The Need for Gambia’s Fiscal Councils to Pave Fiscal Stability

With its turbulent history of weak fiscal management, the Gambia faces a daunting challenge of high debt levels and persistent budget deficits. A shocking debt announcement in 2021 revealed an alarming total public and publicly guaranteed debt stock of USD 1.69 billion (GMD 88.93 billion). Out of this, external debt constitutes USD981.45 million (58.19%) and domestic debt USD705.01 million (41.81%)  2021 Gambia€™s Macroeconomic and Debt Portfolio – MoFEA.

This public debt stock of $1.6 billion is equivalent to 83% of the country’s estimated GDP. The question arises: What level of debt is considered too high for a developing nation? In this article, we delve into the pressing need for implementing fiscal councils and fiscal rules to steer The Gambia toward fiscal stability. Furthermore, we explore the debt levels of African countries that have already embraced these measures, shedding light on the potential benefits for The Gambia’s economic landscape.

Fiscal Councils: Beacons of Hope in Challenging Times

Amidst The Gambia’s fiscal challenges, fiscal councils emerge as essential independent bodies entrusted with evaluating the government’s fiscal policies, plans, and performance, free from partisan influence. Their mission revolves around assessing macroeconomic objectives related to the long-term sustainability of public finances and short-to-medium-term macroeconomic stability. With their expert analysis and recommendations, fiscal councils are pivotal in promoting transparency, accountability, and prudent fiscal decision-making Fiscal Council (imf.org).

Advocates for Transparent and Accountable Governance

Establishing fiscal councils ensures that transparent and accountable governance becomes a cornerstone of The Gambia’s fiscal landscape. These councils demand that the government makes its financial reports and forecasts readily available to the public, fostering an atmosphere of openness. By diligently monitoring budget plans and debt levels, fiscal councils provide invaluable recommendations for necessary adjustments to maintain a stable fiscal trajectory. Moreover, these institutions act as effective communicators, distilling complex fiscal issues into accessible information that builds trust, understanding, and citizen engagement.

Examples of Fiscal Councils in Africa

Looking at other African nations, we find inspiring examples of fiscal councils that have positively impacted fiscal management and economic stability (Fiscal Council Dataset (imf.org). South Africa’s Fiscal Council has provided independent oversight, assessed fiscal policies, and enhanced transparency. Ghana’s Fiscal Responsibility Advisory Council has played a vital role in promoting fiscal discipline and accountability, contributing to the country’s economic growth. The experiences of these countries demonstrate the potential benefits that fiscal councils can bring to The Gambia.

The Roles and Functions of Fiscal Councils in The Gambia

In The Gambia, fiscal councils would assume critical roles and functions to address the challenges of weak fiscal management. They would serve as watchdogs, monitor government spending, evaluate fiscal policies, and provide independent analysis and recommendations. By promoting transparency, fiscal councils ensure that the government’s financial reports are accessible to the public, fostering trust and accountability. These councils would significantly ensure long-term fiscal sustainability, safeguarding the country’s economic future.

Potential Challenges and Considerations

Establishing fiscal councils in The Gambia is not without challenges. Financial implications, legal frameworks, political will, and capacity building require careful attention. Adequate funding and resources must be allocated to support the effective functioning of fiscal councils. Legislation or regulations need to be enacted to grant fiscal councils the necessary authority and independence. Garnering political support and commitment is essential to ensure the success and sustainability of these institutions. Furthermore, investing in capacity-building initiatives will equip council members with the expertise and knowledge to carry out their roles effectively.

Recommendations for Establishing Fiscal Councils

Several recommendations can be considered to proceed with establishing fiscal councils in The Gambia. A comprehensive assessment of the country’s fiscal management challenges and specific needs for fiscal oversight should be conducted. Developing legislation or regulations defining fiscal councils’ mandate, powers, and independence is crucial. Adequate resources and funding must be allocated to support the operations of these institutions. Appointing qualified and independent individuals to serve as council members ensures expertise and impartiality. Collaboration with international organizations and seeking technical assistance will provide valuable insights and experiences for successful implementation.

Forging a Path to Fiscal Stability

In conclusion, The Gambia stands at a pivotal moment where effective fiscal management can pave the way for economic prosperity. The establishment of fiscal councils and the implementation of fiscal rules are vital steps toward achieving fiscal stability. Drawing inspiration from successful examples in Africa and addressing potential challenges, The Gambia can foster transparency, accountability, and prudent decision-making in fiscal matters. With the right strategies, fiscal councils will guide the country toward long-term fiscal sustainability and unlock a brighter economic future for its citizens.

Authors

Momodou S. Fatty is a Chartered Accountant & Master of Public Policy Candidate at the KDI School of Public Policy and Management.

Ousman Sidibeh is a finance professional deeply interested in the Gambian economy. Ousman is passionate about economic development and financial stability and is dedicated to contributing to the discourse on financial matters in the country.