The Gambia’s fiscal deficit is projected to reach a staggering D3.6 billion by the end of the year 2015, which is nearly 10% of the gross domestic product of the Gambian economy, the finance minster revealed.
Minister Abdou Colley, who made the revelation today while tabling the 2016 budget estimates before lawmakers, further urged the Government to ensure stricter fiscal discipline in order to prevent further damage on the economy.
“The fiscal deficit is expected to reach D3.6 billion or 9.6% of (Gross Domestic Product) GDP by end December 2015. As a result, more than 50% of the deficit is to be financed from domestic sources, which in itself is an expensive form of financing the budget,” he said.
“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.”
Fiscal deficit is when a government’s total expenditures exceed the revenue that it generates, excluding the money from borrowings, and The Gambia Government has recently come under intense criticism for lack of adherence to budget ceilings.
The domestic debt (monies borrowed within the local economy) according to the information released by the Central Bank couple of months ago was at a staggering 19.1 billion dalasi, representing 49.6 percent of the country’s Gross Domestic Product.
Forecasting the coming year 2016, Colley further said debt interest payment is equally predicted to extensively eat into the government income, showing a sudden increase of up to 31% from the previous year.
“Debt Interest payment is projected to consume around 43% of Government revenues in 2016 compared to 35% in 2015, increasing from D2.837 billion in 2015 to D3. 720 billion in 2016, or 31 percent,” he revealed.
“In terms of financing the deficit, Net Domestic Borrowing (NDB) is projected to increase to D3.399 billion in 2016, which represents 8% of GDP. 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…I remain convinced that this budget will be a useful tool in our drive to achieve and sustain macroeconomic stability and the Government’s primary objective of reducing poverty if we all recommit to strict fiscal discipline.”
Colley added that the total Government revenue and grants in 2016 is projected to grow by 16% from D11. 197 billion in 2015 to D12.994 billion in 2016.
He said the increment is mainly attributed to increase performances in Domestic Taxes such as VAT, and International Trade Taxes.
However, he said though project grants are estimated to increase from D1.889 billion in 2015 to D4. 396 billion in 2016, “no budget support is programmed for the 2016 budget”.
The majority leader of the National Assembly, Fabakary Tombong Jatta, who seconded the motion, has reiterated the minister call for a stricter fiscal discipline in the Government.
The majority leader said the Government will have to prioritize its spending for future economic gains.
The lawmakers will debate on the bill on Monday, 7 December.