World Bank issued a press release yesterday announcing that it would fund the Gambia’s Budget Deficit with a US$20 Million Grant. Grants are funds allocated to the Gambia on conditions which don’t include repayments or interest. The US$20 Million is equivalent to over D1.2 Billion at the current rate of D60 per US$1.
The Gambia’s Deficit for the 2023 Budget currently stands at D3.9 Billion. This means that the Government has to find an alternative source of funding to finance the remaining D2.7 Billion needed to fund all its programs and activities next year.
Below is the press release from the World Bank.
BANJUL, December 7, 2022—The World Bank’s Board of Executive Directors today approved Supplemental Financing for The Gambia Second Fiscal Management, Energy and Telecom Reform Development Policy Financing (DPF). The $20 million grant will support the government’s efforts to improve debt and public investment management; strengthen financial viability and service delivery in the energy and telecommunications sectors; and enhance the transparency and governance framework of state-owned enterprises (SOEs).
The Supplemental Financing responds to the spillover effects of the war in Ukraine on The Gambia’s economy compounding an already challenging situation due the COVID-19 pandemic. The conflict disrupted agricultural supply chains and food trade, impacting food, feed, fertilizer, and fuel prices and driving inflation up to double digits for the first time in three decades.
“The war in Ukraine has led to a slowdown in economic activities in The Gambia and as a result impacted the country’s economic growth. This has reduced domestic revenues; at the same time, the country has to meet pressing basic social and productive sector needs exarcebated by rising inflation,” said Wilfried Kouame, World Bank Country Economist and Task Team Leader of the project.
The grant will support efforts to improve the country’s economic resilience and recovery by mitigating revenue losses, boosting forex reserves, cushioning the impact of rising prices of essential products on the most vulnerable, and ensuring that the government’s reform program remains on track.
“The Government of The Gambia adopted several measures to mitigate the spillover effects of the war in Ukraine on the population, including foregoing part of the revenues from petroleum products, partially offsetting the rising costs of fertilizers and food products through subsidies, and a continuation of the removal of taxes on bread and rice,” said Feyi Boroffice, World Bank Resident Representative. These measures, while reducing the impact of the crisis on the people, have generated significant fiscal costs and the additional support is part of a coordinated effort to fill the resulting financing gap.