The Gambia’s IMF programme remains on track

What’s happened?

On May 3rd IMF staff concluded the first review of The Gambia’s extended credit facility (ECF), which is in place from 2024 until 2026. Staff noted satisfactory performance on The Gambia’s policy reform efforts (particularly fiscal and exchange-rate reforms). We expect policy reforms under the ECF to progress, helping to unlock additional donor funds, which will sustain the robust economic outlook that we envisage.

Why does it matter?

The Gambia has managed to meet all of the quantitative benchmark targets set out in the ECF, and was reported to be making good progress on structural reforms in the first review. This is crucial for The Gambia to attract further IMF funding—with the country set to receive another US$10.9m of the US$100m programme package upon approval by the IMF’s Executive Board, which is expected by June 2024—and other donor funds.

As part of IMF recommendations, The Gambia is making good progress on transitioning from a managed exchange rate to a market-determined exchange-rate regime, which is important for preserving foreign-currency reserves; a market-determined exchange rate also serves as a shock absorber. We forecast a modest depreciation in the dalasi, from D71.7:US$1 at end‑2024 to D72.9:US$1 at end‑2025 (revised from a previous forecast of D75:9:US$1). This modest depreciation is driven by external debt repayments of previously restructured debt from 2025. Nevertheless, we expect exchange-rate adjustment over the medium term, in line with The Gambia’s strong economic fundamentals, which include healthy foreign-currency reserves—from donor funds and tourism and remittances receipts—and strong economic growth, of a projected average of 6.2% in 2024‑25.

The Gambia is also making progress on fiscal reforms. It successfully privatised Megabank, a state-owned bank, in January 2024, and is making efforts to privatise the state-owned telecommunications company by 2025. We expect the latter to be partially privatised, as the asset is strategic to the state. Progress is also being made towards efficient running of the remaining parastatals, such as the National Water and Electricity Company (NAWEC). Notable moves towards commercialising NAWEC include the ongoing deregulation of water and electricity prices (by increasing tariffs to make them cost-reflective), which began in 2023. As we expect the fiscal position to improve on the back of fiscal reforms, we forecast a narrowing of the fiscal deficit, to 2.1% of GDP in 2025 (revised down from a previous forecast of 2.3% of GDP), from an estimated 3% in 2023.

What next?

We expect the Gambia’s ECF programme to remain broadly on track over 2024‑26, helping to catalyse donor funds. We maintain our positive outlook for The Gambia’s economy, and we have revised our 2025 exchange-rate and fiscal deficit forecasts in our most recent forecasting round, in line with our expectation of a robust economic performance.

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