Gambia’s Economic Rollercoaster: Government Set to Splurge D39 Billion in 2024
By Mariama Dem
The Gambia’s National Assembly commenced its fourth ordinary session with a focus on the government’s fiscal outlook for 2024. Finance Minister Hon. Seedy Keita presented the 2024 budget estimates, revealing projections of a substantial increase in total expenditure and net-lending. This surge is largely attributed to a 76% rise in debt interest, prompting strategic adjustments in various expenditure categories, including personnel emoluments.
This session, also referred to as the Budget session, is a critical event outlined in Section 152 (1) of the 1997 Constitution. According to this provision, the President is required to instruct the Minister of Finance and Economic Affairs to prepare and submit the budget estimates at least 60 days before the end of each financial year. This constitutional mandate aligns with the Public Finance Act (PFM Act) of 2014.
During Friday’s session, Finance Minister Keita tabled the 2024 fiscal year budget estimates before the National Assembly. The key highlight was the projection of a significant increase in the government’s Total Expenditure and net lending, totaling over D39 billion in 2024. Minister Keita attributed this surge primarily to a 76% increase in Debt Interest.
In simple terms, Debt Interest is the money that a government or an individual has to pay regularly as a fee for borrowing money. When a government or a person takes a loan, they agree to pay back the borrowed amount plus an extra amount, which is the interest. Debt Interest is the portion of the regular payments that goes towards covering this interest cost on the borrowed money. It’s like the fee you pay for using someone else’s money, and it’s an essential factor in managing loans and debts.
In his statement, Keita outlined the key components of the budget, stating; “Total Expenditure and Net-lending are projected to increase slightly by six percent, rising from D37.15 billion in 2023 to D39.38 billion in 2024.” The noteworthy contributors to this increase include a substantial rise in Debt Interest, set to escalate from D2.9 million in 2023 to D5.9 billion in 2024, representing a 76% increase. Additionally, Personnel Emolument expenditures are expected to grow from D6.10 billion in 2023 (revised to D6.7 billion) to D7.43 billion in 2024.
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The budget estimates also indicate that goods and services, funded by both Donor and Government resources, are projected to be at D9.84 billion in 2024, reflecting a one percent decrease compared to 2023. Similarly, capital expenditures are expected to decline by 12 percent.
A notable change is projected in Subsidies and Transfers, including Subventions, which are set to increase by D599 million to D4.96 billion in 2024, compared to the D4.34 billion approved for 2023. Meanwhile, goods and services financed by domestically sourced funds are expected to increase by 34 percent, reaching D5.48 billion in 2024.
Minister Keita highlighted that overall Capital expenditure, including donor funds, is anticipated to decrease by 12 percent to D11.76 billion in 2024, mainly due to the projected decrease in project grant disbursements. However, he emphasized that the government’s funding of infrastructure and related investments is projected to increase by 30 percent, from D2.50 billion in 2023 to D3.26 billion in 2024.
Debt service interest payment is anticipated to reach D5.11 billion in 2024, up from D2.19 billion in 2023, marking a significant 76 percent increase. The Minister explained that this increase is driven by the substantial rise in interest payments resulting from an increased MPC rate, reaching a high of 17%. This translates to higher interest payments on the 30-year bond and other domestic debts, along with the expected rollover of other government securities.
Minister Keita also disclosed that the 2024 budget deficit will be financed mainly from domestic financing and borrowing from development partners. The Gross Deficit is estimated to be 2.55 percent of GDP, reflecting a 29% reduction from the 2023 budget.