Gambia to Spend Around 40 Percent of Tax Revenue on Debt Interest
The Gambia’s finance minister, Mambury Njie, has presented the 2020 fiscal year budget estimates on Monday before the national assembly, indicating the government’s plan to use around forty-percent of tax revenue to settle the debt interest payment.
“Debt interest payment is projected to consume around 40 percent of the government’s tax revenues in 2020, compared to 26 percent in 2019, moving from D2.702 billion in 2019 to 4.648 in 2020,” he disclosed.
He states that the increment is as a result of mounting debt stock, domestic debt in particular, coupled with envisaged rolling over of some of the domestic debt.
The 2020 budget estimates have also seen a reduction of 3 percent as compared to the 2019 budget. Njie attributes this development to the grant and budget support the government has received from development partners.
“Total revenue and grant for 2020 is projected 24.47 billion, which represents a reduction of 3 percent over 2019 figure of 25.2 billion. The project grants are expected to decrease from 9.9 billion in 2019 to 8.1 billion in 2020, while we are also factoring budget support to the tune of 2.7 billion in 2020 compared to 3.4 billion in 2019. This is expected to come from our development partners, mainly the European Union and the World Bank,” he told the lawmakers.
He said the total expenditure and net-lending are expected to increase from D28.825 billion in 2019 to D30.048 billion in 2020, representing an increase of 4 percent, the bulk of the increment is attributed to debt increase payments.
In the area of personal emolument, expenditures are expected to increase from D4.2 billion in 2019 to D4.49 billion in 2020. Njie said this is mainly as a result of yearly promotions, additional teachers and health workers that will be recruited.
Other current (non-interest) expenditures are estimated to decline from D20.046 billion in 2019 to D18.206 billion in 2020, reflecting the intention to embark on a fiscal consolidation process.
“Capital expenditure is estimated to increase from D1.880 billion in 2019 to D2.752 billion in 2020, mainly as a result of various new and ongoing, in particular the OIC and the Banjul Rehabilitation projects,” he said.
In terms of financing the deficits, he said domestic borrowing is projected to increase to D3.9 billion in 2020, which represents 4 percent of GDP, compared to D1.236 billion in 2019.
“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 the implementation of structural reforms,” said Njie.
In addition, he states that the government is also expecting to conclude negotiations on debt restructuring with development partners, which could potentially free an estimated D2 billion up to 2020 as a result of debt deferral.
The finance minister believes this will give necessary fiscal space to address the sustainability issues as well as more financing of national budget to priority NDP spending.
“I remain convinced that this budget will be a useful tool in our drive to achieve and sustain our macroeconomic stability and government’s primary objective of reducing poverty and improving basic service delivery for all, if we commit to strict fiscal discipline.”
“I therefore submit the estimates of revenues, recurrent and development expenditures for fiscal year 2020 for the consideration and approval by the national assembly,” he said.
The estimates, according to the minister, incorporates new social initiatives such as setting up of National Health Insurance Scheme that will cover civil servants and vulnerable groups. The budget also features the innovative development model referred to as Emergency Community Development Program (ECDP) which will be implemented through local councils.