Mr Speaker Sir,

I beg to move that " The Bill entitled an Act to provide for the services of The Gambia for the period 1st January, 2003 to 31st December, 2003 (both dates inclusive)" be read a second time.

INTRODUCTION

1. It has been a year since I presented my 2002 Budget in this Chamber. From that time to date, our economy has witnessed some occasional shocks from both external and internal sources. Few, if any, sectors of the local economy have been left untouched by their passing. During 2002, a dry spell adversely affected the domestic production especially rice and groundnut (the main cash crop) and the dalasi came under acute speculative pressure. On the external front, border problems and the 2001 attack on the U.S leading to declining trade and lower tourist arrivals, are some of the factors that had a negative impact on our economy.

2. The economic downturn necessitated the introduction of fiscal reforms and instilled discipline in budget execution. One essential component was the implementation of a cash budget system for the last quarter of 2002. This was implemented to remedy the fiscal imbalances that had arisen in the system and also to decelerate an emerging expenditure pattern that government deemed unsustainable as a challenge to our macroeconomic stability.


3. Under these circumstances, the prudent management of our public finances remains crucial. Only by controlling government spending can we leave the bulk of our economic resources in the hands of the more productive oriented populace. Only with sound fiscal management will we have the ammunition and resilience to defend ourselves from the ills of poverty and create the means to relieve hardship, and the capacity to restore confidence, while not adding to inflationary pressure.


4. A number of institutional reforms were initiated during 2002, particularly on revenue collection and administration. The Department of state for Finance and Economic Affairs (DOSFEA) and its development partners are working towards the establishment of an Independent Revenue Authority with Capacity Building & Economic Management Project (CBEMP) funding, which will merge Central Revenue and Customs & Excise Departments. A high-level Revenue Reform Committee has been established which meets regularly to guide the revenue reform process. At the same time we are seeking the modernization of the income tax, sales tax and customs legislation thereby providing a solid basis for the new architecture for revenue administration in the Gambia.

5. Studies have been conducted to develop business user requirements for the computerization of the tax system at the Central Revenue Department (CRD), as well as to transform the CRD to a functional organization that would separate operational from administrative functions. Similarly, a feasibility study of the ASYCUDA data system of Customs and Excise Department has been conducted; with a view to linking headquarter operations with all border posts electronically, as well as upgrading the current capacity of the system. The findings and recommendations of all these studies will constitute the basis of project implementation next year.

6. In the area of public expenditure, a new public procurement system has been developed to be operational next year. The Major and Minor Tender Boards will be replaced by a more permanent and professional structure with procurement decisions decentralised. In line with the reforms, the process of staff recruitment for the newly established watchdog Gambia Public Procurement Authority (GPPA) is in the final stages of completion. Procurement legislation has been prepared and approved by the National Assembly, and a new Procurement Code, a business plan for GPPA, as well as draft procurement regulations have also been developed. The GPPA is expected to be fully established and operational in the first quarter of 2003.

7. The CBEMP is also financing the introduction of a more efficient public resource management system. For this purpose, an Integrated Financial Management Information System (IFMIS) a Local Area Network (LAN) is being developed to improve the operation of the Accountant General's Department. IFMIS will be developed alongside the LANs for the CRD and CED. Institutions to be linked include the Central Bank, DOSFEA, as well as Departments of State by sectors. The logistical implications of the IFMIS are enormous and, as such, the IFMIS is the single largest component of CBEMP, accounting for a third of its budget. Because of this, and The Gambia's relative inexperience with the IFMIS, implementation has been divided into pilot and expansion phases.

Mr Speaker Sir,

8. In April 2002, The Government of The Gambia expressed interest in an internationally recognised credit rating to the U.S. Government following a seminar on sovereign credit rating at the US department of State. The U.S. Department of State, through USAID, subsequently confirmed The Gambia's selection as a beneficiary of this initiative, and designated Fitch Ratings, an international rating agency, as the sole international credit rating firm in this initiative.


9. The Gambia has now been privileged to benefit from the assignment of a sovereign currency rating of 'B minus', for both local and international currency. The benefit of such a credit rating is that it allows foreign investors to gauge the credit worthiness of a country based on the country's performance in terms of repaying domestic and foreign debt, the sustainability of The Gambia's debt burden, as well as the stability of the macroeconomic environment. Thus far, only three African countries have benefited from such a rating (South Africa, Egypt and Senegal) and we hope that our efforts to obtain an international evaluation of this nature will help us stay ahead of an increasingly competitive global market and will serve us well once the Trade Gateway project becomes fully operational.

10. Although these reforms and initiatives have demonstrated Government's commitment to achieve our goal of establishing the appropriate institutional set-up for our poverty reduction programmes, they have at the same time, increased government's responsibility to maintain fiscal discipline. There are other responsibilities that only the Government can shoulder. One of these is the duty to protect and promote Gambia's commercial interests in the national and international arenas.

11. Government has endeavoured to create an environment in which the economy is market driven. This implies that Government does not seek to administer the course that our economy or markets should take, but instead works in partnership with the private sector, which commands an eminent understanding of entrepreneurship and market dynamics.

12. The Government's primary role is to provide the most business-friendly conditions possible. It should provide the fundamental prerequisite of a buoyant economy such as: personal liberty, the rule of law, a lean and efficient administration, and a level playing field for all businesses. It must also provide the land and the infrastructural 'hardware' such as schools, health facilities, roads and airports that The Gambia needs for growth. Government has gone a long way in addressing these issues and hence creating the enabling environment for an active private sector participation in nation building.

13. We have always prided ourselves on not intervening in the market but we cannot let non-interventionism become an excuse for complacency. A case in point is the intervention in the domain of petroleum marketing to remedy a misalignment that the private sector could not address in the short term. This was necessary to mitigate the incessant shortages and to ensure the security of supply. This has been a learning experience for government in terms of how prices should reflect prevailing world economy conditions, and will henceforth serve as a blueprint for future price adjustments.

14. Now that we have ensured that the oil industry has been placed on the path to equilibrium, Government will pull out and let the private sector participants coordinate petroleum supply and marketing. However, to improve the enabling environment for the petroleum industry and ensure security of supply, Government is working with the petroleum companies to develop legislation to regulate the industry. In due course, an appropriate bill will be presented before this august Assembly for consideration and enactment.

15. Our past success has clearly demonstrated the vital importance of trusting in the market and creating the conditions that give maximum support to the private sector as our principal engine of growth. No less important is exercising sound judgment on the need and timing of government intervention when necessary.

16. I hold dearly these time-tested principles, for they represent a collective wisdom gleaned over the years. They have provided the bedrock of our prosperity and it is my firm belief that these familiar principles remain especially relevant in these times of rapid change.

-end.