The Gambia Economic Update, December 2020 : Preserving the Gains
Real GDP growth exceeded 6 percent during the two years before COVID-19 (coronavirus) struck, supported by rebounding confidence, investment, low interest rates, and growing tourism. Investment accounted for over 22 percent of GDP in 2019, three-fi...
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/170581614977174091/The-Gambia-Economic-Update-Preserving-the-Gains http://hdl.handle.net/10986/35284 |
| Summary: | Real GDP growth exceeded 6 percent
during the two years before COVID-19 (coronavirus) struck,
supported by rebounding confidence, investment, low interest
rates, and growing tourism. Investment accounted for over 22
percent of GDP in 2019, three-fifths of which was private.
The tourism market had weathered the collapse of Thomas Cook
UK and expanded into new markets. Industry was the
fastest-growing sector in 2019, partly due to the issuance
of oil-prospecting licenses, but also due to strong
investment in construction fueled by remittances from the
diaspora. On the other hand, agriculture had contracted,
affected by erratic rainfall and the late supply of inputs.
Tourism arrivals had started the year in line with 2019 but
collapsed by 50 percent in March and are expected to fall by
63 percent in 2020. However, official remittances grew at
record pace in the second quarter, perhaps due to travel
restrictions closing informal channels. Favorable rainfall,
good access to inputs, and few pest outbreaks bode well for
agriculture. It registered the lowest fiscal deficit since
2009 and a primary surplus after 2009. This came despite
increased expenditure, as revenues rose due to increased
excises and levies and improved revenue administration
capacity. Both budget and project grants also increased. The
Government continues to make large transfers to state-owned
enterprises (SOEs), however, the fiscal burden of which is
estimated to be around 6 percent of 2019 GDP. Pressures from
COVID-19 saw the deficit rise in the first half of 2020
although the tax authorities still managed to exceed their
revised collection targets. Tax exemptions, although
declining, continue to be sizeable-without discretionary
exemptions, the deficit in the first half of 2020 would have
been reduced by 0.7 percent of GDP. Non-tax revenue has been
boosted by one-off items such as the sale of assets, which
partly compensated for the tax decline. The Government
initially responded to pandemic-related spending pressures
through budgetary reallocation. In July, the National
Assembly passed a supplementary bill aimed at providing
further relief and stimulating recovery. |
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