The word Debt, the twin brothers, the International Monetary Fund (IMF) and the World Bank, the Chinese Consensus, the Paris Consensus, and the Washington Consensus all peer support together does not augur very well for any developing nation. Some people are already starting to propagate that jingoist nationalism anthem of “us vs. them.”
However, we are all in Africa linked to the same bilateral and multilateral debt controllers. The Gambia would not be the first of many African dominoes to fall under the auctioneer’s gavel. They always want leaders who steal and would never repay the debt. We are not borrowing to create wealth.
They are selling us debt as a way of mortgaging our resources and, after that, foreclosing on our natural resources. It is cheaper that way than buying it on the open market and bidding against China or the Arabs
Countries like the USA also borrow in their currency, so all their debts are like domestic debts carrying no forex risks. Developed countries have a higher debt to GDP ratios, let me state something.
Developed countries can do so. This is because they are not developing their industries and infrastructure, hence the term developed. They can spend a significant chunk of their revenue repaying loans. We, on the other hand, should be spending our revenue on development, not servicing loans. We have reached a place where we are borrowing to repay loans.
Mainstream economics was built on the simplifying assumption that people behave rationally. Nobel laureate Professor Richard Thaler has played a significant role in pushing economists from this assumption.
He did not merely argue that humans are irrational, which has always been evident. Instead, he showed that people depart from rationality in consistent ways, so that behavior can still be anticipated and modeled.
It is the economy stupid. Tax spending has been stretched to its elastic limit. We need a national consensus on what should be done about taking the economy into a productive age. We need to focus on how to reset and renew the productive engines of the Gambian economy.
The tragedy of the past and the present of building a Casino economy with grabbing public resources as its core philosophy has left nothing except to grab each other’s throats. Yes, from both sides of the (political) divide, economic policy does not seem to be a top agenda item this time.
The inflated cost of living is making the Gambia very uncompetitive. This is the reason behind the endless corruption in both the public and private sectors.
If severe measures are not undertaken to bring down the cost of living and that of doing business, it will become tough to attract foreign investment into the country or even to sustain existing businesses. Business resilience in times of crisis will also be highly compromised since cost reduction measures will be ineffective.
Increasing salaries and wages of the Office of the President, the National Assembly members, and senior government officials all the time and neglect pay increases to ordinary civil servants or those in the Middle and low class is not sustainable in the medium and long term.
The executive and the legislative will keep coming for more until the government’s close shop. Bringing down the cost of living is more viable as it will lower the living wage and reduce the agitation for higher pay.
Unfortunately, this tactical alliance government of President Adama Barrow does not even realize there is a crisis.
Government spending has expanded a lot over the last five years. This can only be sustained through borrowing. However, borrowing has limits. Soon the government will struggle even to pay salaries unless these people return on a path of fiscal consolidation and discipline.
The cost of living has become too high in this country, and most of the middle class will sink to low-income levels if the economic growth remains stunted, especially with current economic and political uncertainty. Salaries are hardly catching up with a rise in the cost of living. This is what has caused endless hardships, and more will be seen in the future.
The Gambia’s GDP has not been shrinking for decades if it were not for the massive loans that are propping the economy. One sign is the slow growth of the middle class compared with population growth.
The spending power of citizens has seen very sluggish growth mainly because of the recent massive layoffs and concentration of wealth at the very top while the middle and lower class are finding it increasingly difficult to maintain their living standards.
This is bad for the simple reasons that the wealthy tend to save or stash their money elsewhere, meaning there is less to be spent on buying goods and services in the economy as compared to when that same wealth is in the hands of the middle and lower class who tend to spend almost all their income leading to more goods and services being bought and the economy growing.
That is what the previous regimes were doing, and this regime is doing the same practices.
Hopefully, they will rectify the situation and promote practices that encourage increased employment through purchasing goods and services from Gambian businesses (and not through the satanic tender preneurship). Seriously, we need an entirely new way of thinking.
