According to World Bank and IMF data published by Mays-Moussi, Gambia is the third most indebted country in sub Saharan Africa in 2016 after Eritrea and Cape Verde. By relating public debt to GDP (a measure of the national wealth of a country at a point in time), Gambia’s public debt is now 97% of GDP the third highest in Africa. The highest is Eritrea 126%, then Cape Verde with 122%.
The other 7 countries ranked in the top 10 African countries most indebted in 2016 according to the report published on 13 May 2016, are: São Tomé and Príncipe (92%), Congo (79%), Ghana (74%), Malawi (73%), Angola (70%) and Seychelles (65%). As for our neighboring countries Senegal, Guinea, Guinea Bissau and Mali, their debt ratios in 2016 are 57%, 48%, 48% and 35% respectively. With Gambia’s public debt at 97%, it is two times as high as our neighbors Mali, Guinea and Guinea Bissau.
Conversely, the countries whose debt levels are lowest are Nigeria (13%), Botswana (16%), DR Congo and Swaziland (20%), Equatorial Guinea (25%) and the Comoros (29%). Mali with (35%) is among the 10 top sub-Saharan African countries with the lowest debt ratio.
The table confirms that Gambia remains severely indebted even after the IMF disbursement of $10 million under the Rapid Credit Facility last year when the country was placed under a Staff-Monitored program. From 2009 to 2014 the debt-to-GDP ratio increased by 18 percentage points, more than all other countries in sub-Saharan Africa. Now 97%, it is the third highest in the region and with no end to the border crisis with Senegal and the repeatedly massive borrowing of this government, it is likely to increase further thanks to the mismanagement of the country’s finances that has pushed the economy over the edge.
A rule of thumb favored by the IMF suggests that a country’s debt is unsustainable when the government is devoting 20% of its revenue to paying back debts. In 2014, the Gambia devoted 23% of revenue to debt-service when the debt-to GDP ratio was 80%, this time it can go up to 33% if adequate measures are not taken (like cutting down illegal spending) to close the revenue shortfalls as a result of the anticipated fall in tourism revenues and the severe impact the border closure could have on the 2016 GRA’s targeted revenues.
Sadly, the biggest private group of companies, the KGI Group, was never included in the annual GRA awards of best tax payers in the country. Are all these Kanilai group of companies honoring their tax obligations? It is illegal to operate a business doing all sorts of things including exporting sands, cashew nuts, timber, and tannery accruing massive profits without paying taxes. A leader should lead by example. Where is zero-tolerance for corruption?
The year 2016 is going to be a defining year for Gambians as the country’s financial difficulties is expected to worsen. Words pay no Debts!