By Momodou Sabally
You may be surprised if I say this but actually I am not surprised that the budget estimates for 2024 turned out to be impressive.
When a journalists asked for my reaction to the Finance Minister’s mid-year fiscal report, I told him I have nothing to say. The journalist expected my usual negative appraisal of the budget report but I told him it would be dishonest of me to do that given that the numbers turned out quite impressive.
It’s not an easy job at all: budget formulation and implementation is the most difficult job in macroeconomic management.
The Gambia happens to be operating “line-item” budgeting which is quite okay in my mind given the harsh macroeconomic realities we are confronted with. Since I was budget director I always argued against the delusional ideas of program-based budgeting given the realities of our fiscal space.
It is easy to cherry-pick certain numbers from the budget and make storms out of those teacups but a wholistic analysis of the budget would lead to some form of respect for the fiscal authorities this time around.
With overall budget execution on track for the first 3 quarters of 2023: and expenditure below projection as reported by the ministry; a better-than-expected revenue performance bodes well for macroeconomic stability.
Stating his policy thrust for 2024, the Minister made this pronouncement: “The 2024 Budget is anchored on the reduction of overall fiscal deficit, including the gradual reduction of Net-domestic borrowing as a percentage of gdp over the medium-term. “
With total revenue and grants projected at D34.9 billion; while total expenditure and net lending is set at D39.4 billion, one notices a level of congruence between the policy thrust as announced by the Minister and the numbers presented.
With a budget deficit of 2.55% of GDP, significantly lower than the 2023 estimate of 3.59% of GDP, we must comment the Ministry of Finance for a brilliant job.
This is quite commendable and this is exactly what some of us have been calling for for the past 5 years.
I only hope that implantation of the 2024 budget will follow the outlined estimates that would eventually be approved by the National Assembly.
Virements are inevitable in any realistic scenarios of budget implementation, but the Finance Minister and his team must avoid excessive virements for that would be tantamount to “cannibalism” in the budget implementation process.
We must appeal to the Monetary Authorities to complement this commendable attempt of the Finance Ministry geared towards fiscal consolidation.
Unfortunately recent policy mis -steps by the Central Bank have worsened our macroeconomic instability.
From unconventional foreign exchange intervention practices; to excessive (direct and indirect) lending to government for political expediency; the Central Bank has been its own worst enemy of late. With inflation at a record high level of 18.5% as at September 2023, the Bank can, and should, do better.
