The Central Bank of The Gambia (CBG) has agreed to on-lend $15.55 million to the Government of The Gambia as a Rapid Credit Facility (RCF) for budgetary support.
On-lend mean “to borrow money and lend it to someone.”
This information is contained in the Memorandum of Understanding (MOU) between the Ministry of Finance and Economic Affairs and the Central Bank of The Gambia (CBG) for the disbursement of the aforementioned money to The Gambia by the International Monetary Fund.
According to the MOU, the government of The Gambia requested a RCF loan of 25 percent of quota, or SDR 15.55 million from the International Monetary Fund, and that the Fund has been submitted to IMF Executive Board for consideration on 15th April 2020.
“This financial assistance from the Fund is intended to address the urgent balance of payments and fiscal needs that have arisen on account of the Coronavirus global pandemic. It will help fill budgetary gaps while the authorities implement economic and structural policies to help limit the risk of an outbreak of the virus in the country and assist businesses and vulnerable individuals that will be affected during this period,” stated the MOU.
“This Memorandum of Understanding establishes a framework for cooperation between the Ministry of Finance and Economic Affairs (MoFEA) and the Central Bank of The Gambia (CBG) in respect of the on-lending of the RCF to the Government in the amount of SDR 15.55 million.
“The CBG is the fiscal agent for the Fund and the on-lending of the RCF terms to the budget shall be an internal arrangement between the CBG and the Government. Accordingly, the MoU details how the Government will repay the CBG so that the CBG can repay the Fund.”
Below is a detail and breakdown of the MOU:
- MoFEA’s RESPONSIBILITIES
• MoFEA is responsible for the repayment of SDR 15.55 million or its equivalent in Gambia Dalasi thereon to the CBG in accordance with CBG schedule of repayment to the Fund.
- CBG’s RESPONSIBILITIES
•The CBG will on-lend SDR 15.55 million (or its equivalent in US Dollars, in Gambian Dalasi at the current official rate) to the Government to support the budget.
•As the fiscal agent to the Fund, the responsibility to repay the RCF loan remains solely on the CBG
- TERMS OF CREDIT TO GOVERNMENT, EFFECT DATE OF THE MoU AND AMENDMENTS
•The CBG shall on-lend SDR 15.55 million to the Government on RCF terms, i.e., Government shall pay principal at an amount, rates and frequency as set by the RCF loan terms. In effect, CBG shall not profit nor incur any form of loss on the on-lending to Government.
• The CBG shall open a Special Credit Facility Account for the propose of recording the on-lending of SDR 15.55 million to the Budget and the repayments over the life of the facility.
•CBG shall transfer SDR 15.55 million, or its equivalent in US Dollars received from the Fund on April 20, 2020 or on the later day corresponding the date of receival of the RCF support at the CBG, to the Treasury Main Account with the CBG in Dalasi at the prevailing official United States Dollar rate.
•Repayment of the SDR 15.55 million thereon by Government shall commence in October 2025, with two yearly installments thereon in April and October of each year to coincide with the schedule of repayment from the Fund on the total disbursement, i.e. after the grace period of five years and six months as provided in the Schedule of Repayment (as per the Fund Schedule of Repayment attached Appendix A).
•Government shall pay CBG the Dalasi equivalent of the SDR amounts due as per the IMF RCF Schedule of Repayment (Appendix A) through direct transfer from the Treasury Main Account with CBG.
•The MoU shall come into force as of its date of signing and will remain in force until the SDR 15.55 million is fully repaid to CBG on or before April 2030.
•Amendment to the MoU may be proposed by either party by giving notice in writing to the other and shall only come into force by formal agreement. MoFEA and CBG further agree that any amendment shall not have the effect of suspending or undermining the implementation of this MoU.
Agreed and signed on the 8th day of April 2020. For the Ministry of Finance and Economic Affairs Hon. Mambury Njie Minister of Finance and Economic Affairs. While for the Central Bank of The Gambia Bakary Jammeh.
Source: Kexx Sanneh