A blog about Africa and Gambia in particular. It focuses on social commentary and public policy issues
Friday, 7 December 2018
Gambia Fiscal 2019. An Ambitious Budget Without Sound Macro Fundamentals
Macroeconomic Stability is the anchor for economic growth and prosperity. A country cannot tax it's way to prosperity. Therefore fiscal prudence and economic growth strategies must be the strategic objective of any government.
Having said the above, I want to register my concerns on an ambitious budget for fiscal 2019. The budget process is a combination of several activities starting with the formulation of a resource envelope. This envelope takes into consideration all macro activities and opportunities in terms of our revenue drive. Hitherto to the formulation of a resource envelope, a call circular is drafted for eventual bilateral consultations between sectors and the exchequer (Ministry of Finance). The 2019 budget is over reaching and grossly ambitious without sound macro fundamentals to back the expansionary fiscal drive. The stance of the government on the 2019 budget can create inflationary tendencies and also raise deficit financing which will in turn increase the domestic debt and consequently, raise the policy and interest rates of the Central Bank.
The desire by government to increase salaries by 50% is noble but lacks a logical construct based on prudent economic management. I wonder if the economy is stupid or the custodians of policy are taking the macroeconomic environment for a joke. The government must first engage in civil service reform by down sizing the government then use the savings to properly renumerate the workers.
I foresee a lackluster performance in 2019 and an economy that is severely taxed. God bless the Gambia but our economic woes are largely a result of politically expedient decisions that disregard good economic thought and policy. Our last Flicker of hope lies with the Assembly. I do hope for once, they tame the excesses of government by taking their oversight function seriously in order to the much needed fiscal consolidation and productive sector development and growth.
Nyang Njie
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