President Barrow says ‘reduction of economic activities responsible for slowdown of economic growth’
Banjul, Gambia(PANA) - Gambian President Adama Barrow Thursday attributed the slowdown in the country’s economic growth to a reduction in economic activities “as a direct result of the coronavirus (COVID-19) pandemic”.
In his fourth State of the Nation Address, since assuming power in 2017, Barrow noted that an initial analysis showed that GDP growth rates this year could decline from six per cent to two per cent.
He said the decline in import volumes and economic activities would correspondingly lead to shortfalls in import duties and other tax revenues “based on the current situation”, estimating that 20 per cent of expected revenue would be lost.
According to him, the total estimated fiscal impact from the decline in import duties and other tax revenues is Two billion, three hundred thousand million Dalasis (D2.3 bln), that is 2.4 per cent of GDP.
The ministry of Finance and Economic Affairs (MoFEA) projects that the fiscal deficit will widen from 1.5 per cent of GDP to 2.1 per cent of GDP.
Moreover, he said the pandemic had negatively impacted on budget execution as approved by the National Assembly.
The government, therefore, had to resort to cuts and reallocation of funds from line items, such as travel, training and workshops, into much needed areas.
“These decisions were taken to set aside Five Hundred Million Dalasis (D500 Million) as emergency funds to cater for prevention, containment and response to the pandemic,” he noted.
He also said certain budget line expenditures had been reallocated to the ministry of Health for COVID-19-related expenditures.
President Barrow stressed that the decision had affected almost all Ministries, Departments and Agencies (MDAs), noting that MoFEA was forced to make further budget cuts in the face of declining revenue in recent months and the expected loss of revenue for the rest of the year.
He reiterated that with declining revenues and the need to provide humanitarian assistance and support businesses during this period of economic downturn, government was faced with a challenging task for the coming months.
The COVID-19 pandemic, he noted, “will continue to have a significant socio-economic impact on the economy, both directly and indirectly; directly, through the effects of the disease on production, investment and trade within the country, and between The Gambia and the rest of the world.
Indirectly, the impact will be felt through the slowing of global economic growth, supply chain disruptions and, by extension, negatively impacting The Gambia’s growth prospects.”
On finance and economic affairs, he concluded that there was an imminent threat of a global recession arising from the pandemic, the extent of this impact was yet to be fully determined.
No matter what the impact will be, “government has already devised post-pandemic plans to protect lives and livelihoods,” he stated.
-0- PANA MSS/RA 17Sept2020
