International Monetary Fund Executive Board has approved the sum of $21.3 million disbursement to The Gambia to fight COVID-19.
The financial assistance, which was disclosed on Thursday April 16, 2020, is aimed at addressing urgent balance-of-payments need in the country.
Mr Tao Zhang, Deputy Managing Director and Acting Chair, said, “The global COVID-19 pandemic is straining The Gambian economy, notably as international travel and tourism are halted.”
“The Gambian authorities are acting decisively to contain the domestic spread of the pandemic and mitigate its impact on the economy. The IMF Executive Board’s approval of a disbursement under the Rapid Credit Facility will help fill the urgent balance-of-payments need and augment budget resources,” he stated.
“The authorities’ support for social programs is being severely tested. In this context, a better targeting and timely delivery of social assistance to the most affected households and sectors is needed during the pandemic.
“It is important to establish appropriate criteria and reporting requirements for the use of emergency spending and ensure that COVID-related operations and outlays undergo a full independent audit to enhance transparency. In order to safeguard debt sustainability, the authorities are encouraged to seek additional grant financing for emergency spending,” Zhang added.
According to IMF, the global COVID-19 threatens The Gambian economy. As the pandemic halts international travel and tourism, it lowers the growth of country’s economy to 2.5 percent.
Apart from the disbursement, which was issued under the Rapid Credit Facility, the country will also benefit from IMF debt service relief under the Catastrophe Containment and Relief Trust.
The immediate challenge, however, is to contain the spread of COVID-19, strengthen medical care, implement the social distancing and other containment measures, and mitigate the economic impact of the pandemic, especially on the most vulnerable.
The emergency support to The Gambia will supplement financing from the IMF under a US$47.1 million Extended Credit Facility arrangement for The Gambia approved on March 23, 2020.
The Gambia has also benefited from the IMF Executive Board decision of April 13, 2020 to provide debt service relief to all countries eligible for support from the International Development Association (IDA) in the form of grant assistance under the Catastrophe Containment (CC) window of the Catastrophe Containment and Relief Trust (CCRT).
As a result, The Gambia will receive relief from the CCRT on debt service falling due to the IMF in the next 6 months (about US$2.9 million). This relief could be extended for up to 2 years, subject to the availability of resources under the CCRT.
“The Central Bank of The Gambia should continue to monitor developments in the financial sector, to ensure adequate liquidity and oversight, while avoiding a blanket weakening of supervisory standards. A strengthening of market surveillance under the existing regulations will help detect and address appropriately any weakening of banks’ foreign exchange positions. Maintaining a flexible exchange rate will help absorb balance-of-payments shocks,“ Zhang concluded.
