The Gambia financial and private enterprise development project : a study on the short-term economic outlook

Subsequently, in July of 1994, the Gambian Armed Forces took power from a democratically elected government, and the donor community reacted by suspending program assistance. Further, when military government announced that democracy would not return until December 1998, the United States terminated all assistance except humanitarian aid through NGOs, while Britain and the Scandinavian governments urged their citizens not to travel to The Gambia. As a result, The Gambia, a small country which until recently had a history of political and social stability and a reputation for sound economic management, is in danger of economic collapse. The report reviews the current and prospective impacts of discontinued donor assistance and disruption of tourism on the country"s balance of payments and future economic growth, evaluates the performance of the Gambian economy, and outlines the policy requirements for sustaining development through the next 2 years. For a long time, The Gambia depended on groundnut exports, tourism, and a large infusion of external grants for its survival. But weakening of the international groundnut market, disruptions in the transit trade, and now the travel embargo and suspension of donor assistance have threatened the economic and social fabric of the country and put at risk some of the fundamental economic reforms of the previous 9 years. Growth is uncertain, the country"s capacity to meet its external commitments could be in jeopardy, and it is unclear how long the government, under present economic conditions, will be able to meet its financial obligations. At the same time, it is not apparent when donor assistance will resume even if a speedy timetable for return to democratic government is announced. But for now, hastening democracy"s return appears to be the last chance to reverse the deteriorating economic situation. The decisions that will be made by the military government in the coming months will determine if progress can be made in resuming donor assistance. Even so, the interest of the nation will be better served if a compromise can be reached between donors and the government on the sequencing of the transition program.