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Nyarikangbanna
United Kingdom
1382 Posts |
 Posted - 02 Sep 2006 : 14:48:49
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THE DEBT QUESTION
The APRC Governments’ difficulties in mobilizing revenue and financial resources for further investment pushed the regime to resort to over taxation and indebtedness. The nature of the debt stock of the country can be classified into domestic and foreign debts. Out of the D1, 460Million that was paid as interest and debt repayment in 2005 D723 Million is payment of interest on domestic debts. The payment of foreign interest amounted to 226 Million, foreign amortization or payment of principal amounted to D516 Million. The domestic debt has been growing because of the dependence of Government on Treasury Bills to finance growing budget deficit: for example in 2005, the budget deficit amounted to D855 Million. This budget deficit had been compounded by unauthorized expenditure. This mismanagement of the resources led to action by the IMF to suspend its financing of the poverty reduction strategy Paper Programme in 2003 until Government curbs unauthorized expenditure, audit the Central Bank externally and reduce the deficits and clear arrears in the payment of the interest on debts. In fact the donors punished The Gambia because of mis-governance by withholding 118 Million Dollars pledged in 2002 in the Geneva round. In other words, as a percentage of total recurrent expenditures interest payments (domestic and foreign) increased from 23.7% in 2001 to 28.1% in 2002 to 36.4% in 2003. In 2003 the external debt service to GDP ratio remained broadly constant at around 5%. Domestic debts interest payments steadily increased from 3.4% of GDP in 2001 to 4.2% in 2003 and increased to 9.2% in 2004. In 2004 servicing of interest on contracted debt consumed 40.3% of the recurrent budget and the interest element of debt servicing represents a major concern for budget allocation and public resource management. As a share of GDP, Government domestic debt rose from 27% at the end of 2003 to 32% at the end of 2004. The Gambia’s domestic debt stock as a share of GDP under the APRC regime is more than double the average for non CFA/SSA countries and four times the level in the highly indebted poor countries (HIPC) eligible non CFA/SSA countries. It is worth noting that the high debt servicing has serious implications for poverty alleviation because it reduces the sustainability of current poverty alleviation programmes.
We in the UDP/NRP Alliance resolve to carry out financial reforms and institute financial discipline to ensure effectiveness of poverty reduction policies. To increase the revenue base of the economy, the Alliance will concentrate on the growth of the productive base of the economy. Instead of a tax and debt driven economy, the Alliance will encourage the growth of industries to manufacture and produce goods for export. Agricultural produce in the form of fruits and vegetable exist but are not processed for export. Similarly abundant fishery resources exist but are not processed for export. The UDP/NRP Alliance will embark on deliberate policies to process these resources, the proceeds of which will improve our foreign exchange earnings and thus provide revenue for further investments.
Recent reports indicate a substantial reduction in Government resources allocated to the Agriculture, education and health sectors under the APRC leadership. In 2004 and 2005 the Agricultural sector was allocated 2.9% and 3.4% of the Governments’ recurrent budget (financed largely from Government revenues). The education sector received 10.3% and 10.7% during the same period, while the share of the Government recurrent budget devoted to the health sector fell from 9.8% to 8.9%.
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I do not oppose unity but I oppose dumb union. |
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