Finance Minister Hails Government Expenditure Policy, but Economist Says That’s Laughable
The Minister of Finance and Economic Affairs, Mambury Njie said on the austerity measures undertaken by the government have resulted in creating a better economy for The Gambia.
Speaking at a joint press conference in Banjul with Tao Zhang, the visiting IMF Deputy Managing Director Monday, Njie said the government has embarked on ‘cut your coat according to your size’ policy as a way of expenditures control. However, he said certain governance issues including funding of the different commissions which were never budgeted for posed some complications. “So these are issues we have to go out for to make sure funds are provided.”
As part of measures to recover lost finances and to build proper economic footings, the government in 2017 announced numerous policies, including the controversial vehicle policy and travel ban on certain public officials. According to the minister, these worked well and were part of all cut-cutting measures.
He said the government could not go ahead and sell some expensive cars that were recovered from former president Yahya Jammeh through the Janneh Commission. “We’re going through a legal route to make sure we do the right thing. You cannot just take an expensive car overnight and go and sell it. After the completion of the Janneh Commission we will look at it and make sure whatever we are doing, we are taking the legal route.”
The Janneh Commission submitted its final report to President Adama Barrow on March 29th and he’s expected to act on the recommendations within six months. In September 2017, Njie who once had served as minister under Jammeh, appeared before the commission to answer questions regarding the ex-leader’s financial dealings.
He told the press conference that due to austerities and financial discipline, The Gambia’s economy attained 88 percent GDP ratio after the rebasing, from the previous rate of 129.
“We are making moves and efforts to make sure it will go further down because it is in our interest to make sure the GDP ratio goes further down so that we can access more resources. Right now we can only access concessionary finances. Without that there is nothing much we can do.”
Regarding the implementation of the vehicle policy, the Finance Minister said it was estimated that D300 million would be made which did not happen due to ‘technical hiccups’. He said the policy is being reviewed and stressed that it has already created impact as the frequency of the way the government vehicles were used has gone way down.
“We are going to do much further austerity measures to make sure that we control it. With respect to salary increase, it’s being financed through our own domestic resource mobilization. It is not externally financed and so far the revenue is doing well and we are paying salaries since January. So again, this is to make sure that the 50 percent increase on the salaries is accompanied with expenditure control to make sure that the unnecessary monies that were sent are now controlled.”
For his part, IMF’s Zhang urged the government to strengthen its local resource mobilization and fiscal strengths. “We need to move forward to create a better environment for the country so that businesses can boom that will generate more revenues to finance the most needed public expenditures,” he said.
Meanwhile, The Chronicle gauged the views of economists on the Finance Minister’s positions on the key economic issues. Momodou Sabally, a former Director of Budget at the Ministry of Finance described Njie’s statement that the government has been cutting its coat according to its size as laughable.
“I think that statement is actually laughable because it is very obvious to partial observers that the 2019 budget actually has demonstrated that this government is deliberately trying to live beyond its means and that is characterized by quantum jump in salaries.”
According to Sabally, “the fact that the government right now as we speak is trying to refract her cause to bring down quantum jump of almost 650 percent increase in excise taxes that is a demonstration that the government is not cutting its coat by its cloth.”
“I think the Finance Minister should know that the day of fooling Gambians is a thing of the past. Let him present the facts to us and not try to play any games with the public mind. The fact is the government is not living within her means.”
He said the minister should go back to the drawing board and retract all the ill-advised policy measures that he has taken up of late and restore the budget and the economy to desired and reasonable level of equilibrium.
“Increasing salaries by 50 percent without coming up with reasonable, rationale and sustainable revenue measures is one of the worst policies that have been made in our life-time in terms of macro-revenue management in this country. The local resources are not sufficient and the fact that they went ahead and did this outrageous quantum increase in excise taxes to the point that the whole company which is almost synonymous with our country and created a lot of jobs for more than 200 Gambians is about to close down and with further collateral damage to tourism and entertainment industry, is evident out there in public eye that the domestic resources needed to sustain the salary increase are not available,” Sabally told The Chronicle.
Action, not words
Nyang Njie, an economist and social commentator said in theory, the Finance Minister was right about the ‘cut your coat according to your size’ policy, but in practice “there are things we see defeat the purpose and one of them is travels and the growth of embassies around the world and diplomats being posted.” According to him, that is not in line with good financial discipline, considering the resource base of the country.
He said the travel budget is still big, adding that there should be serious commitment to fiscal reforms, fiscal consolidation and fiscal restraints in order to have financial discipline.
“We have to see it, and not say it. If you look at the figures on the budget there are certain areas that the government is growing instead of curtailing its expenditures.”
Nyang Njie described the vehicle policy as a good move, but said it should have been embedded in a comprehensive civil service reform where civil servants can also have a loan package to buy their own cars as way of motivation.