By Awa B. Bah
The Finance and Economic Affairs minister on Thursday 29th June 2017 laid the revised draft estimates of revenue and expenditure 2017 of the government of The Gambia for the period 1st January to 31st December, 2017 before legislators at the National Assembly complex in Banjul.
Mr Amadou Sanneh Minister for Finance and Economic Affairs submitted for consideration and approval by the National Assembly the revised estimates of revenue, recurrent and development expenditure for the fiscal year 2017.
After an analysis of the economic situation in the country, Mr Sanneh proceeded to justify why the new government has come up with a revised budget. He mentioned a series of measures government has taken or intends to take in order to cut down on expenditure and reduce the deficit. These include debt management, sale of vehicles and planes, the gateway project, mining and fuel for NAWEC. Details are as follows:
He pointed out the submission of a revised budget to the parliament is to address “the dire macro-economic situation the new government has inherited such as a ballooning of the public debt from 83.3 5 to 120.3 % of GDP between 2013 and 2016, the depletion of the domestic foreign reserves to less than 2 months of future imports, abuse of State-Owned Enterprises such as GAMTEL, SSHFC, NAWEC, etc through the embezzlement of funds to the tune of D4.7 billion within a space of 3 years, further adding that a D9 billion debt portfolio for NAWEC with an ageing fleet of generators and an unsustainable operational cost.”
He went on to note that poor agricultural policy and a cumbersome strategic plan to implement the policy, the siphoning of royalties from the mining sub-sector, and the purchase of 44 pickup vehicles by the government of the Gambia for use by the APRC party in 2011.
This new administration, he revealed, intends to prioritize macroeconomic stability with emphasis on addressing the burgeoning debt situation by instilling fiscal discipline and as a result, this revised budget has a total financing gap of D955 million, compared to the D4.7 billion budget that was previously approved in December 2016. Measures taken by the government includes all outstanding CBG lending to the budget through various facilities were consolidated into a 30-year bond at an interest rate of 5.5% at the end of 2016, with projected interest savings of D330 million per annum.
He said curtailing expenditure considerably which has further supported the decline in T-bill rates, with an average reaching 11.5 % in early April 2017 compared to an average of 17 percent in 2016 is expected to reduce domestic interest payments in 2017 by D377 million.
He said expenditure cuts of D475 million mainly in goods and services, including from the budget of the Office of The President and staff audits of the civil service, adding that for the first time in the uniformed services (which has expanded strongly in recent years) have been launched recently and are expected to be completed June 2017 while the Elimination of ghost-workers from the payroll could deliver savings and the staff audit could also lay a foundation for a more comprehensive civil service reform in the future.
Policies governing the bloated vehicle fleet and its cost he revealed will be reformed with the expected savings in spending on goods and services in the tune of D942 million, “asset sales are expected to yield D471 million in 2017 including four Presidential planes, and sale of land, prime tourist areas which could generate investment said Sanneh.
The minister said previously diverted non-tax revenue from the international voice gateway, sand and heavy metal mining concessions, and other fees, are expected to yield D566 million and announced that plans are underway to vigorously pursue recovery of purported stolen assets of the government through all available channels, including the assistance of the World Bank Stolen Assets Recovery Unit and removing the rent-seeking nature of fuel supply to NAWEC to better manage its cost of production.
“Fuel importation for NAWEC has been switched to competitive international tender which has reduced cost by 15 percent in the 1st tender monthly reduction of pump price of fuel at the petrol stations is aimed at passing on the gains from the reduction in international oil prices which should impact on transportation costs and cost of business thus consumer prices,” he said.
He also indicated that apart from cutting down expenditure government has reduced the price of fertilizer in order to boost production. “Government has reduced the sale of fertilizer from D950 per bag to D700 per bag and efforts are being made to reduce the price of seed nuts from D2,500.00 per bag to D2,000 per bag to increasing production remarkably from 3,000 MT to 200,000 MT,” the minister promised.
In addition, he said they have extensively engaged development partners like the IMF, The World Bank, The European Union, and the African Development Bank, to work closely to bring about macro-economic stability to jointly agree to implement certain reforms to speed up the economic recovery process.
The revision of the 2017 approved budget, he said, is to further reduce non-priority expenditure which is one of the prior actions agreed upon in order to receive budget support.
In the revised budget for 2017, he revealed that total Revenue and Grants for the 2017 Revised Budget is now projected at Dl2.242 billion, which represents a reduction of 5.7 per cent over 20I6 figure of Dl2.994 billion decrease mainly attributed to the loss of revenue realized during the political impasse when most businesses were closed, coupled with the negative impact the impasse had on the tourism sector with flights and bookings cancellations.
Projected grants, he said, are estimated to decrease significantly from D4.396 billion in 2016 to D782 million in 2017, representing a decline of 82% primarily as a result of the end cycle of various projects in the country, and a more realistic methodology in the capturing of project grants within the budget.
However, unlike the previously approved budget, which did not earmark any budget support for the year, this revised budget, the minister highlights, is projecting a budget support to the tune of D2.4 billion most of which support will come from the IMF, World Bank, EU, and the African Development Bank.
Total Expenditure and Net-lending Sanneh announced is projected to decline from D16.911 billion in 2016 to D13.198 billion in the revised 2017 budget, representing a decrease of 22 % of the bulk attributed to Domestic Interest Payments, which declined by 30% or over Dl billion, and Other Current (OC) expenditure, which declined by 37% or over D3 billion.
The debt Interest payment is projected to consume around 34 % of government Tax revenues in 2017 that is 9% less than what it consumed in2016, moving from D3.720 billion in 2016 to D2.768 billion .
In terms of financing the deficit, Net Domestic Borrowing (NDB) he highlighted, is projected to decrease significantly to Dl.18 billion in 2017 from a budgeted amount of D3.39 billion in 2016.
He concluded by remaining convinced that when approved and considered, this revised budget will be a useful tool in the drive to achieve and sustain macroeconomic stability and the new Government’s primary objective of reducing poverty if all recommit to strict fiscal discipline.
Minister of Finance Amadou Sanneh