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Momodou
Denmark
11735 Posts |
 Posted - 18 Jan 2008 : 20:47:35
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Foroyaa Editorial:
Will external Debt Relief actually result in Relief?
The Gambia has incurred Foreign and Domestic debts which amount to billions of dalasis.
The issue of debt relief refers mainly to external debts. Little is being said regarding the volume of the Domestic debt.
It is important for the country to look at its domestic debt and develop a strategy to reduce such a burden and create the basis to avoid its future growth.
In short, in 2006, the interest on foreign debt stood at 243,355, 000 Dalasis while the interest on domestic debts stood at 721,872,000 dalasis..
In 2007, the interest on foreign debt stood at 231,350,000 while the interest on domestic debt stood at 615,000,000. In 2008, the interest on the foreign debt is estimated to be 222,494,000 dalasis while the interest on the domestic debt is estimated as 594,000,000 dalasis.
The figures confirm that more interest is being paid in connection with the domestic debt than the foreign debt.
This huge reliance by the government on domestic debt, which is giving birth to treasury bills, has serious repercussions to private sector investments. In short, if the domestic banking sector finds it more lucrative and reliable to lend to government, they do not give much regard to private sector investment. This is why businesses, which require credit, often find it very difficult to pass all the huddles to get support. It would be important for the Monetary Policy Committee of the Central Bank to study how long it takes for a bank to process an application for a loan. Many customers do complain that accessing bank loans appears more like a
favour than a service premised on equal opportunity.
Instead of following established procedures to gain access, one follows the person one knows for privilege.
This may be some of the causes that lead to defaults in the payment of loans and the bad debts.
The second concern is the need to know what happened to the billions which have been paid back as interest from treasury bills. Have they been put back into the cycle for more interest from treasury bills or are they redirected to some productive ventures? Needless to say, if the government reduces its borrowing, the need will be there for the billions it used to receive to be absorbed elsewhere.
May be the Monetary Policy Committee should look into the creation of a stock market so as to provide outlet for the investment of such capital.
In our view, a lot of lip service is being paid to private sector growth but little next to nothing is being done to facilitate it. In the interval poverty and unemployment continue to surge.
Source: Foroyaa Newspaper Burning Issues
Issue No. 007/2008, 17 January 2008
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A clear conscience fears no accusation - proverb from Sierra Leone |
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