National Debt Can Be An Inhibitor To Growth and Prosperity

Domestic debt (government borrowing) has been a perennial problem for our fiscal authorities. This is as a result of government's reckless and insatiable appetite to spend over and beyond its means. This malaise has a negative effect on the economy as it serves as an opportunity cost to the growth prospects of the economy. Our Debt/GDP Ratio is relatively unsustainable and fiscal receipts that are meant for expenditures in priority areas such as health and education suffers at the expense of drawing down the debt and accrued interest charges.

That said, the government of the Gambia has to revisit our 2017 budget with a view of curbing down undue and excessive expenditure that bloats the bureaucracy or stifled the tax payer. The #NewGAMBIA will be endowed with external budgetary support from multilaterals to augment our ailing economy but this external intervention by donors must be complimented by sound macroeconomic initiatives to kick start our economy. Simplifying our tax administration and rationalisation of our tax cade is paramount to such an initiative. A purely tax based economy is counter productive to economic growth as heavy taxation impedes private sector reinvestment in the economy.

The current Gambia Revenue Authority model needs an overhaul as a police cannot police itself. This implies that Inland Revenue (Income Tax) and Customs & Excise cannot be at the apex of a functioning revenue authority. This is a clear conflict of interest as enforcers can't be administrators of the very function they need to enforce. It is therefore incumbent on the Ministry of Finance to set up a lean and responsive Revenue Authority headed by business minded people with indepth knowledge on regional economic intelligence, global commercial trends and port management systems. Furthermore, the cost of collecting taxes must be rationalised by using artificial intelligence that will streamline processes and reduce human interaction in the compliance chain.

Finally drawing down the debt stock is of paramount importance to the macroeconomic environment as it helps reduce overall interest rates at the banks, reduce the eventuality of crowding out and also tame inflationary pressures as it compliments monetary policy of the Central Bank. I therefore suggest that government of the day must employ a two prong approach to resolving this menace of borrowing. First, government must institute via legislation firm debt ceilings that will curb the appetite of the exchequer from spending over and beyond our resource envelope. Secondly, the government of the day must also audit the telecommunication companies as it relates to their reporting and accounting practices especially the ones with offshore parent companies that periodically pay management fees to their parent companies. I am of the view that such an excercise can yeild millions of dollars in back taxes and penalties that will directly fund the reduction of our debt stock. Debt is an impediment to growth and this beast must be curtailed inorder to give our economy a clean bill of health for sustainable prosperity and development.