IMF Approves $22.5 Million for The Gambia, Urges Fiscal Discipline Amid Global Uncertainty

By CTV Africa

BANJUL — The International Monetary Fund (IMF) has approved an immediate disbursement of US$22.51 million to The Gambia after completing the fifth review of the country’s Extended Credit Facility (ECF) programme and the second review of its Resilience and Sustainability Facility (RSF), while warning that rising inflation, global instability and fiscal pressures continue to pose significant risks to the country’s economic outlook.

The approval, announced by the IMF Executive Board on Monday, follows the successful conclusion of the 2026 Article IV Consultation with The Gambia and provides fresh financial support to help the country sustain economic reforms, strengthen macroeconomic stability and enhance resilience against climate-related shocks.

Of the total package, US$8.44 million will be disbursed under the Extended Credit Facility, while US$14.06 million comes under the Resilience and Sustainability Facility. The IMF also approved a six-month extension of both programmes and increased access under the ECF by SDR12.44 million, equivalent to 20 percent of The Gambia’s IMF quota, to help address emerging balance-of-payments pressures arising from the conflict in the Middle East.

Despite growing external challenges, the IMF said The Gambia’s economy continues to demonstrate resilience.

Economic growth reached an estimated 6 percent in 2025, supported by strong domestic activity. However, the Fund expects growth to moderate to 4.7 percent in 2026 before stabilizing at around 5 percent over the medium term as global economic headwinds weigh on the country’s outlook.

The IMF attributed much of the downside risk to spillover effects from the ongoing conflict in the Middle East, which has pushed up global food and energy prices, fueling inflation and increasing pressure on the Gambian economy.

“The Gambia’s macroeconomic outlook remains broadly favorable but faces elevated downside risks from spillovers from the war in the Middle East as well as climate shocks,” the Fund stated.

Inflation, which had been easing steadily, has begun rising again, largely driven by higher food and fuel costs. The IMF warned that these inflationary pressures could delay efforts by the Central Bank of The Gambia to return inflation to its medium-term target.

To address these challenges, the IMF welcomed the government’s commitment to tighten fiscal policy in both 2026 and 2027, following what it described as fiscal slippages at the end of 2025.

The Fund said the authorities plan to strengthen domestic revenue collection, exercise tighter expenditure controls and improve public financial management to restore fiscal discipline while safeguarding priority social spending.

Deputy Managing Director Bo Li said maintaining fiscal discipline would be particularly important as The Gambia approaches the 2026 election period.

“It is essential to contain spending pressures in this election year through strict expenditure prioritization and control,” he said, while supporting targeted cash transfers for vulnerable households financed through a World Bank grant.

The IMF also underscored the importance of protecting fuel revenues despite rising international fuel prices and called for stronger oversight of state-owned enterprises (SOEs) to reduce fiscal risks and improve transparency.

On monetary policy, the Fund urged the Central Bank of The Gambia to maintain a cautious, data-driven approach to curb inflation while preserving external stability.

It emphasized the importance of allowing the exchange rate to remain market-determined, arguing that exchange rate flexibility will help the economy absorb external shocks more effectively.

The IMF further encouraged authorities to strengthen financial sector supervision, closely monitor banks’ exposure to government debt and amend the Central Bank Act to reinforce the institution’s independence, governance and policy mandate.

Beyond short-term macroeconomic management, the Fund stressed that deeper structural reforms will be essential to sustaining long-term economic growth.

Executive Directors called for faster implementation of governance reforms, including operationalizing the Anti-Corruption Commission, strengthening anti-money laundering legislation and improving oversight of public institutions.

They also emphasized the need to improve the business environment to encourage private sector investment, formalization of businesses and job creation.

Climate resilience also featured prominently in the IMF’s assessment.

The Fund commended The Gambia’s progress under the Resilience and Sustainability Facility, noting that reforms aimed at integrating climate risks into macroeconomic planning will strengthen the country’s ability to withstand future environmental shocks while attracting additional support from development partners.

The IMF also praised the extensive technical assistance it has provided to The Gambia over the past several years.

According to the Fund, The Gambia ranks among its largest recipients of capacity development support, receiving approximately US$10.4 million in technical assistance between fiscal years 2022 and 2026. This support has contributed to improvements in domestic revenue mobilization, exchange rate management, public financial management, SOE oversight, macroeconomic statistics and climate-related reforms.

While acknowledging that implementation of some reforms has been mixed, the IMF concluded that The Gambia remains committed to advancing its economic reform agenda despite a difficult global environment.

With fresh financing now approved, the Fund said continued fiscal discipline, prudent monetary policy and accelerated structural reforms will be critical to maintaining macroeconomic stability, protecting vulnerable households and laying the foundation for resilient, private sector-led growth in the years ahead.