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Monday, December 24, 2007
Introduction: by SoS Bala Gaye
"Ladies and gentlemen: Welcome to this auspicious occasion. The IMF representative to The Gambia will give you the verdict of the board of directors of the World Bank and the IMF on the determination that The Gambia and has or has not reached its completion point. But as background information let me give you the following. In 2000 Gambia reach decision point under the enhanced HIPC initiative.
At decision point The Gambia agreed with both the IMF and the World Bank on HIPC completion triggers and also at decision point Gambia enjoyed interim debt relief from both the World Bank, IDA, African Development Fund, the IMF and also the OPEC forum. The interim debt relief spanned from 2000 to 2005.
The agreement was that if we have a successful PRGF program, that would have gone through a successful review after six months and on completion of the triggers, Gambia would then reach HIPC completion point.
In July 2007 there was the first review of the current PRGF program and that review went to the IMF Executive Board on 29th August 2007. The review was successful.
There were problems on the HIPC completion triggers. And the problem that was outstanding was the bringing of groundnut assets to the point of sale.
The government tried in 2004 to privatise the GGC (The Gambia Groundnut Corporaion) assets but this was unsuccessful. We had to enter into discussions with the World Bank and had encouragement on how this trigger will be satisfied. As I indicated at the beginning I am not going to deliver a verdict. I would allow the IMF residence representative Alex Sergeura to talk to us on what the IMF and World Bank decided. Over to you Alex.”
IMF Press Release in full, as presented by Mr Alex Sergeura.
World Bank and IMF Support The Gambia’s Completion Point Under the Enhanced HIPC Initiative and Approve Debt Relief Under the Multilateral Debt Relief Initiative
Washington, December 20, 2007 - The World Bank’s International Development Association (IDA) and the International Monetary Fund (IMF) have agreed that The Gambia has made sufficient progress and taken the necessary steps to reach its completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
The Gambia becomes the 23rd country to reach the completion point under the initiative.
Debt relief to The Gambia under the Enhanced HIPC Initiative amounts to US$66.6 million in net present value (NPV) terms(1), equivalent to a 27.2 percent NPV reduction of The Gambia’s debt after traditional debt relief.
The US$66.6 million in reduced debt is attributable to all creditors. Total assistance under the Enhanced HIPC Initiative is estimated to correspond to approximately US$140 million in nominal terms.(2)
In reaching the HIPC completion point, The Gambia also becomes eligible for further debt relief from the IMF, IDA, and the African Development Fund (AFDF) under the Multilateral Debt Relief Initiative (MDRI).
Total debt service savings under the MDRI will amount to approximately US$373.5 million in nominal terms over the next 43 years.
As a result of reaching HIPC completion point, The Gambia is expected to receive in total the equivalent of US$514 million in nominal debt relief under both the Enhanced HIPC Initiative and the MDRI, on principal as well as interest payments.
The World Bank’s IDA committed itself to provide assistance of US$35.9 million in nominal terms, of which US$9.1 million has already been delivered. Under the MDRI, the World Bank’s IDA will cancel a debt stock of approximately US$183 million of debt disbursed before end-2003 and still outstanding on December 31, 2007, corresponding to a total of approximately US$202 million in debt service savings.
The IMF committed itself to provide MDRI/HIPC debt relief totaling SDR 9.4 million (US$14.2 million). Under the MDRI, the IMF will provide 100 per cent debt relief on obligations incurred before end-2004 and still oustanding at the completion point.
To reach the completion point, The Gambia met a number of triggers aimed at maintaining macroeconomic stability, ensuring committment to the national poverty strategy, strengthening public expenditure management, improving the poverty database and monitoring capacity, raising the quality and coverage of education, improving health outcomes, and promoting development of the private sector. In addition, the authorities have taken steps to revitalise the groundnut sector through liberalisation reforms.
Madani Tall, World Bank country director for The Gambia noted that "in achieving the HIPC completion point, The Gambia significantly lowers its debt burden and effectively frees up resources to redeploy towards growth and poverty reduction. In order to achieve optimum results", he added, "The Gambia must take this opportunity to ensure that future borrowing is prudently managed in order to prevent a reoccurence of debt distress, and to continue implementing reforms outlined in the government’s groundnut sector roadmap".
"The Gambia has made good progress towards securing macroeconomic stability and has established a good track record of policy implementation in 2007", said Tsidi Tsikata, IMF Mission chief for The Gambia.
"Looking forward, a key challenge is to maintain a sustainable external and domestic debt position through careful borrowing and prudent fiscal policy. Debt relief at completion point under the enhanced HIPC Initiative and MDRI is an important milestone for The Gambia toward debt sutainability while providing more resources for poverty reduction and the attainment of the Millennium Development Goals".
On a question from the Daily Observer, Mr Sergeura confirmed that the IMF would encourage other countries with whom The Gambia has bilateral debt agreement to similarly provide The Gambia with debt relief. He added that these reports from the IMF and World Bank will go a long way to assisting The Gambia in its case for debt relief with bilateral donors.
SoS Bala Gaye confirmed that at a meeting the previous day, both Britain and France had issued a press release calling for non-Paris Club countries to provide full debt relief for The Gambia. Present at the meeting were SoS/Secretary General Ousman Jammeh, SoS Higher Education, Research, Science and Technology, Abdoulie Sallah, Governor Central Bank of The Gambia Bamba Saho and his deputies, Chairman of the National Planning Commission, Alieu Ngum, PS at Finance, Mod A.K. Secka, and others.
"Ladies and gentlemen: Welcome to this auspicious occasion. The IMF representative to The Gambia will give you the verdict of the board of directors of the World Bank and the IMF on the determination that The Gambia and has or has not reached its completion point. But as background information let me give you the following. In 2000 Gambia reach decision point under the enhanced HIPC initiative.
At decision point The Gambia agreed with both the IMF and the World Bank on HIPC completion triggers and also at decision point Gambia enjoyed interim debt relief from both the World Bank, IDA, African Development Fund, the IMF and also the OPEC forum. The interim debt relief spanned from 2000 to 2005.
The agreement was that if we have a successful PRGF program, that would have gone through a successful review after six months and on completion of the triggers, Gambia would then reach HIPC completion point.
In July 2007 there was the first review of the current PRGF program and that review went to the IMF Executive Board on 29th August 2007. The review was successful.
There were problems on the HIPC completion triggers. And the problem that was outstanding was the bringing of groundnut assets to the point of sale.
The government tried in 2004 to privatise the GGC (The Gambia Groundnut Corporaion) assets but this was unsuccessful. We had to enter into discussions with the World Bank and had encouragement on how this trigger will be satisfied. As I indicated at the beginning I am not going to deliver a verdict. I would allow the IMF residence representative Alex Sergeura to talk to us on what the IMF and World Bank decided. Over to you Alex.”
IMF Press Release in full, as presented by Mr Alex Sergeura.
World Bank and IMF Support The Gambia’s Completion Point Under the Enhanced HIPC Initiative and Approve Debt Relief Under the Multilateral Debt Relief Initiative
Washington, December 20, 2007 - The World Bank’s International Development Association (IDA) and the International Monetary Fund (IMF) have agreed that The Gambia has made sufficient progress and taken the necessary steps to reach its completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
The Gambia becomes the 23rd country to reach the completion point under the initiative.
Debt relief to The Gambia under the Enhanced HIPC Initiative amounts to US$66.6 million in net present value (NPV) terms(1), equivalent to a 27.2 percent NPV reduction of The Gambia’s debt after traditional debt relief.
The US$66.6 million in reduced debt is attributable to all creditors. Total assistance under the Enhanced HIPC Initiative is estimated to correspond to approximately US$140 million in nominal terms.(2)
In reaching the HIPC completion point, The Gambia also becomes eligible for further debt relief from the IMF, IDA, and the African Development Fund (AFDF) under the Multilateral Debt Relief Initiative (MDRI).
Total debt service savings under the MDRI will amount to approximately US$373.5 million in nominal terms over the next 43 years.
As a result of reaching HIPC completion point, The Gambia is expected to receive in total the equivalent of US$514 million in nominal debt relief under both the Enhanced HIPC Initiative and the MDRI, on principal as well as interest payments.
The World Bank’s IDA committed itself to provide assistance of US$35.9 million in nominal terms, of which US$9.1 million has already been delivered. Under the MDRI, the World Bank’s IDA will cancel a debt stock of approximately US$183 million of debt disbursed before end-2003 and still outstanding on December 31, 2007, corresponding to a total of approximately US$202 million in debt service savings.
The IMF committed itself to provide MDRI/HIPC debt relief totaling SDR 9.4 million (US$14.2 million). Under the MDRI, the IMF will provide 100 per cent debt relief on obligations incurred before end-2004 and still oustanding at the completion point.
To reach the completion point, The Gambia met a number of triggers aimed at maintaining macroeconomic stability, ensuring committment to the national poverty strategy, strengthening public expenditure management, improving the poverty database and monitoring capacity, raising the quality and coverage of education, improving health outcomes, and promoting development of the private sector. In addition, the authorities have taken steps to revitalise the groundnut sector through liberalisation reforms.
Madani Tall, World Bank country director for The Gambia noted that "in achieving the HIPC completion point, The Gambia significantly lowers its debt burden and effectively frees up resources to redeploy towards growth and poverty reduction. In order to achieve optimum results", he added, "The Gambia must take this opportunity to ensure that future borrowing is prudently managed in order to prevent a reoccurence of debt distress, and to continue implementing reforms outlined in the government’s groundnut sector roadmap".
"The Gambia has made good progress towards securing macroeconomic stability and has established a good track record of policy implementation in 2007", said Tsidi Tsikata, IMF Mission chief for The Gambia.
"Looking forward, a key challenge is to maintain a sustainable external and domestic debt position through careful borrowing and prudent fiscal policy. Debt relief at completion point under the enhanced HIPC Initiative and MDRI is an important milestone for The Gambia toward debt sutainability while providing more resources for poverty reduction and the attainment of the Millennium Development Goals".
On a question from the Daily Observer, Mr Sergeura confirmed that the IMF would encourage other countries with whom The Gambia has bilateral debt agreement to similarly provide The Gambia with debt relief. He added that these reports from the IMF and World Bank will go a long way to assisting The Gambia in its case for debt relief with bilateral donors.
SoS Bala Gaye confirmed that at a meeting the previous day, both Britain and France had issued a press release calling for non-Paris Club countries to provide full debt relief for The Gambia. Present at the meeting were SoS/Secretary General Ousman Jammeh, SoS Higher Education, Research, Science and Technology, Abdoulie Sallah, Governor Central Bank of The Gambia Bamba Saho and his deputies, Chairman of the National Planning Commission, Alieu Ngum, PS at Finance, Mod A.K. Secka, and others.
Author: DO
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