深度报告-2025-09-01-世界银行-冈比亚经济更新_2025年春季_冈比亚公共债务-阿喀琉斯之踵_（英）页_108页_8mb

The Gambia Public Debt: An Achilles Heel Summary

Executive Summary

The Gambia is grappling with high public debt levels, which pose a significant risk to its economic stability. While the economy showed improvement in public revenue mobilization and fiscal consolidation, public debt remains unsustainable due to factors such as low domestic savings, tax revenue shortfalls, the fiscal burden of state-owned enterprises, and a large external deficit. The expiration of external debt service deferral at the end of 2024 is expected to increase borrowing costs and constrain investment, negatively affecting medium-term growth prospects. The analysis confirms that there are optimal debt thresholds beyond which the negative effects on economic growth become pronounced. Strategies for debt management focus on fiscal consolidation, domestic revenue mobilization reforms, ensuring debt transparency, and exploring innovative financial instruments like climate-resilient debt and debt-for-development swaps.

Key Findings

• Current Debt Situation:

  • Public debt decreased from 75.6% of GDP in 2023 to 71.2% in 2024.
  • At around 43.9% external debt-to-GDP ratio, external debt remains nearly twice the size of domestic debt.
  • Debt servicing costs average about 6.5% of GDP, constraining domestic spending.

• Economic Impact:

  • High debt increases interest payments, which absorb significant portions of budgets, nearly matching allocations for health and education combined.
  • It negatively impacts private investment, crowds out public and private sector credit, and reduces financial deepening.
  • External debt servicing poses risks to monetary stability and exchange rate depreciation.

• Optimal Debt Threshold:

  • Studies using ARDL models indicate optimal thresholds for total (51.9% of GDP) and external public debt (34.66% of GDP beyond which debt negatively impacts growth).

Policy Recommendations

• Fiscal Consolidation: Strengthen domestic revenue through digital tax administration, reduce subsidies, and improve expenditure efficiency.
• Debt Transparency: Enhance debt reporting and management systems to mitigate risks.
• Innovative Instruments: Explore climate-resilient debt and debt-for-development swaps to secure financing.
• External Deficit Reduction: Promote regional trade and attract FDI to decrease reliance on external borrowing.
• Economic Diversification: Enhance productive investments in key sectors like agriculture and tourism to boost domestic savings.

Conclusion

The Gambia must balance debt needs and constraints to ensure long-term economic growth and development. continued vulnerabilities stem from climatic shocks, low fiscal buffers, and political uncertainties. Sustainable debt management is critical for maintaining macroeconomic stability and achieving inclusive growth.

Key Data Points

• External Debt Servicing Impact: Expected to reduce economic growth by 1.2 percentage points between 2025–2028.
• Investment Impact: High debt hinders capital accumulation and reduces productivity, with transmission channels including reduced public and private investment.