The Gambia : Joint Bank-Fund Debt Sustainability Analysis, 2018 Update
An updated debt sustainability analysis (DSA) indicates that The Gambia is currently in external debt distress and that public debt is unsustainable. Both external and domestic debt are very high, and a significant pipeline of already-contracted lo...
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| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/545741539630784796/The-Gambia-Joint-Bank-Fund-Debt-Sustainability-Analysis-2018-Update http://hdl.handle.net/10986/30906 |
| Summary: | An updated debt sustainability analysis
(DSA) indicates that The Gambia is currently in external
debt distress and that public debt is unsustainable. Both
external and domestic debt are very high, and a significant
pipeline of already-contracted loans poses risks to
solvency. External debt stock indicators have deteriorated
since the March 2018 DSA, and all five external debt burden
indicators breach their indicative thresholds by large
margins and for an extended period in the passive scenario
and in the active (baseline) scenario. The stress test
results illustrate the country’s high vulnerability to
shocks, total public debt is expected to remain elevated
throughout the projection period, rollover risks associated
with the short maturity of domestic debt are high, and
contingent liabilities related to SOE debt pose additional
risks. Furthermore, the sustained primary surpluses needed
to reduce public debt would be politically and socially
challenging given The Gambia’s substantial development
needs. New borrowing would need to be on highly concessional
terms and reserved for the very highest priority projects
for which grant-financing is not available. The government
should also refrain from offering any guarantees. An
illustrative scenario shows how debt relief (comprising a
deferral of principal due to pluri-lateral, bilateral
official and private creditors and a softening of the terms
of the already contracted loans)—complementing the
implementation of a sound medium-term fiscal framework and
debt strategy—could be instrumental in restoring debt sustainability. |
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