Gambiaj.com – (BANJUL, The Gambia) – The Government of The Gambia’s budget performance up to the end of September 2025 reveals a mixed fiscal picture, with strong tax revenue growth masking deeper structural weaknesses that could complicate fiscal management in the final quarter of the year and beyond.
According to the Ministry of Finance and Economic Affairs’ Budget Performance Report, total revenue excluding project grants reached GMD 21.7 billion, equivalent to 68 percent of the approved annual target.
While this represents a solid 21 percent increase compared to the same period in 2024, the execution rate underscores a sizeable shortfall that raises questions about the realism of full-year revenue projections.
Non-Tax Revenue: A Persistent Weak Spot
One of the most problematic trends is the sharp underperformance of non-tax revenue. At GMD 3.56 billion, non-tax receipts achieved only 45 percent of the annual target and declined by 19 percent year-on-year.
The report points to weak remittances from Ministries, Departments, and Agencies (MDAs), with some major revenue-generating institutions performing far below expectations.
Notably, the Ministry of Finance itself recorded an execution rate of just 18 percent, while several MDAs remained below 25 percent.
This pattern suggests systemic challenges in non-tax revenue administration, including weak enforcement, limited institutional incentives, and possible governance bottlenecks.
If unaddressed, the continued reliance on tax revenue alone may constrain fiscal flexibility, particularly in periods of economic slowdown.
Tax Gains Concentrated, Risks Remain
Tax revenue performance has been comparatively robust, reaching GMD 18.15 billion, or 86 percent of the annual target, driven by sharp increases in income, trade, and property taxes.
However, the concentration of gains in a few tax handles, especially international trade and corporate income, leaves revenue vulnerable to external shocks, exchange rate volatility, and changes in import volumes.
Meanwhile, “other taxes” declined by 43 percent year-on-year, indicating erosion in smaller but potentially broad-based revenue streams that could otherwise enhance resilience.
Expenditure Pressures: Wages and Debt Dominate
On the spending side, total expenditure and net lending amounted to GMD 22.93 billion, or 71 percent of the approved budget, already exceeding total revenue and resulting in a gross deficit of GMD 1.22 billion.
This deficit was largely financed through domestic borrowing, deepening exposure to rising interest costs.
Personnel emoluments stand out as a key pressure point. At GMD 7.15 billion—81 percent of the annual allocation by end-September—wage spending grew by 37 percent following civil service salary adjustments.
With three-quarters of the year’s wage budget already consumed, the risk of overruns in the final quarter is high, potentially forcing either supplementary appropriations or cuts elsewhere.
Debt servicing is an even more acute concern. Interest payments totaled GMD 4.69 billion, accounting for one-fifth of total expenditure.
Domestic interest alone reached GMD 3.9 billion, reflecting the high cost of short-term domestic borrowing. This trend is crowding out productive spending and narrowing fiscal space for development priorities.
Capital Spending Falls Behind
While recurrent spending surged, capital expenditure lagged significantly. Only 45 percent of the capital budget was executed by end-September, with development capital spending at just 41 percent of its allocation .
The year-on-year decline of nearly GMD 880 million in capital outlays points to resource constraints and possible implementation bottlenecks.
This imbalance, rapid growth in recurrent costs alongside weak investment spending, raises concerns about the long-term growth impact of current fiscal choices, as infrastructure and development projects are deferred while consumption-oriented expenditures expand.
Concentration of Spending and Fiscal Risks With a Narrowing Path Ahead
The report also shows a heavy concentration of spending among a few entities. The top ten budget entities accounted for 83 percent of total expenditure, with debt service, education, health, and security dominating allocations.
While these sectors are critical, such concentration reduces flexibility and amplifies fiscal risk if costs in any one area escalate unexpectedly.
Overall, the budget execution up to September 2025 highlights three interlinked risks: persistent weakness in non-tax revenue, rapidly rising recurrent expenditure, especially wages and domestic interest, and under-execution of capital spending.
Together, these trends point to a fiscal structure that is becoming more rigid, debt-dependent, and less growth-oriented.
Unless corrective measures are taken in the final quarter, particularly to strengthen non-tax revenue collection, rein in recurrent cost growth, and rebalance spending toward investment, the government may face heightened fiscal stress and limited room to respond to economic shocks in 2026.
