The minister of finance, Abdou Kolley presented a draft budget for 2011 to parliament on December 1st. The headline figures were covered in the local media but the underlying assumptions have not yet been released. Revenue is budgeted to increase by 2.7%, from an approved D5.5bn (US$195.5m) in 2010 to D5.65bn in 2011. However, the actual revenue outturn has fallen short of the budgeted amount in 2010; based on the Economist Intelligence Unit's estimates of actual revenue collection, the draft budget implies revenue growth of about 6.8% (compared with an average increase of 9.3% over the last five years). This is much lower than nominal GDP growth, which is expected to be in double digits. The budget therefore represents a sharp reduction in the size of government as a share of the economy.

Expenditure is expected to grow by 7.4%, from D5.7bn in 2010 to D6.1bn in 2011, and the budget is expected to remain firmly in deficit. The public debt stock will therefore continue to rise, boosting interest payments from an estimated D762.4m (13.9% of total fiscal revenue) in 2010 to D918.5m (16.3% of revenue) in 2011. This is likely to upset the IMF, which has been pushing the government to reduce its debt in order to reduce the large sums of money that it spends on servicing debt. The only way to achieve this is to run successive fiscal surpluses, something that continues to elude the government. In the meantime, the IMF is putting pressure on the government to limit domestic borrowing. This would lower interest on domestic debt (which accounts for about 80% of total interest payments) by reducing Treasury-bill yields, which currently stand at 13.2% on one-year T-bills and 9.7% on 91-day T-bills.

Download the numbers in Excel