Letter of Intent
Banjul, The Gambia, March 4, 2015
Ms. Christine Lagarde
Managing Director International Monetary Fund
Washington, DC 20431
Dear Ms. Lagarde:
1. The regional Ebola outbreak has had a major impact on The Gambia’s balance of payments and fiscal outlook. Although The Gambia remains Ebola free, we are facing an urgent balance of payments need triggered by the shock’s impact on tourism. The fiscal impact of the shock, at a time when we were dealing with fiscal pressures from legacy problems of key public enterprises and some policy slippages, has pushed off track the economic and financial programme supported by the Extended Credit Facility (ECF) that was approved by the IMF’s Executive Board on May 25, 2012. We need urgent financial assistance to help us cope with the shock, but recognize that it will not be possible to complete any further reviews under the ECF. Accordingly, as detailed below, we would like to request support under the Rapid Credit Facility (RCF) and notify our decision to cancel the ECF arrangement effective immediately prior to the approval of the RCF disbursement.
2. Our immediate priority is to restore macroeconomic stability and bring policy implementation back on track. To this end, we are committed to implementing strong upfront fiscal measures, taking steps to put the public utility companies on a sound financial footing expeditiously, and safeguarding foreign exchange reserves. To assist us in fulfilling the pressing priority, we are counting on the financial support from the international community, which is necessary to cope with the acute impact of the shock. We are asking the IMF to provide immediate support in the form of a disbursement under the RCF in an amount equivalent to 25 percent of quota, or SDR 7.775 million that would be disbursed to the Central Bank of The Gambia (CBG). The CBG will then on-lend SDR 5.67 million to the Government for budgetary support.
3. We are interested in a successor ECF arrangement to help maintain economic stability and make progress towards inclusive growth and poverty reduction over the medium term. We recognize the need to re-establish a track record of strong policy implementation before moving to a new arrangement. We will need close engagement with the IMF staff to guide policy implementation and articulate medium-term adjustment measures during 2015. Therefore, we THE GAMBIA 2 request that IMF staff monitors the implementation of our economic programme covering the period March 2015 to March 2016.
4. The attached Memorandum of Economic and Financial Policies (MEFP) describes the policies that we plan to implement during the year 2015. It emphasizes policies—particularly fiscal policy and public enterprise reforms—that will enable us to obtain rapid results to address our chronic fiscal problems and restore confidence in economic policies. In turn, this will also help stabilize our balance of payments position. The Government has revived a high level economic committee comprised of the Vice-President, the Secretary General and Minister for Presidential Affairs, the Minister of Finance and the Governor of the CBG to provide the political leadership required to ensure that the programme remains on track.
5. We believe that the policies and measures included in this MEFP are adequate to achieve the objectives of our programme, but we will take any further measures that may become appropriate for this purpose. We will consult with the IMF staff prior to any revisions to the policies contained in the MEFP, in accordance with the IMF’s policies on such consultations. We will continue to provide to the IMF staff on a timely basis the information required to monitor accurately the staff-monitored programme. We will fully cooperate with the IMF to achieve our policy objectives, and undertake furthermore not to introduce measures to compound the current balance of payments difficulties in The Gambia, including but not limited to an introduction or intensification of exchange and trade restrictions. The CBG will undergo a safeguards assessment before a successor IMF arrangement is in place. We will authorize the external auditors of the CBG to share relevant documents and hold discussions with the IMF staff.
6. The Gambian authorities agree to the publication of this Letter of Intent (LOI) and the attached MEFP and Technical Memorandum of Understanding (TMU), as well as the IMF staff report related to the request for a disbursement under the RCF and the proposed staffmonitored programme. We hereby authorize their publication and posting on the IMF website after approval by the Executive Board of the IMF.
/s/ Kebba Touray Amadou Colley Minister of Finance and Economic Affairs
/s/ Governor, Central Bank of The Gambia
1. Memorandum on Economic and Financial Policies (MEFP)
2. Technical Memorandum of Understanding (TMU)
* For the full application and above-cited attachments containing the details (where the devil resides), please access it at the IMF website which you can find here.