR) (Roads and Bridges). An independent evaluation assessment report recommended that compensation be paid to landowners directly affected by the project.
The Ministry of Finance and Economic Affairs will use various financing mechanisms to cater for this Supplementary Appropriation. The Government has already received D1.05 billion as a Rapid Credit Facility (RCF) from the International Monetary Fund (IMF) to address the impact of the Covid-19. In addition, an additional D952 million as Grant financing is from the European Union (EU). The African Development Bank (AfDB) has also made firm commitments to provide us with an additional D408 million as a grant, whilst the World Bank has disbursed D500 million as grant financing towards the procurement of medical equipment.
Meanwhile, a credit facility of D435 million will be accessed from the International Trade Finance Corporation (ITFC), and D49 million will be borrowed from the Domestic market. Even though borrowing is certainly not preferable given our debt situation, it should, however, be noted that the situation we are facing today is unprecedented and requires urgent and prudent actions that prioritize economic stability in the short and medium-term.
Conclusion Despite the challenges anticipated for the economy, I would like to emphasize the significant role that the Government’s assistance will play not only in the protection of our nation from the Coronavirus, but it will also act as a trigger to help stimulate economic growth through a reprioritization of Government spending, as well as extending the assistance to the vulnerable, tourism and infrastructure sectors through these times of uncertainty.
I will take this opportunity to thank our development partners for their invaluable support during this period and I can assure you that the Government is committed to continue working in close collaboration with them to secure the health and social welfare of our nation, as well as to sustain economic growth today and in the years to come.
Finally, I wish to emphasize that the measures I have announced are the initial response to the impact of COVID-19. The government may take additional measures to support the economy and respond specifically to the challenges the business community may face, as well as safeguard the financial sector, should the situation worsen”.