Below is the IMF report on Gambia.  I wonder how they accounted for Lang and
Jammeh's heist from the Bank.

"The Executive Directors urged the authorities, during the Article IV
consultation in 2004, to commission a reaudit of the Central Bank of The
Gambia's (CBG's) 2001 and 2002 financial statements on terms of reference
agreed with Fund staff. The Directors also stressed the need for a special
audit of foreign exchange transactions between 2000 and 2003. These audits
have now been completed and confirm the breakdown of internal controls at
the central bank that were observed during the IMF's Safeguard Assessment
mission conducted in November 2003. The audit reports restate general ledger
balances for external reserves for various test dates between end-December
2000 and end-December 2003, which are significantly lower than the
originally recorded balances. The auditors have issued a disclaimer
indicating that they were unable to express an opinion on the 2001 and 2002
accounts largely because of the lack of documentation supporting several
foreign exchange transactions."

Simply put, they cooked the books.  Nothing has changed and the theft will
continue as long as Yaya is presiding over the criminal activity.  Please
read on.


Public Information Notice (PIN) No. 05/121
September 8, 2005 International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA



IMF Executive Board Concludes 2005 Article IV Consultation with The Gambia
Public Information Notices (PINs) form part of the IMF's efforts to promote
transparency of the IMF's views and analysis of economic developments and
policies. With the consent of the country (or countries) concerned, PINs are
issued after Executive Board discussions of Article IV consultations with
member countries, of its surveillance of developments at the regional level,
of post-program monitoring, and of ex post assessments of member countries
with longer-term program engagements. PINs are also issued after Executive
Board discussions of general policy matters, unless otherwise decided by the
Executive Board in a particular case. The staff report for the Article IV
consultation with The Gambia may be made available at a later stage if the
authorities consent.


On July 18, 2005, the Executive Board of the International Monetary Fund
(IMF) concluded the Article IV consultation with The Gambia.1

Background

The Gambia's economic performance since the mid-1980s has been uneven owing
to exogenous shocks, macroeconomic and structural policy slippage, poor
governance, and weak institutions. The economy's vulnerability to shocks
stems from a lack of economic diversification. In addition, economic
performance has been constrained by policy distortions and by recurrent
weaknesses in fiscal policy. Expansionary policies have increased the
government's recourse to domestic bank financing, which, in turn, has raised
real interest rates, increased the domestic debt burden, and tended to crowd
out private investment.

In 1998, the authorities entered into a three-year program under the
Enhanced Structural Adjustment Facility (ESAF), which was converted into a
Poverty Reduction and Growth Facility (PRGF) arrangement. In July 2002, the
Board approved a new three-year PRGF arrangement (See News Brief No. 02/74
and Press Release No. 02/32), but the first review was not completed because
of weak policy implementation and governance problems. It was discovered in
2003 that The Gambia had misreported to the Fund net international reserves
by US$38.8 million at end-December 2001 and failed to record US$28.5 million
in government expenditures. The Executive Board concluded that The Gambia
had received two noncomplying disbursements, equivalent to SDR 3.435 million
each in July and December 2001 (See Press Release No. 04/49). The
authorities repaid these disbursements in 2004 in four equal installments,
with the last payment made ahead of schedule.

The Executive Directors urged the authorities, during the Article IV
consultation in 2004, to commission a reaudit of the Central Bank of The
Gambia's (CBG's) 2001 and 2002 financial statements on terms of reference
agreed with Fund staff. The Directors also stressed the need for a special
audit of foreign exchange transactions between 2000 and 2003. These audits
have now been completed and confirm the breakdown of internal controls at
the central bank that were observed during the IMF's Safeguard Assessment
mission conducted in November 2003. The audit reports restate general ledger
balances for external reserves for various test dates between end-December
2000 and end-December 2003, which are significantly lower than the
originally recorded balances. The auditors have issued a disclaimer
indicating that they were unable to express an opinion on the 2001 and 2002
accounts largely because of the lack of documentation supporting several
foreign exchange transactions.

Macroeconomic performance has strengthened over the past 18 months,
particularly through end-2004, in response to strong financial policies.
Despite an increase in groundnut production, real GDP growth slowed in 2004
to 5.1 percent (from 6.9 percent in 2003) due to lower growth in industry
and services. Inflation reached 18 percent at end-2003 and declined to 5
percent by March 2005. The central bank's rediscount rate (policy rate) was
reduced by 5 percentage points from September 2004 to 29 percent in March
2005.

The overall fiscal deficit (including grants and on a commitment basis)
increased to 5¾ percent of GDP in 2004 from 4¾ percent in 2003, mainly due
to much higher externally-financed capital expenditures. However, the basic
primary surplus more than doubled to 9½ percent of GDP, indicating a
significant tightening in domestic fiscal operations. Broad money growth
declined from a peak of 43 percent on a 12-month basis in 2003 to 18 percent
in 2004. The nominal exchange rate has been stable since 2003 when it
depreciated by 25 percent in U.S. dollar terms.

The relatively high interest rates that were necessary to reverse the
deterioration in the macroeconomic environment have, however, placed a heavy
burden on domestic debt service, and on credit markets. The total domestic
debt stock increased from around 25 percent of GDP in 2003 to 31 percent in
2004 and domestic interest payments have risen from 4½ percent in 2003 to 5¼
percent of GDP in 2004. The tightening in domestic financial policies has
also severely depressed credit to the private sector. In 2004, the stock of
such credit is estimated to have fallen by 6 percent.

The external current account deficit (including official transfers)
deteriorated from 5 percent of GDP in 2003 to 12 percent in 2004, partly
reflecting the worsening in the balance of trade, as strong import growth
was driven by the recovery in output, the surge in donor-financed capital
expenditures, foreign direct investment, and higher international oil
prices. Gross international reserves rose by more than US$22 million or by
over 30 percent in 2004 as increased foreign inflows and a stabilizing
exchange rate allowed the central bank to increase its purchases in the
interbank market.

Policies, however, weakened in the first quarter of 2005. There have been
significant fiscal slippages owing primarily to unbudgeted expenditures of D
101 million (¾ percent of GDP). These expenditures have led to a substantial
increase in the net debt of the government. Accommodating policies by the
central bank led to excessive growth in monetary aggregates. Prospects for
2005 are further jeopardized by the decision to license a monopoly
quasi-public enterprise, the Gambian Agricultural Marketing Corporation
(GAMCO), to market and process groundnuts. This has had a near disastrous
effect on exports of processed groundnuts, as GAMCO has been unable to raise
the finances to purchase what was a bumper harvest for groundnuts. The
mission estimates that a substantial proportion of groundnut exports could
be lost in the 2004/05 crop season.

After a long delay, the authorities recently completed the first annual
progress report of the Poverty Reduction Strategy Paper covering the period
July 2002-December 2003. Progress on structural reforms has been mixed. The
authorities have fallen behind in their schedule to privatize the Gambia
Groundnut Corporation. On the fiscal side, the National Emergency Fiscal
Committee (NEFCOM) had some positive effects in ensuring greater control
over expenditures. Further, steps are being taken to strengthen the public
expenditure management system. A new organic budget law has been passed and
the financial regulations are currently being implemented. The authorities
are in the process of developing a statistical strategy to be presented to
donors. However, basic macroeconomic statistics remain weak.

Executive Board Assessment

Executive Directors observed that The Gambia's economic performance in
recent years was marked by inconsistent implementation of sound
macroeconomic policies, poor governance, exogenous and policy-induced
shocks, and inappropriate policy responses to those shocks. Directors
concurred that the main medium-term challenge for The Gambia is to make a
decisive break from the past "stop-go" policies, and embark on a
comprehensive economic program that would establish the conditions for
sustainable growth and poverty reduction. Key elements of such a program
should include measures to preserve macroeconomic stability and to achieve
debt sustainability. The program should also incorporate reforms aimed at
promoting faster growth and poverty reduction through improvements in the
investment climate, and the strengthening of public expenditure management,
governance, and accountability.

In this context, Directors commended the authorities for their
implementation of strong financial policies over the past 18 months, which
has led to an improvement in the basic primary fiscal surplus, a reduction
in inflation, the stabilization of the exchange rate, and the rebuilding of
international reserves. Directors noted that the improved macroeconomic
conditions had paved the way for the recent easing in interest rates.

While welcoming this progress, Directors expressed disappointment with the
fiscal slippage—stemming from extrabudgetary expenditures—that occurred in
the first quarter of 2005. They urged the authorities to address it by fully
implementing the proposed quarterly ceilings on nondiscretionary
expenditure, improving cash management, and enforcing the public
enterprises' repayment of government loans. In this process, it will be
important to avoid adverse effects on pro-poor spending. Directors also
urged the authorities to phase out the subsidization of petroleum products
by adjusting prices and enforcing the terms of the petroleum price
mechanism, bearing in mind the social implications of the adjustment. In
addition, they recommended strengthening revenues by improving tax
administration, and broadening the tax base by phasing out tax exemptions.

Directors were encouraged by the recent implementation of reforms to promote
enhanced fiscal transparency. They welcomed the passage of the organic
budget law and encouraged the authorities to finalize implementation of the
supporting financial regulations. They also noted the progress being made in
auditing the government accounts, and urged the authorities to intensify
efforts to bring the accounts up to date.

Directors commended the progress made in reducing inflation, and stressed
that further fiscal consolidation would provide room for easing monetary
policy and permit further reductions in interest rates. Directors concurred
with the use of broad money as a nominal anchor for prices. They welcomed
the progress made to enhance the conduct of monetary policy, and encouraged
the authorities to move ahead with the introduction of new instruments
designed to separate monetary operations from the financing of the budget,
and by adopting other key recommendations made by recent Fund technical
assistance missions. Also, Directors welcomed the increased attention being
paid to better coordination of fiscal and monetary management, and saw the
creation of the Monetary Policy Committee and Treasury Bill Committee as
important first steps in this regard. Efficient use of Fund technical
assistance in public expenditure management and in the domestic and foreign
operations of the central bank, together with the strengthening of the
authorities' statistical capacity, should help to further improve The
Gambia's macroeconomic management capacity.

Directors expressed disappointment with the continued weaknesses in internal
controls at the Central Bank, and stressed the need for the prompt and
effective implementation of appropriate remedial measures. In this regard,
they welcomed the recent adoption by the Central Bank of an Action Plan to
strengthen internal controls drawing on the report of the new external
auditors. The establishment of an Audit Committee, drafting of guidelines
for foreign reserves management, as well as the recent reorganization of the
Bank were also welcomed. In addition, Directors encouraged the authorities
to fully implement the recommendations from the recent Safeguards
Assessment, including the passage of the revised Central Bank Act designed
to strengthen the Bank's operational independence.

Directors observed that the fundamentals of the financial sector appear
sound with adequate capitalization and high profitability and liquidity
ratios. They welcomed the reduction in nonperforming loans, and urged the
authorities to pursue the further deepening of the financial sector,
including by enhancing the legal framework and reinforcing creditor rights.

Directors agreed that the current level of the real effective exchange rate
is appropriate, and that improvements in external competitiveness should be
addressed through the removal of structural bottlenecks, which currently
constrain productivity.

Directors concurred that The Gambia's external competitiveness and growth
prospects would be enhanced by the adoption of a comprehensive structural
reform strategy designed to reduce the costs and risks of doing business in
the country, and removing key structural bottlenecks in the agricultural
sector. They encouraged the authorities to accelerate the privatization
program, and enhance the investment climate through fiscal, judicial, and
legislative reforms, as recommended by the Foreign Investment Advisory
Service and the World Bank's Diagnostic Assessment of the Investment Climate
in The Gambia. In this connection, strengthening institutions and improving
governance would be major priorities. In the groundnut sector, Directors
expressed disappointment with the decision to license a public monopoly, The
Gambia Agricultural Marketing Corporation to market and process groundnuts.
They noted that the authorities had agreed to license firms to compete with
the Gambia Agricultural Marketing Corporation, but emphasized that it will
be essential to avoid further government intervention and accelerate
implementation of the sectoral strategy agreed with major donors. including
the privatization of the Gambia Groundnut Corporation.

Directors concurred that clear steps would be needed as part of a
staff-monitored program (SMP). Directors agreed with staff that the main
elements of an SMP should include implementation of an action plan to
address the external auditor's recommendations to improve internal controls,
and in that regard they welcomed the authorities' intention to conduct
quarterly audits of the Central Bank's foreign reserve balances. They also
agreed that emphasis will need to be placed on public financial management
and accountability. Successful performance under an SMP could be expected to
lead to a new PRGF arrangement and debt relief under the HIPC Initiative.

Directors welcomed the ex post assessment report and generally agreed with
its main findings. They identified as key lessons to be learned for future
program design the importance of structuring conditionality so as to give
greater emphasis to the resolution of problems in public expenditure
management and in the internal controls at the central bank. A few Directors
noted the authorities' view that over ambitious targets may have contributed
to program failures, and they saw a possible need for greater realism and
streamlining of program conditionality. Directors also observed that
governance problems and insufficient commitment to reforms had hampered
program implementation over the course of the last two arrangements with the
Fund and emphasized the need to continue strengthening transparency in the
use of public resources.




The Gambia: Selected Economic Indicators


--------------------------------------------------------------------------------

  2001
2002
2003
2004


--------------------------------------------------------------------------------

  (Annual Percentage changes, unless otherwise indicated)

Domestic economy

Real GDP
5.8
-3.2
6.9
5.1

Nominal GDP
21.8
12.3
36.1
20.1

GDP deflator
15.2
16.1
27.4
14.3

Consumer price index (period average)
4.5
8.6
17.0
14.2

Groundnut production
(in thousands of metric tons)
151.0
71.5
92.9
120.5


  (In percent of GDP)

External sector

Current account balance

Excluding official transfers
-10.1
-13.4
-13.6
-21.6

Including official transfers
-2.6
-2.8
-5.1
-11.8


  (Annual percentage changes, unless otherwise) indicated)

Exports, f.o.b. (in U.S. dollars)
-19.4
7.1
-7.6
25.8

Imports, c.i.f. (in U.S. dollars)
-19.9
12.8
-6.2
46.2


Money and credit (end-of-period stocks)

Broad money
19.4
35.3
43.4
18.3

Credit to the private sector and public enterprises
12.8
72.3
48.0
-15.1

Reserve money
21.0
34.1
62.7
11.0

Treasury Bill rate (in percent; end-of-period)
15.0
20.0
31.0
30.0


  (In percent of GDP)

Central government budget 1/

Balance, excluding grants
-16.0
-9.1
-7.2
-10.2

Balance, including grants
-13.9
-4.6
-4.7
-5.7

Total expenditure and net lending
31.1
25.4
22.9
31.2

Domestic revenue
15.1
16.3
15.7
20.9

Stock of domesti debt
38.1
36.6
25.2
30.7


  (In millions of U.S. dollars, unless otherwise indicated)

Current account balance

Excluding official transfers
-42.2
-49.6
-48.0
-86.7

Including official transfers
-10.8
-10.4
-18.0
-47.1


Gross official reserves 2/
63.0
67.2
62.3
84.6

In months of imports, c.i.f.
5.0
4.5
4.4
4.1


  (In percent of exports and travel income)

External debt service 3/
16.4
16.9
8.5
15.9


--------------------------------------------------------------------------------

Sources: The Gambian authorities; and IMF Staff estimates.
1/ Adjustment have been incorporated for previously unrecorded public
spending and borrowing in 2001, financed by the Central Bank of The Gambia.
2/ Adjustments have been incorporated for previously unrecorded depletion of
foreign exchange reserves in 2001-03, as reported by the authorities on
October 28, 2003.
3/ Servicing of public external debt after HIPC grants in percent of exports
and travel income. In 2001, the increase in debt service reflects in part
payments to Alimenta. Any accumulation of arrears is excluded.


--------------------------------------------------------------------------------
1 Under Article IV of the IMF's Articles of Agreement, the IMF holds
bilateral discussions with members, usually every year. A staff team visits
the country, collects economic and financial information, and discusses with
officials the country's economic developments and policies. On return to
headquarters, the staff prepares a report, which forms the basis for
discussion by the Executive Board. At the conclusion of the discussion, the
Managing Director, as Chairman of the Board, summarizes the views of
Executive Directors, and this summary is transmitted to the country's
authorities.





IMF EXTERNAL RELATIONS DEPARTMENT
Public Affairs: 202-623-7300 - Fax: 202-623-6278
Media Relations: 202-623-7100 - Fax: 202-623-6772

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