A warning to reform borrowing before debt crowds out development
By Ambassador Abdoulie M Touray
The reported increase in The Gambia’s domestic debt to approximately D55.43 billion, accompanied by Central Bank Governor Buah Saidy’s warning about its concentration in short-term instruments, deserves serious national attention.
This should neither cause panic nor be seen as a routine statistical announcement.
Public borrowing is not inherently bad. Governments borrow to finance roads, electricity, water systems, hospitals, schools, agriculture and other investments that strengthen national productivity. The essential questions are:
Why are we borrowing? At what cost? For how long? What has the borrowing produced? And how will it be repaid?
The principal concern is not merely the size of the domestic debt, but its structure. Heavy reliance on short-term Treasury bills requires frequent refinancing. Government borrows today, repays or rolls over tomorrow, and returns to borrow again—sometimes at higher interest rates and without creating corresponding productive assets.
The national discussion must therefore examine the debt’s cost, maturity, purpose and economic impact.
A serious but manageable warning
The IMF’s July 2026 assessment estimated The Gambia’s total public debt at 82.1 percent of GDP in 2025, including domestic public debt of approximately 30.9 percent of GDP. Total public debt is projected to decline to 73.5 percent in 2026, subject to fiscal consolidation, economic growth and continued reforms.
Although the IMF considers the debt sustainable, vulnerabilities remain elevated. Sustainability does not mean comfort. It means the country is expected to meet its obligations if growth, revenue mobilisation, expenditure control and creditor support remain broadly on course.
Fiscal performance weakened in 2025 as expenditure exceeded programmed levels. Transfers, arrears payments, emergency subsidies and support to state-owned enterprises contributed to the pressure. Domestic debt is therefore part of a deeper imbalance between government revenue and expenditure.
The risks of short-term borrowing
Excessive reliance on short-term domestic debt creates five interconnected risks.
First is rollover risk. Treasury bills mature quickly, forcing the government to return repeatedly to the market. If interest rates rise, liquidity tightens or investor confidence weakens, refinancing becomes more expensive.
Second is the growing interest burden. Debt service absorbs resources that could otherwise finance healthcare, education, agriculture, infrastructure and social protection. Gambia Participates estimated total debt service at approximately D7.48 billion in 2024 — about 26.64 percent of government expenditure.
A country cannot achieve rapid development when an increasing share of its budget services yesterday’s borrowing instead of building tomorrow’s productive capacity.
Third is the danger of crowding out private investment. Government securities offer banks relatively secure returns. As public borrowing expands, banks may prefer lending to the state rather than to farmers, manufacturers, exporters, housing developers and small businesses.
Government may therefore borrow to stimulate the economy while simultaneously restricting the credit needed to create jobs, expand production and broaden the tax base.
Fourth, heavy borrowing complicates monetary policy. If fiscal expansion increases demand while the Central Bank raises interest rates to contain inflation, the two sides of economic management begin working against each other. Higher rates then increase the cost of government borrowing, mortgages and business finance.
Fifth is borrowing for consumption rather than production. Debt used for a commercially sound energy project, irrigation system, port facility or processing centre can generate economic returns. Repeated borrowing for routine expenditure, administrative overheads, subsidies or losses in poorly managed public enterprises creates liabilities without corresponding assets.
The government nevertheless operates under difficult conditions: a narrow tax base, high infrastructure needs, imported inflation, climate vulnerability, energy-sector pressures and substantial public expectations. The answer cannot be indiscriminate austerity. Cutting productive investment, healthcare, education and targeted support for vulnerable households would weaken growth.
What The Gambia requires is intelligent fiscal consolidation: reduce waste, improve revenue collection, prioritise productive expenditure and restructure the debt portfolio without undermining essential services.
A national reform programme
The D55.43 billion figure should become a catalyst for reform.
The Ministry of Finance and the Central Bank should publish a comprehensive quarterly domestic debt bulletin showing the stock of debt, instruments, interest rates, maturity profile, institutional holders, repayments, guarantees, contingent liabilities and the stated purpose of new borrowing.
Government should gradually reduce excessive dependence on Treasury bills and responsibly expand medium- and long-term dalasi-denominated bonds. Longer maturities would reduce refinancing pressure and improve predictability, although replacing expensive short-term debt with equally expensive long-term debt would only postpone the problem.
Parliament should approve a binding annual ceiling on net domestic borrowing. Any proposed breach should require a supplementary appropriation, public explanation and parliamentary approval.
Every major loan should also be connected to an identifiable national outcome. Government must distinguish between borrowing for recurrent expenditure, emergency stabilisation, refinancing and productive capital investment. Debt-financed projects should undergo independent financial, economic, social and environmental appraisal.
State-owned enterprises require stronger control. Performance contracts, audited financial statements, transparent subsidy rules and restructuring plans should become mandatory. Parliament should receive an annual fiscal-risk statement covering state enterprises, public-private partnerships, government guarantees and pending legal claims.
Revenue must increase without unfairly burdening poor households and already compliant businesses. Priorities include digital tax administration, business formalisation, improved customs valuation, reduction of unjustified exemptions, property taxation, collection of arrears and measures against illicit financial flows.
Fiscal consolidation must protect well-targeted expenditure on health, education, agriculture, energy, water, climate resilience and vulnerable households. Wasteful expenditure should be reduced before development expenditure is sacrificed.
The country should also develop pension funds, insurance companies and other institutional investors capable of supporting longer-term securities. Prudential limits must, however, prevent excessive exposure to sovereign debt. The capital market must finance private enterprises, municipalities and infrastructure — not become merely another channel for government borrowing.
Quarterly high-level reviews of fiscal policy, debt management and development planning should complement the Monetary Policy Committee. The Ministry of Finance, Central Bank, Gambia Revenue Authority, planning authorities, National Audit Office, state-owned enterprises and private-sector representatives should participate. Fiscal and monetary policy must pull in the same direction.
From debt management to economic transformation
The most sustainable way to reduce debt is not merely to borrow less. It is to grow the economy, expand exports, mobilise domestic revenue and ensure public spending produces measurable value.
The Gambia must accelerate investment in agriculture, agro-processing, renewable energy, fisheries, tourism, transport, logistics, digital services and light manufacturing. Greater use should be made of concessional finance, grants, climate finance, properly structured public-private partnerships, diaspora investment instruments, infrastructure funds and project bonds.
Short-term domestic borrowing should primarily address temporary cash-management needs—not become a permanent substitute for long-term development finance.
Governor Buah Saidy’s warning should therefore be welcomed as an act of institutional responsibility. The Central Bank must continue providing candid advice. The Ministry of Finance must produce a credible debt-management programme. Parliament must strengthen oversight. State-owned enterprises must become accountable, and the private sector must be enabled to invest and create employment.
This is not a partisan matter. The debt will be serviced by Gambian taxpayers, businesses and families for years to come.
D55.43 billion is more than a financial statistic. It is a national warning.
The appropriate response is neither panic nor denial, but disciplined reform. Borrowing must become more transparent, expenditure more productive, debt longer-term and less costly, and economic growth more broad-based and inclusive.
That is how The Gambia can prevent today’s borrowing from becoming tomorrow’s burden—and transform public finance from a cycle of refinancing into an instrument of national development.
Ambassador Abdoulie M Touray is the president of the SaHel Knowledge Campus Think Tank (SKCTT)