THE GAMBIA’S PATHWAY TO ECONOMIC DISASTER
We should worry too much if 50 percent of our expenditure goes to servicing our debts and the country is under debt distress currently soliciting the assistance of the IMF to help get debt relief from creditors.
There are reasons to fret about the current state of the Gambian economy. Economic policy uncertainty has been especially pronounced since the beginning of the year and the sustained budget deficits, a source of economic vulnerability, continues to increase government debt. We are saddled with a huge public sector debt making it necessary to refrain from taking any additional external debt in consonance with the advice from IMF.
Taking more debts to service existing debts have economic consequences for job creation, foreign exchange shortages, and threat to macro-economic stability due to increase growth in money supply thus pushing up inflation and putting pressures on prices of essential commodities. The size of current government spending has already taken a toll on the economy.
It is a wisdom widely accepted in modern economics that governments should not spend more than what it can generate from tax and non-tax revenues. For the second year running, the fiscal profligacy of this government has resulted in widening the budget deficit with damaging consequences for the economy.
Adding to the glooming economic reality is the fact that the dalasi remains volatile against a basket of major currencies and the price of fuel have been increased more than three times during the year. The remarkable increase in imports over exports still continues to have adverse effect on the currency market which is the prime source of the phenomenal rise in the Current Account deficit thus creating foreign currency shortages as trading is denominated in foreign currencies.
The economy appears to be on a warpath under the commander-in-chief, finance minister Mamburay Njie, whose economic war plan is not focusing on any sustainable debt management strategy but instead had been busy acquiring new fleet of vehicles, increased spending on travels and per diems, while we are under no illusion that the recently introduced 50% salary increase across the board is having a strain on government to balance its books. His policy of “cutting the government coat according to its size” is just a facade to fool us. This government is spending much more than we are made to believe very soon the economy will go burst if creditors failed to give us debt-relief.
Written by: Morro Gaye