According to the International Monetary Fund, Gambia’s record-high remittance inflows have more than compensated for the country’s decrease in tourism revenue due to coronavirus-related travel restrictions.
Remittance and capital transactions stood at $588 million in 2020, a 78 percent increase compared with 2019, contributing to a healthy balance of payments overall, Mamadou Barry, the IMF’s resident delegate, said in a statement following the first review of the new IMF program.
“This has more than compensated for the losses in tourism and re-export trade inflows,” he said. “Gross international reserves continued to increase,” creating the conditions for a stable currency, Barry said.
For nearly a third of its GDP, the $1 billion West African economy relies on tourism, attracting mostly European holiday-makers to its white-sand beaches. Authorities estimated that, due to the fallout from coronavirus-related travel restrictions, it would lose $292 million of industry revenue by the end of 2020.
The high inflows reported last year are responsible for an improved remittance data recording system and a change from informal to formal remittance platforms due to movement curbs, Seeku Jaabi, the first deputy governor of the Central Bank of Gambia, said at an online conference last month.
Gambia’s economic growth is “projected at around zero percent in 2020, which is much better than its peer-countries dependent on sub-Saharan African tourism, whose GDP growth is projected to average negative 10 percent-11 percent in 2020,” said IMF Barry. Increasing agricultural production and resilience in the construction and food retail sectors have supported output after public and private donors have funded distributions of food packages, he said.
If the government implements the stimulus package included in the 2021 budget and global conditions normalize, Barry said, growth is projected to rebound to 6 percent in 2021 and average 6.5 percent in the medium term. Furthermore, the IMF recommends that Gambia should focus on fiscal consolidation and improving debt management.
“The risk of debt distress remains high despite a projected decline in the debt-to-GDP ratio from 80.1% in 2019 to 76.4% in 2020,” he said.
