Friday, December 13, 2019

Finance Minister tables 2020 Estimates before Lawmakers

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As a requirement of the Constitution under section 152 (1), the Minister of Finance and Economic Affairs on Monday, 18th November 2019 presented the estimates of revenues, recurrent and development expenditure for the fiscal year 2020.

The National Assembly is the authority that is responsible for reviewing and approving national budget of The Gambia.

In his statement, the Minister indicated that while revenue in 2018 decreased from 25.2 billion dalasi to 24.5 billion dalasi in 2019, expenditure is estimated to increase from 28.8 billion dalasi to 30.0 billion dalasi. In short, the deficit of 3.6 billion dalasi in 2018 is expected to increase to 5.5 billion dalasi in 2019.

The Minister attributes the fall to project grants and budget support.
The Minister also gave a gloomy picture of the debt problem.

He said:“Debt interest payment is projected to consume around forty percent of Government’s tax revenue in 2020 compared to 26 percent in 2019, moving from 2.702 billion in 2019 to 4.648 billion in 2020. The increment is a result of mounting debt stock, domestic debt in particular, coupled with the envisaged rolling over of some of the domestic debt.”

He said the Gambian economy is anticipated to grow by 4 per cent in 2019 compared to actual real growth of 6.5 per cent in 2018.

“The decline in growth is as a result of anticipated setbacks in both the agriculture and services sectors. Growth in these two sectors is projected at -2.6% and 1.5% in 2019 compared to 0.9% and 9.9% in 2018, for agricultural and services respectively. The contraction is on account of the delayed rains and the impact of the collapse of Thomas Cook – the major carrier of tourists to The Gambia,” the Minister said.

He said in terms of sector contribution to GDP, Services continues to dominate with a 55 % share contribution, followed by Industry and Agriculture contributing 20 and 18 per cent respectively. He said this suggests a change in share contribution from the previous years where agriculture ranked second with 20 per cent and industry 15 per cent.

“The late start of this year’s cropping season which was characterized by intermittent dry spells has resulted in a drop in the actual area cultivated compared to what was planned for this cropping season as per the mid-season assessment report. The report highlighted that the area cultivated for upland and lowland rice dropped by 41 per cent and 50 per cent respectively, 59 per cent for groundnuts, 48 per cent for coarse-grain crops and 38 per cent for early millet.

He said the Gross Domestic Product (GDP) at current prices is estimated at 86.6 billion in 2019 compared to D78.6 billion in 2018, representing a growth of 10.1%. He said the GDP is expected to grow by 4% in 2019 compared to actual outturn of 6.5% in 2018.

“The agricultural sector is anticipated to experience contraction in 2019 due to primarily on poor performance from two important subsectors: crops and livestock. Both of which are anticipated to decline to -6.2 and -10.0 per cent in 2019, compared to 6.6 and -5.6 per cent last year. Forestry and fishing, on the other hand, are expected to grow by 1.1 and 5.9 percent respectively in 2019,” the Minister said.

He said the projected growth in the fishing sector is attributed to recent FDI inflows that are geared towards a new fish factory, and the commencement of a new fishing agreement between the European Union and the government of The Gambia.

He said the industry sector is anticipated to record the strongest growth in 2019, with a projected growth rate of 20.3% compared to 2.5% in 2018. He said the drivers of growth in the sector are construction, electricity and water, adding that these subsectors are anticipated to grow by 31.7, 12.6 and 9.5 per cent respectively. He said the expansion is attributed to growth in both private and public construction, increased power generation and water production capacity due to the commissioning of new generator sets by NAWEC.
On the services, the Minister said growth is anticipated to be mild due to the impact of the collapse if Thomas Cook, slashing the growth outlook of hotels and restaurants from 18.8 per cent in 2018 to 6.2 per cent in 2019. He added that communication, finance and insurance, and real estate are anticipated to register a growth of 13.4, 12.6 and 6.9 per cent respectively.

He said the current account deficit has narrowed to $25.8 million (1.5 percent of the GDP) in the first half of 2019 compared to a deficit of $26.7 million (1.7 per cent of GDP) in the corresponding period in 2018.

“The improvement in the current account balance is attributed to the increase in foreign inflows related to the support from development partners, diaspora remittances, and tourism,” he said.

Minister Njie said the goods account balance is estimated at a deficit of $194.60 million (11% of GDP) in the first six months of 2019 compared to a deficit of $150.0 million (9.3% of GDP) in the corresponding period in 2018.

He said: “The widening of the deficit in the goods account was due to the increase in imports, which reflects rising economic activity. Imports rose to $277.7 million or by 29.8 per cent in the first half of 2019 from $214.0 million in the same period of 2018. Exports also increased by 35.6 per cent to $74.4 million during the period under review.”

He said services account balance, on the other hand, registered a surplus of $59.7 million in the first six months of 2019, higher than a surplus of $40.5 million a year ago, and explained largely by the increase in tourist arrivals.

He said the capital account balance, improved to a surplus of $7.54 million from a surplus of $4.63 million in the previous year, mainly on account of official flows. However, the Minister said financial account balance worsened to a deficit of $30.72 million in the first half of 2019 compared to a deficit of $8.12 million in the corresponding period a year ago due to the increase in currency and deposit by 35.2 per cent.

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