By Yusef Taylor, @FlexDan_YT
On Friday 4th December 2020, the Minister of Finance and Economic Affairs delivered the 2021 Budget Speech at the Gambia’s National Assembly highlighting that “the macro-economic impact of the pandemic on the Gambian economy indicates that there is a significant slowdown in GDP, decline in tax revenues, increased unbudgeted expenditures in health, relief support for vulnerable individuals and economic stimulus packages for businesses.”
Finance Minister, Hon. Mambury Njie also tabled the 2021 Appropriation Bill featuring a reduction of D267 Million Dalasis from the Independent Electoral Commission and an increase of D135 Million Dalasis on Centralised Services. These are the largest cuts and additions to the 2021 Draft Appropriation Bill. Speaking to National Assembly members (NAMs) I was informed that further cuts may be made to the Appropriation Bill, however, some are of the view that cuts could result in a Supplementary Appropriation Bill being tabled in 2021.
Revenue, Expenditure and Deficit
On the revenue front, the Minister highlighted that “Revenue and Grants for the first nine months of 2020 increased by 16% from D12.3 billion (14% of GDP) in the first nine months of 2019 to D14.2 billion (15% of GDP). This is largely owing to an increase in indirect taxes and nontax revenue during the period.” For 2021 the Draft Budget estimated that D35 Billion Dalasis will be raised in taxes, non-tax-based sources, loans and grants.
Delivering his hour-long speech, Hon. Mambury Njie indicated that “total expenditure increased by 13% from D14.5 billion (16% of GDP) in first nine months of 2019 to D16.4 billion (17% of GDP) in the same period in 2020″. The total Appropriation featured in the 2021 Draft Budget was cut by approximately D146 Million. A stark contrast to last year when the National Assembly made a total of D1.6 Billion in cuts. Had the National Assembly made savings by cutting the D54.4 Million Dalasis Building Loan they appropriated themselves the Gambia would have cut over D200 Million Dalasis from the total appropriation.
However, it must be highlighted that the 2021 Draft Budget projects that the entire funding of Government is planned to exceed D35 Billion Dalasis.
The result of having more expenditure than revenue is a budget deficit. This means that the Gambia will look elsewhere to raise funds for more Government activities. The Minister’s speech highlights “the overall fiscal deficit excluding grants increased by 9% from D5.5 billion (6.2% of GDP) in the first nine months of 2019 to D6 billion (6.3% of GDP) in the first nine months of 2020.” This year the 2021 Draft Budget projects a similar budget deficit of D6.1 Billion.
Below is the 2021 Appropriation Bill tabled on 4th December 2020.
Watch the Minister’s Budget Speech in the link below.
More for Security than on Health, Tourism and Agriculture
The chart below shows the 10 highest allocated budget entities. Similar to previous years, Debt Service is the highest allocation with almost D6 Billion projected to be spent on debt repayments next year (2021). Updating NAMs on the Gambia’s Debt Stock, Hon. Mambury Njie said that “the public debt stock as at end September 2020 stands at D67.6 billion (71% of GDP) compared to D71.3 billion (81% of GDP) in the same period in 2019”.
The chart shows that the Ministries of Defence and Interior together total 8.1% of the entire 2021 Appropriation, highlighting that the Gambia spends more on Security than on Health, Agriculture and Tourism individually. Agriculture just misses out of the top 10 highest allocations, ranking 11th highest after Office of the President.
Tourism third-lowest Allocation 0.2%
On the lower end of the scale shows the budget entities which the Government expects to spend the least in 2021. The Public Service Commission has the lowest allocation while a new budget entity has been included for the National Human Rights Commission ranking as fourth lowest allocation after Office of the Ombudsman (2nd) and Ministry of Tourism (3rd).
Tourism is recognised as one of the most productive sectors in the Gambia; however, it has been allocated a meagre amount compared to other sectors. The Minister gave numerous reasons highlighting the impact of the Coronavirus Pandemic on Tourism. Hon. Mambury Njie told Parliamentarians that the State of Emergency which started in April to October 2020 brought the tourism sector to “a standstill as all tourists were repatriated, with hotels and all tourism service-related businesses forced to shut down.” Last year (2020) approximately D41 Million Dalasis was allocated to Tourism, compared to 2021 (D37.8 Million).
D267 Million Cut from Independent Electoral Commission
The chart below has been computed by calculating the difference between the first 2021 Appropriation Bill tabled with the 2021 Draft Budget, on 12th November 2020 and the second 2021 Appropriation Bill tabled at the Budget Speech, on 4th December 2020. The difference between these two shows the budget entities which have been slashed and those which have increased.
The chart shows that D267 Million was cut from the Independent Electoral Commission. Speaking to Hon. Touma Njie of Banjul South she informed me that the cuts are due to the removal of the Constitutional Referendum from the 2021 Budget. It can also be seen that the Judiciary and the National Audit Office have both been cut significantly with the Office of President also being cut by over D35 Million Dalasis.
Health Ministry increased by less than D350
The difference between the two Appropriation Bills shows that Centralised Services has increased by D135 Million followed by the National Assembly which increased by almost D90 Million. It will be recalled that the National Assembly moved a motion to appropriate themselves a D54.4 Million Building loan. Ministry of Interior and Ministry of Defence both featured increases of over D16.6 Million and 9.8 Million respectively. Meanwhile, the Ministry of Health has received the lowest increase of D339 Dalasis only.
Service Sector Declines by 13.6%
The 2021 Draft Budget projects that the Gambia’s 2021 Gross Domestic Product (GDP) is expected to increase from D98.3 Billion in 2020 to D106.9 Billion in 2021. Speaking to NAMs the Minister highlights that “Real Gross Domestic Product (GDP) growth is projected to decline significantly from 6.1% in 2019 to -1.5% in 2020. This is on account of a contraction in growth in the services sector, emanating mostly from the wholesale and retail trade and tourism sub-sectors.”
This year (2020) the Service Sector “is projected to register a growth rate of -6.8% … compared to 6.8%” in 2019. This represents a total decline of 13.6% from 2019 to 2020. According to Hon. Mambury Njie at least three other sectors are expected to achieve lower growth rates, namely; “Transport and Storage, Communication, and Finance and Insurance”.
According to Hon. Njie the negative growth rates are “as a result of the lockdown and border closures which hindered economic activity and tourist arrivals”.
A publication on the 2021 Draft Budget is featured in the article below which features the 2021 Draft Appropriation Bill tabled on November 12th 2020.
2021 Draft Budget features D6.1 Billion Budget Deficit, a Record High