Gambia’s Record Remittances Make Up for Tourism Losses, IMF Says
(Bloomberg) -- Gambia’s record-high remittance inflows have more than compensated for the country’s decline in tourism revenue due to coronavirus-related travel restrictions, according to the International Monetary Fund.
Remittance and capital transfers stood at $588 million in 2020, a 78% rise compared with 2019, leading to a positive balance of payments overall, Mamadou Barry, the IMF’s resident representative, said in a statement following the first review of its current IMF program.
“This has more than compensated for the losses in tourism and re-export trade inflows,” he said. “Gross international reserves continued to increase,” creating the conditions for a stable currency, Barry said.
The $1-billion West African economy depends on tourism for nearly a third of its GDP, drawing mainly European holiday-makers to its white-sand beaches. Authorities estimated it stood to lose $292 million of the industry’s revenue by the end of 2020 due to the fallout from coronavirus-related travel restrictions.
An improved remittance data recording system and a shift from informal to formal remittance platforms due to virus-related travel restrictions are responsible for the high inflows recorded last year, Seeku Jaabi, the first deputy governor of the Central Bank of The Gambia, said at an online conference last month.
Gambia’s economic growth is “projected around zero percent in 2020, which is much better than its sub-Saharan African tourism-dependent peer countries whose GDP growth in 2020 is projected to average negative 10%-11%,” IMF’s Barry said. An increase in agricultural production and resilience in the construction and food-retail sectors, after public and private donors funded food-package distributions, supported output, he said.
Growth is projected to rebound to 6% in 2021 and average 6.5% in the medium-term, if the government implements the stimulus package included in the 2021 budget and global conditions normalize, Barry said. The IMF also recommends Gambia focuses on fiscal consolidation and improving debt management.
“The risk of debt distress remains high despite a projected decline in the debt-to-GDP ratio from 80.1% in 2019 to 76.4% in 2020,” he said.
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