By Fatou Dahaba
The Minister of Finance and Economic Affairs Mamburay Njie has outlined government’s progress in the 2020 financial year during his budget speech last Friday. He gives details of how and where tax payer’s money has been sent, revenue generated and the forecast of economic outlook and expenditure plan for 2021.
“The 2020 fiscal year has been a very difficult one for Gambia as the covid-19 pandemic disrupted economic activities in most sectors.”
The relaxation of travel restrictions implemented during Corona virus pandemic has led to the reopening of domestic business such as the economic is projected to register an improvement over the medium term, as a result GDP is expected to rebound to 5.9 percent in 2021, this depended on stronger performance from industry and service sectors.
The Finance Minister said overall, fiscal deficit is expected to worsen from 5 percent of GDP in 2020 to 5.8 percent of GDP in 2021, however over the medium term the overall fiscal balance is expected to be in surplus and continuously improve annually due to fiscal consolidation efforts of government.
He added that the government’s forecast is that there will be a gradual growth in revenue collection from 13.6 billion dalasi to 13.7 billion dalasi in 2021 with a lesser percentage of GDP in the 2020 fiscal year. He said the government aims to boost domestic revenue through the implementation of reform for the improvement in tax administration next year.
‘ As for the recently calculate debt sustainability analysis, Gambia remain debt depress as its debt is unsustainable. An austerity fiscal measure needs to be taken to ensure that, debt is reduced to a sustainable level.’
Njie further states that the fiscal deficit will also be in a worst state than last year including a 5 billion dalasi deficit that will be financed through domestic and external borrowing for the period when the Gambia is debt depress.
The bad news is that next year is projected to register a drop in budgetary support in which the government will relay on to financing its deficit, however project grants are expected to increase from 7.3 billion to 12 billion dalasi in 2021 due to increase in project grants.
The minister disclose that budget support Grant is expected to decline in 2021 as a significant amount received in 2020 was from development partners support budget in covid-19 expenditure. These grants are not expected in 2021 with some partners such as EU.
In the area of economic recovery he said government will be implementing new revenue measures from 1st January next year aim at mainly supporting the informal sector of the economic. This include reducing the cost of incorporation fee from 10,000 to 4,000 dalasi, business registration certificate from 1,000 to 500 dalasi and the elimination of environment tax for employees, reduction in benefit tax from 35 percent to 27 percent.
Part of the tax expenditure reform the ministry is implementing following measures; any contract or agreement with a duty or tax exemption that is sign without consultation with the waiting approval of the ministry of finance will not be honored.