Gambia, Republic of the

Slowing growth related to advanced economies

Although still strong, growth will slow slightly in 2025 and 2026. In fact, slower growth in advanced European economies will weigh on tourism (20% of GDP in 2024) and expatriate remittances (around 20%). In addition, the government plans in 2025 to amend the law on the Gambia Investment (both domestic and foreign) and Export Promotion Agency by limiting tax incentives and stopping special investment certificates to underperforming companies. The reform will curb private investment. Conversely, reforms are nonetheless planned out to end-2025 to encourage business creation, such as a land policy aimed at securing and facilitating access to land and financing.

Ahead of the 2026 presidential election, public investment is expected to slow in favour of social spending. However, under its 2023-2027 National Development Plan (RF-NDP), the government plans to invest in agriculture, transport, energy and human capital. Infrastructure financing by international partners remains crucial, although foreign direct investment and government investment – at times in partnership with the private sector – also play a role. A high-voltage power line was inaugurated in early 2025 co-financed by the World Bank, the European Union and the European Investment Bank (EIB). Growth will also be supported by the agricultural sector thanks to lower input prices, particularly for fertilisers and seeds. This is expected to boost household consumption as agriculture accounted for 29% of total employment in 2023. Last, China announced in June 2025 the complete removal of tariffs on imports from 53 African countries. China was The Gambia’s top export destination in 2024, accounting for 36.3% of total exports. The direct impact of the trade war and the scheduled end of the African Growth and Opportunity Act (AGOA) in September 2025 is expected to be minimal as exports to the US previously represented a mere 0.3% of total exports.

Since 2024, an easing of inflation has been observed on back of persistent tight monetary policy – the key interest rate has been held at 17% since December 2023 – and a decrease in oil and food prices. In 2025 and 2026, inflation is expected to gradually converge toward the central bank’s target rate of 5%. Amid global uncertainty, the central bank is only likely to begin cutting rates as of 2026. Easing inflation and the upcoming monetary loosening will encourage private consumption and investment.

Fiscal consolidation threatened by pre-election spending

The government intends to continue its fiscal consolidation efforts, guided by the IMF’s USD 100 million Extended Credit Facility (ECF) through to 2027. The tax revenue-to-GDP ratio is expected to rise slightly in 2025–2026, supported by higher electricity and water tariffs as subsidies are gradually phased out. Non-tax revenues will be boosted by the next disbursement under Africa50’s asset recycling programme related to the Senegambia Bridge, equivalent to 1.8% of GDP. The programme allows private investors run infrastructure for a set period of time in return for payment. In addition, the government plans to sell up to 60% of its stake in Gambia Telecommunications Company (Gamtel) in 2026. Nevertheless, the fiscal deficit is projected to widen, particularly in 2026. The IMF has noted slow progress on fiscal consolidation, largely due to continued off-budget transfers to support the struggling National Water and Electricity Company (NAWEC). However, NAWEC’s financial situation is expected to improve following the non-renewal of its contract with Karpowership, to which it has accumulated significant arrears. The expenditure-to-GDP ratio will rise in 2025, driven by planned public sector wage increases, higher external debt service payments (with debt service accounting for 23% of the national budget), and increased infrastructure spending ahead of the 2026 elections. President Adama Barrow’s declining popularity is likely to prompt greater social spending and transfers to vulnerable communities. Despite these pressures, the ECF is expected to continue until its scheduled end in January 2027 and disbursements will continue, although they may be temporarily suspended during the election period. Public debt, which is mostly external and composed of concessional and semi-concessional loans from multilateral and bilateral creditors, is projected to decline further in 2025 and 2026 as repayments continue. The IMF describes Gambia’s debt as sustainable but believes that the risk of debt distress will remain high.

As for the external accounts, the current account, which is structurally negative due to a large trade imbalance, is expected to see its deficit decrease in 2025 and 2026. The improvement will be driven by lower import prices for oil and food commodities, as well as increased export revenues, particularly from peanut sales to Senegal. Declines in tourism earnings and remittance inflows will be offset by higher disbursements from the IMF. The current account deficit will be financed through project grants, foreign direct investment (FDI), and, to a lesser extent, concessional borrowing. Foreign exchange reserves represent five months of imports.

A tense political climate with the prospect of a third presidential term

Re-elected for a second five-year term in 2021, President Adama Barrow has repeatedly hinted at seeking a possible third term in December 2026. Such a move is made possible by his blocking of a constitutional reform that aims to cap the number of presidential terms. His party, the National People's Party (NPP), secured a narrow relative majority in the April 2022 legislative elections and, with the support of two minor parties, holds a slim absolute majority. However, constitutional amendments require a 75% majority in the National Assembly before being put to a referendum. In this context, opposition-led protests and public demonstrations may intensify ahead of the elections, adding to recent mobilisations against corruption. Despite failing to deliver on key campaign promises –particularly regarding political and constitutional reforms aimed at strengthening democracy – and amid persistently limited economic opportunities, Barrow appears to be in a favourable position, relying on alliances with smaller political parties. Meanwhile, security sector reform is progressing slowly, delaying the departure of the ECOWAS Mission in The Gambia (ECOMIG), which was deployed in 2017 following former President Yahya Jammeh’s refusal to step down. ECOMIG’s continued presence remains a source of frustration for some parts of the population.

The Gambia maintains close ties with Senegal, with which it has a trade and transit cooperation agreement. It also retains strong relations with Mali – an sizeable trading partner – despite Mali’s withdrawal from ECOWAS, as well as with Guinea-Bissau and Côte d’Ivoire. The Gambia remains close to the Gulf countries, which provide significant support for infrastructure financing. Last, the country continues to enjoy good relations with both China and India: China is investing in the local fishing industry, while India imports cashew nuts and supplies rice.

Last updated:July 2025