Abdoulie G. Dibba
The Minister of Finance and Economic Affairs, Mr. Abdou Kolley, on Monday, 30 Novemeber, submitted for consideration and approval by the National Assembly the Estimates of Revenues, Recurrent and Development Expenditures for the Fiscal Year 2016 in fulfillment of Section 152 (1) of the 1997 Constitution of The Republic of The Gambia which requires the President to instruct the said minister to prepare and submit to the law makers, at least 30 days before the end of each Financial Year, the Estimates of Revenues and Expenditures of The Gambia for the following year.
In tabling the Estimates, Hon Kolley indicated that the economy still remains strong despite the recent Ebola outbreak and late rains last year, that Real GDP grew by 5.6 per cent in 2013 but moderated to 0.9 per cent in 2014 as a result of the delayed rains and the West Africa Ebola epidemic.
He said the outlook for growth remains positive even in the face of major challenges, as Nominal GDP is projected at 4.7 percent in 2015 and 5.5 per cent in 2016, due to a sustained recovery in tourism and agriculture.
With regards to inflation, the finance and economic affairs minister said the average inflation rate continues its upward trajectory, as the Consumer Price Index (CPI) recorded 6.6 per cent as at end September 2015, from 6.3 per cent in 2014.
He indicated that the main driver of consumer price inflation was food prices, which increased to 8.05 per cent from 7.34 per cent in September 2014. Non-food inflation decelerated slightly to 4.35 per cent from 4.84 per cent in September 2014. Core inflation, which excludes Utilities and Energy Prices, declined to 6.32 per cent from 6.92 per cent in September 2014.
It is therefore expected, he said, that the end year inflation target of 5 per cent will not be attained.
On the fiscal front, minister Kolley said the two exogenous shocks of Ebola and climate change pose huge additional challenges to an already difficult situation that the government was undertaking to correct.
He stated that following significant spending pressures that pushed the budget deficit to 12.5 per cent of GDP in 2014, the government embarked on a corrective program over the first half of 2015 to restore macroeconomic stability.
Minister Kolley said concrete measures to boost revenue and to curtail expenditure were implemented and with improved policy implementation, especially on the revenue front, government’s fiscal position was moderately improving, but increasing expenditure pressures reversed most of the positive gains recorded from the revenue front.
He said preliminary estimates for 2015 show an improvement on revenue and grants of 9.1 per cent over 2014. Domestic revenue improved considerably by 18.2 per cent over the 2014 estimates, mainly as a result of improvements in tax administration in the areas of personal, capital gains and indirect taxes. Non-tax revenue and grants decelerated by 20.3 per cent and 36 per cent respectively in comparison to a year earlier.
He said the decline in grants is mainly as a result of lower than expected support from our development partners.
On the expenditure front, the finance and economic affairs minister indicated that total expenditure and net lending is expected to increase by 22.4 per cent over the 2014 figure and that the components of current expenditure comprising of wages and salaries, other charges and interest payments are expected to increase by 11.5 per cent, 4.5 per cent and 60.2 per cent respectively over the 2014 estimates.
He said capital expenditure and net lending is expected to increase moderately by 2.6 percent over 2014.
On the fiscal deficit, Hon Kolley asserted that the fiscal deficit is expected to reach D3.6 billion or 9.6 per cent of GDP by end December 2015 and as a result, more than 50 per cent of the deficit is to be financed from domestic sources, which in itself is an expensive form of financing the budget.
Mr. Kolley told deputies that it is important to note that there is greater need to restrain Government spending within its available resources so as to reduce the level of fiscal deficit with the aim of lowering the stock of debt.
On total revenue and grants, Hon Kolley informed Deputies that total revenue and grants in 2016 is projected at Dl2.994 billion, which represents an increment of 16 per cent over 2015 figure of D11.197 billion.
He said the increment is mainly attributed to increase performances in domestic taxes such as VAT, as well as international trade taxes.
On project grants, Mr. Kolley stated that Project grants are estimated to increase from D1.889 billion in 2015 to D4.396 billion in 2016.
However he said, unlike 2015, no budget support is programmed for the 2016 budget.
On Total Expenditure and Net-lending, Minister Kolley informed Deputies that it is projected to increase from D11.700 billion in 2015 to D16.911 billion in 2016, representing an increase of 45 per cent, the bulk of which is attributed to the recurrent budget and that Personnel Expenditures are projected to increase from D2.031 billion in 2015 to D2.209 billion in 2016.
On Debt Interest payment, he informed them that it is projected to consume around 43 per cent of Government revenues in 2016 compared to 35 per cent in 2015, increasing from D2.837 billion in 2015 to D3.720 billion in 2016, or 31 per cent.
On other current (Non-Interest) Expenditure, he said that it is estimated to increase by 64 percent to D8.148 billion from D4.963 billion in 2015 and that this is to cater for the settlement of existing arrears; OMVG contributions and Government intention to further invest into the Education sector, including availing more scholarships to students.
He informed deputies that capital spending is estimated to increase by 43 per cent in 2016 from Dl.990 billion to D2.843 billion, mainly as a result of the various road and infrastructure projects Government intends on implementing, as well as contributions towards ongoing project activities.
In terms of financing the deficit he said, Net Domestic Borrowing (NDB) is projected to increase to D3.399 billion in 2016, which represents 8 per cent of GDP.
In conclusion, the finance and economic affairs minister said staying within this borrowing ceiling and working towards reducing it is premised mainly on strict adherence to budget ceilings by all budget entities as well as structural reforms.