The Gambia Monthly Economic Bulletin- April 2009

THE GAMBIA MONTHLY

ECONOMIC BULLETIN1

April 2009

Institutional Support Project for Economic and Financial Governance (ISPEFG)

Department of State for Finance and Economic Affairs (DOSFEA)
The Republic of Gambia
The Quadrangle, Banjul, The Gambia

1
The Gambia Monthly Economic Bulletin provides an update on recent economic developments and
policies in the Republic of the Gambia. This Bulletin has been prepared by a research team comprising
Tarun Das, Macroeconomic Adviser; Tamsir Cham, Director and Ami Khan and Momodou Taal, Principal
Economists in the Economic Management and Planning Unit (EMPU) of the Ministry of Finance and
Economic Affairs (DOSFEA); with key inputs from the Debt Management Adviser, Fiscal/Financial
Adviser, the Gambian Bureau of Statistics (GBOS), the Central Bank of Gambia (CBG) and the Gambian
Revenue Authority (GRA). Any questions and feedback can be addressed to: either Tarun Das
(das.tarun@hotmail.com) or Tamsir Cham (tamsirc@hotmail.com).

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 The Gambia Monthly Economic Bulletin- April 2009

At a Glance- April 2009

Economic Latest Status in the Status in the Outlook for 2009
Indicators Reference latest reference Corresponding
Period period period in 2008
in 2009
1. Inflation, Money Supply, Interest Rates
CPI inflation (%) Feb 2009 Overall 7.0 Overall 5.0 Expected to rise in
Food 8.8 Food 8.1 March-July 2009 &
Non-food 4.8 Non-food 1.2 decline thereafter
Brent crude oil Mar 2009 Average US$45 Average US$104 May rise to US$52
price (US$/ brl) in April-May 2009
Money supply- Jan 2009 19.3 3.9 Money supply growth
Growth rate (%) may be around 16%

2. Government fiscal operations - Percentage change over previous period

Revenue & grants Jan-Mar 2009 15.5 -1.4 Fiscal performance in

Domestic Revenue Jan-Mar 2009 13.1 -4.0 the first quarter (Q1) of
Tax Revenue Jan-Mar 2009 15.2 1.9 2009 can be considered
Nontax Revenue Jan-Mar 2009 -6.6 -38.1 to be on track as per the
Grants Jan-Mar 2009 60.7 102.7 Budget estimates.
Exp & Net Lending Jan-Mar 2009 15.8 -3.9 Better performance by
Current Exp. Jan-Mar 2009 -1.5 21.3
revenue items in 2009-
Interest Jan-Mar 2009 -8.9 -6.3
Q1 compared to that in
-- External Jan-Mar 2009 -23.7 -21.1
-- Domestic Jan-Mar 2009 -3.6 0.4
2008-Q1.
Capital Exp. Jan-Mar 2009 114.4 -39.2 Overall Fiscal Surplus
Net Lending Jan-Mar 2009 -162.9 -65.4 due to decline of interest
Overall fiscal bal. Jan-Mar 2009 17.2 55.1 payments and net
Primary Balance Jan-Mar 2009 -2.8 3.2 lending in 2009-Q1.

3. Government fiscal operations as percentage of GDP at current market prices

Rev. and grants Jan-Mar 2009 4.6 4.4 As % of GDP at current

Exp & Net Lending Jan-Mar 2009 4.3 4.1 market prices, revenues
Interest Jan-Mar 2009 0.8 1.0 and expenditures are on-
Overall fiscal bal. Jan-Mar 2009 0.3 0.3 track.
Primary Balance Jan-Mar 2009 1.1 1.3

4. Outstanding Domestic Public Debt in Million Dalasi

Treasury bills Feb 2009 4696 4749 Outstanding treasury

Sukuk Al-Salam Feb 2009 92 71 bills are expected to
Govt Bonds Feb 2009 250 250 decline.
Non-int. bearing Feb 2009 873 415
Treasury Notes
Total Feb 2009 5911 5485

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 The Gambia Monthly Economic Bulletin- April 2009

At a Glance- April 2009 Continued

Economic Latest Status in the latest Status in the Outlook for 2009
Indicators Reference reference period Corresponding
Period in 2009 period in 2008

5. Composition of Outstanding Domestic Public Debt (Percentage share in total)

Treasury bills Feb 2009 79.5 86.6 Share of non-interest

Sukuk Al-Salam Feb 2009 1.5 1.3 bearing Treasury notes
Govt Bonds Feb 2009 4.2 4.6 is expected to decline.
Non-int. bearing Feb 2009 14.8 7.6
Treasury Notes
Total Feb 2009 100 100

6. Composition of Interest Bearing Domestic Debt By Holders (in percentage)

Central Bank Feb 2008 8 8 Likely to remain stable.

Banks Feb 2008 63 56
Parastatals Feb 2008 15 18
Other Non Banks Feb 2008 14 18
Total Feb 2008 100 100

7. Composition of Interest Bearing Domestic Debt By Instruments (in percentage)

Treasury Bills Feb 2008 93 94 Expected to remain

Sukuk Al Salaam Feb 2008 2 1 stable.
Govt Bonds Feb 2008 5 5
Total dom. Debt Feb 2008 100 100

8. Maturity Composition of Treasury Bills (in Percentage)

91-days Feb 2008 15 11

182-days Feb 2008 16 22
364-days Feb 2008 69 67

9. Yields of Treasury Bills (in Percentage)

91-days Feb 2008 11.1 10.9 Yields may come down

182-days Feb 2008 12.8 11.9 when CPI inflation
364-days Feb 2008 14.4 13.7 decelerates.

10. Annual Growth Rate of Money Supply (Percentage)

Broad Money Jan-2009 19.3 3.9 Broad money growth

supply (M3) rate is likely to
Reserve Money Jan-2009 12.7 0.1 decelerate.

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 The Gambia Monthly Economic Bulletin- April 2009

At a Glance- April 2009 Continued

Economic Latest Status in the latest Status in the Outlook for 2009
Indicators Reference reference period Corresponding
Period in 2009 period in 2008

11. CBG Policy Rates and Banks’ Lending rates (Percentage per annum)

CBG Bank rate Mar 2009 10 10 Banks’ lending rates may

Rediscount rate Mar 2009 16 15 decline if the credit rating
Bank lending Mar 2009 18 to 27 18 to 27 system is strengthened.
rate

12. Share of Banks Foreign Assets/ Liabilities in Total Assets/ Liabilities (%)

Foreign assets Jan 2009 9.2 14.4 Likely to remain stable

Foreign liabilities Jan 2009 3.1 4..1

13. Balance of Payments (billion Dalasi)

Goods A/C 2008 (-) 5.27 (-) 4.27 Likely to remain under
Balance pressure.
Goods exports 2008 2.16 2.27
Goods imports 2008 7.41 6.54
Overall BOP 2008 (-) 1.30 0.80 Likely to deteriorate
Balance further in 2009.

14. Inter-bank Exchange Rate- End Period Mid-Market Rates

Dalasi per unit of foreign currency

US$ Mar 2009 26.14 19.46 Dalasi is likely to

UK £ Mar 2009 37.25 40.87 depreciate against major
Euro Mar 2009 34.15 30.82 currencies.
CHF Mar 2009 22.59 19.15
CFA (5000) Mar 2009 257.18 239.16

15. Foreign Exchange Reserves (US$ Million)

FER End-Jan 116.8 140.4 Likely to remain under

2009 pressure.
Inter-bank FE Jan 2009 1300 1700
transactions

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 The Gambia Monthly Economic Bulletin- April 2009

1. Global Economic Outlook and Global Public Policies

1.1 Sustained weakness and risk in global output and trade in 2009

The global economic outlook has deteriorated further since the IMF made an update of the
World Economic Outlook (WEO) at the end of January 20092. In a recent paper entitled “Global
Economic Policies and Prospects”3, the IMF reduced further its estimate for the expected global
output growth in 2009 to a range of (-) 1.0 to (-) 0.5 per cent on an annual average basis, before
recovering gradually to the range of 1.5 to 2.5 percent in the course of 2010 (Table-1).

This is the first global contraction in the last 60 years since the great depression in 1930s. With
all the advanced economies – the United States, Europe and Japan - having firmly drowning
into recession, the contagion of the crisis has spread from the financial sector to the real
sectors. Recent evidence suggests that contraction forces are strong with slumping demand,
plunging production, rising unemployment and weakened banks. Most worryingly, world trade is
projected to contract by 2.8 per cent in 2009, the fastest pace of shrinkage in the last 80 years.

Global GDP is estimated to have fallen by an unprecedented 5 percent in the fourth quarter of
2008 (annualized), led by advanced economies, which contracted by 7 percent. GDP declined
in 2008-Q4 by 6 percent in both the United States and the euro area, while it plummeted at a
post-war record of 13 percent in Japan. Growth also plunged across a broad swath of emerging
economies, reflecting the confluence of weakening external demand, tightening financing
constraints, and plunging commodity prices. Global inflation continues to drop rapidly, reflecting
the sharp fall in economic activity and the collapse of commodity prices since mid-2008.

Recent data point to sustained weakness in the period ahead (Figure 1). Global real sectors
and financial markets continue to weaken both in advanced and emerging economies. Trade

2
World Economic Outlook- An Update, 28 January 2009, IMF, Washington D.C.
3
Global Economic Policies and Prospects, paper prepared by the Staff of the International Monetary
Fund (IMF) for the Group of Twenty (G20) Meeting of the Ministers and Central Bank Governors during
March 13–14, 2009 at London, U.K.

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 The Gambia Monthly Economic Bulletin- April 2009

volumes continue to shrink rapidly, while production and employment data suggest that the
global activity continues to contract in the current quarter.

Figure-1: Trends of Global Growth Rates and World Trade

Emerging Asia

Emerging Asia is being hurt through its reliance on manufacturing exports. The region’s
manufacturing activity has been particularly hurt by collapsing IT exports and decline of
automobile and electronics production. Growth in China is also slowing, albeit from a high rate
(13 percent in 2007), and domestic demand is being supported by strong policy stimulus.

Africa and the Middle East

In Africa and the Middle East, growth is also projected to slow, but more modestly than in other
regions. In Africa, growth is expected to moderate particularly in commodity exporting countries,
and several countries are experiencing reduced demand for their exports, lower remittances,
and foreign direct investment (FDI), while aid flows are under threat. In the Middle East, the
effects of the financial crisis have been more limited so far. Despite the sharp drop in oil prices,
government spending is largely being sustained to cushion the toll on economic activity.

Global Responses and Risks

Governments and central banks across countries have responded to the crisis through large,
aggressive and unconventional fiscal and monetary measures to bail out failed financial and
other strategic sectors and to boost domestic consumption and investment demand. However,
there is a contentious debate on whether these measures are adequate and appropriate, and
when, if at all, they will start to show some positive and encouraging results.
1.2 Deflation Risks and Prospects of Emerging Economies

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 The Gambia Monthly Economic Bulletin- April 2009

Deflation risks, concentrated in the major advanced economies, could reinforce a deeper and
longer downturn for the global economy. Expectations of falling prices could encourage both
households and business houses to postpone consumption and investment spending and push
the economy into deeper recession. With policy rates already near the zero limits, monetary
authorities in many countries have limited capacity to counteract deflationary pressures through
traditional means, while the effectiveness of less conventional approaches is uncertain.

There is a serious risk that emerging economies will not be able to secure adequate external
financing, especially given global deleveraging, potentially large borrowing needs of advanced
economies and increased domestic bias guided by growing feeling of strong nationalism.
Overall, risks are largest for emerging economies that relied on cross-border flows to finance
current account deficits or to fund the activities of their financial or corporate sectors.

1.3 Decisions of G20 Meeting at London on April 2, 2009

The Group of Twenty (G20) Leaders in their meeting on April 2, 2009 at London agreed to take
collective action to strengthen financial regulation and supervision for improving transparency
and accountability, enhancing sound regulation, promoting integrity in financial markets and
reinforcing international cooperation. Amongst others, major actions include the following:

(a) To expand the Financial Stability Forum with broadened mandate and re-established with a
stronger institutional basis and enhanced capacity as the Financial Stability Board (FSB).

(b) Concrete measures for strengthening international cooperation and prudential regulation to
assure economic recovery and to maintain quality of capital thereafter.

(c) Hedge funds or their managers will be registered and will be required to disclose appropriate
information on an ongoing basis.

(d) Principles on pay and compensation in significant financial institutions to ensure that
compensation structures are consistent with firms’ long-term goals and prudent risk taking.

(e) Information exchange on tax havens and non-cooperative jurisdictions to protect public
finances and international standards against the risks posed by non-cooperative jurisdictions.

(f) Reviewing tax treaty policies according to agreed principles of tax transparency and
information exchange.

(g) To improve accounting standards for realistic and fair valuation of financial instruments
based on their liquidity and investors’ holding horizons.

(h) To improve accounting standards for recognition and provisioning of loan-loss, off-balance
sheet contingent liabilities and valuation uncertainty;

(i) More effective oversight of the activities of the Credit Rating Agencies, as they are essential
financial market participants.

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 The Gambia Monthly Economic Bulletin- April 2009

1.4 India-Africa Partnership Conclave held in New Delhi on 23-24 March 2009

During 23-24 March 2009 at New Dellhi, the Confederation of Indian Industry (CII) and the
EXIM Bank of India held the 5th CII-EXIM Bank Conclave on India Africa Project
Partnership. The CII-EXIM Bank India-Africa Partnership Project was launched in 2004. The
first ever India-Africa Forum Summit held in New Delhi in April 2008 was convened in
partnership with the African Union.

This year’s Conclave had participation by 38 African nations, four regional bodies and six
financial institutions on the either side. The two-day conclave was attended by 450 participants
from Africa, including 15 ministers from Botswana, Burkina Faso, Central African
Republic, Comoros, Congo, Cote d’lvoire, Liberia, Mauritius, Mozambique, Sudan, Togo,
Uganda, and Zimbabwe.

India called for doubling the India-Africa bilateral trade to the level of $70 billion over the next
five years, continuing the growth trajectory that began in 2000-01 with a trade of only $3 billion
but shot up 12 times to $36 billion in 2007-08.

In April 2008 India had announced duty free tariff preferential scheme for 49 least developed
countries (LDCs) which has benefited 33 African countries. India is the world’s largest importer
of rough diamonds, most of which are sourced from Africa. It is also a major exporter of cut and
polished diamonds. India has also comparative advantages in many sectors.

While Indian companies have already begun investing in Africa, the African Ministers and other
leaders have called for boosting investments in almost all sectors including agriculture,
transportation, health, education, water supply, mining, power, agro-processing, irrigation,
pharmaceuticals, IT, micro finance, retail chain and small and medium scale sector for
generating employment and helping Africa to achieve poverty reduction and MDG targets.

India is committed to helping Africa to bridge the digital divide and help spread the benefits of
development, especially in sub-Saharan Africa. The Indian Technical and Economic
Cooperation has benefited African students undertaking training courses in India and in 2009
the Indian government has designed special courses for experts from Africa in mining and new
and renewable energy resources. The number of training slots for African students has been
increased from 1100 to 1600. The number of scholarships for African students has been
doubled to 500.

The EXIM Bank of India has already provided $2 billion line of credit to African nations and
additional $600 million credit is under active consideration at various stages. This is a part of the
commitment to extend $5.3 billion assistance for development of trade and infrastructure both in
the private and public sectors over a period of five years.

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 The Gambia Monthly Economic Bulletin- April 2009

1.5 World Commodity Prices and Inflation

As a result of the sharp downturn in global demand, commodity prices, especially for energy,
declined significantly since the last quarter of 2008. Inflationary pressures had subsided in the
major advanced economies. There are also significant declines of housing prices in some
advanced countries, showing signs of deflation.

Inflation will continue to retreat due to the combination of lower commodity prices and increasing
economic slackness, with deflation risks growing in advanced economies. IMF forecasts
indicate that G-7 deflation vulnerability has risen above its previous peak, reflecting high risks in
Japan and the United States and moderate risks in several euro area members— including
Germany, Italy and France.

Inflationary pressures also subsided in the low and income economies. Although commodity
prices recorded some increase in January 2009, they declined again since Feb 2009 (Table-2).

1.6 Petroleum Prices

During 2008 Brent crude oil prices ruled very high until July 2008 when prices increased to $147
per barrel. However, due to global financial crisis and economic slowdown oil prices started
declining thereafter.

A recent report from the Paris based International Energy Agency (IEA) has projected that the
world oil demand in 2009 will decline by half a million barrels per day (bpd). In their last meeting,
the OPEC has decided not to have any cut in oil supply. Accordingly, oil prices are expected to
remain soft in the rest of the year 2009.

In March-April 2009 Brent crude oil prices ranged around US$47 per barrel. Given weakness in
the Chinese demand and negative growth in the US and EU, global oil prices are likely to
remain around US$50 per barrel in 2009

Trends of Monthly Brent Crude Oil Prices (US$/ barrel)

140

120
US$ per Barrel

100

80

60

40

20

0
9

9
1

7
9

Ja 0

8
-9

-0

-0

-0

-0

-0

0
0
-9

-0

-0

-0

-0

l-0

-0

-0

l-0

-0
n-

n-

n-

n-
n-
an

an

an

an

an

an
ul

ul

ul

ul

ul

ul

ul

ul
u

u
a

a
J

J
J

Months and Years 1999-2009

Series1

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 The Gambia Monthly Economic Bulletin- April 2009

Table 2: Trends of World Commodity Prices

Quarterly averages Monthly averages

Jan- Apr- Oct- Jan-

Mar Jun Jul-Sep Dec Mar Jan Feb Mar
Commodity Unit 2008 2008 2008 2008 2009 2009 2009 2009

Energy
Coal, Australia $/mt 114.00 138.65 162.80 92.97 71.93 79.40 75.38 61.00
Crude oil, Brent $/bbl 96.67 122.39 115.60 55.89 44.98 44.86 43.24 46.84
Crude oil, Dubai $/bbl 91.30 116.67 113.47 53.67 44.56 44.97 43.14 45.58
2000=10
Natural gas Index 0 235.3 286.0 284.1 266.2 199.0 229.6 187.9 179.3
Agriculture
Coffee, Arabica ¢/kg 328.5 315.1 321.2 267.8 283.9 282.9 285.5 283.3
Tea, Mombasa
auctions ¢/kg 221.8 221.6 252.8 190.8 214.3 219.3 211.8 211.8
Coconut oil $/mt 1,379 1,499 1,246 772 677 734 673 624
Groundnut oil $/mt 2,007 2,328 2,417 1,773 1,287 1,343 1,293 1,224
Soybean oil $/mt 1,384 1,466 1,353 830 754 789 748 725
Maize $/mt 220.4 259.0 244.7 168.4 166.9 172.8 163.4 164.6
Rice, Thailand,
25% $/mt 182.2 n.a. 669.5 449.9 469.4 464.0 472.8 471.5
Wheat, US, HRW $/mt 411.8 346.5 317.7 228.1 231.6 239.1 224.7 230.9
Wheat US SRW $/mt 384.1 277.8 241.5 182.7 187.4 195.1 183.4 183.7
Fishmeal $/mt 1,126 1,185 1,198 1,023 1,013 1,009 1,001 1,029
Meat, beef ¢/kg 282.1 332.7 372.4 268.0 245.2 251.6 236.2 247.7
Meat, chicken ¢/kg 158.8 167.9 177.1 174.7 173.5 174.9 173.8 171.9
Meat, sheep ¢/kg 453.6 493.2 477.3 410.0 378.5 380.7 380.3 374.6
Oranges $/mt 1,103 1,322 1,163 842 799 783 767 847
Sugar, world ¢/kg 28.42 27.01 31.14 26.28 28.85 27.76 29.26 29.54
Raw Materials
Logs, Cameroon $/cum 530.8 554.4 548.5 473.8 426.8 470.2 421.9 388.2
Plywood ¢/sheets 640.4 647.3 648.6 645.5 563.3 574.7 573.0 542.1
Cotton A Index ¢/kg 167.9 166.5 168.2 126.9 120.8 127.2 121.7 113.4
Cotton Memphis ¢/kg 174.2 171.6 170.0 130.1 129.8 134.9 131.4 123.3
* Rubber RSS3,
SGP ¢/kg 273.5 303.5 298.4 159.0 146.0 148.7 146.3 143.1

Fertilizers
DAP $/mt 860.2 1,191.6 1,153.7 663.3 362.2 351.0 367.9 367.6
Phosphate rock $/mt 234.4 367.5 409.2 371.3 193.3 265.0 157.5 157.5
Potassium
chloride $/mt 367.7 511.1 635.0 766.7 865.2 853.1 872.5 870.0
Urea $/mt 357.6 575.7 745.4 292.2 267.3 263.4 273.3 265.4
Metals and
Minerals
Aluminum $/mt 2,743 2,940 2,787 1,821 1,360 1,413 1,330 1,336
Copper $/mt 7,796 8,443 7,680 3,905 3,428 3,221 3,315 3,750
Gold $/toz 927 896 870 795 909 859 943 924
Source: World Bank Pink Sheet April 2009

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 The Gambia Monthly Economic Bulletin- April 2009

2. Current State of the Gambian Economy

2.1 Overall and Sectoral GDP Growth Rates

• The sharp decline in global economic activity had adverse impact on the Gambian
economy in 2008 leading to decline of exports and remittances and decline of
manufacturing production and wholesale and retail trade.

• However, thanks to favorable rainfall and bumper crops, high food grains prices and very
good performance by electricity, telecom and financial sectors, the real GDP growth at
constant 2004 factor cost improved from 6.1% in 2007 to 7.2% in 2008, supported by a
spectacular growth of 28.4% in agriculture value added and a marginal growth of 0.7%
by industry while services value added declined by (-) 0.6% due to poor performance by
trade and public administration.

• Agriculture is expected to perform well in 2009, but due to higher base in 2008 the
agricultural growth will be moderate in 2009. It is projected that real GDP growth rate in
2009 is likely to be around 4.5% aided by a growth of 6% in agriculture, 2% in industry
and 4.4% in services.

• However, the general increase in civil servant salaries, introduction of work efforts’
incentives and donors’ commitment to provide financial support to Gambia under PRGF
and to help Gambia to mitigate adverse impact would boost both consumer spending
and investment and enhance economic growth in the range of 5%.

Table-2.1: Trends of Sectoral Growth Rates and Shares in GDP4

In the Gambia in 2005-2009 (In percentage)

I T E MS GDP Growth Rates (%) Sectoral Shares (%)

2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Actual Actual Actual Est. Proj. Actual Actual Actual Est. Proj.
GDP at 2004 FC 2.0 6.6 6.1 7.2 4.5 100.0 100.0 100.0 100.0 100.0
Agriculture and allied -0.8 3.9 3.9 28.4 6.0 29.1 28.4 27.8 33.4 33.9
Industry 6.2 18.5 -3.1 0.7 2.0 15.8 17.5 16.0 15.0 14.7
Services 3.2 5.7 10.4 -0.6 4.4 60.0 59.5 61.9 57.4 57.4
Source: Gambian Bureau of Statistics (GBOS) for the years 2005-2008 and projections for
2009 by the Macroeconomic Adviser.

4
Gross Domestic Product at Factor Cost at constant 2004 prices.

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 The Gambia Monthly Economic Bulletin- April 2009

2.2 Consumer Price Index and Inflation

• As measured by the Consumer Price Index (CPI), the annual point-to-point inflation
accelerated from 5% in February 2008 to 7.0% in February 2009. However, the 12-
month average inflation rate decelerated to 4.5% from 5.7% a year ago.

• Food items (with weights of 55.2% in overall CPI) recorded average inflation of 8.8% in
Feb 2009 compared to 8.1% a year ago and contributed 72% to inflation in Feb 2009.

• Non-food items (with weights of 44.8% in overall CPI) recorded annual inflation of 4.8%
in February 2009 compared to 1.2% a year ago and contributed 28% to inflation.

• Among other groups, in February 2009, clothing and textiles recorded annual inflation of
5.4%, housing and utilities 5.9%, restaurants 7.7% and transport 4.4%.

Items Weights Feb-2008 Feb-2009 Inflation Wi.(CPI1-CPI0) Contributio

(%) (%) n5 (%)
Overall 100.0 112.3
120.25 7.0 777.3 100.0
Food 55.2 125.57
115.5 8.8 558.7 71.9
Tobacco 0.7 105.68
103.8 1.8 1.3 0.2
Clothing 11.3 110.98
105.3 5.4 64.1 8.2
Utilities 3.4 121.18
114.4 5.9 23.1 3.0
Furnishing 5.2 110.6
114.87 3.9 22.6 2.9
Health 1.0 101.0 101.77 0.8 0.8 0.1
Transport 4.4 114.9 119.93 4.4 22.2 2.9
Telecom 3.0 101.1 101.95 0.9 2.6 0.3
Recreation 8.0 103.6 104.5 0.9 7.5 1.0
Education 1.5 101.9 102.24 0.4 0.6 0.1
Hotels 0.4 107.6 115.89 7.7 3.0 0.4
Misc. 5.9 112.3 124.28 10.7 71.0 9.1
non-food 44.8 108.6 113.79 4.8 233.4 28.1
Source: Gambian Bureau of Statistics (GBOS).

5
Contribution of an item to overall inflation is estimated by the following formula:
Contribution of Item (i) = Wi (CPIi1 – CPIi0 ) / ∑ Wi (CPIi1 – CPIi0 ) expressed as a percentage.
where CPIi1 = Consumer Price Index for Item (i) in the current period
CPIi0 = Consumer Price Index for Item (i) in the previous period
Wi = Weights for Item (i) and
W = Total weights = Σ Wi

For example, contribution of food is estimated as 100 X 558.7 / 777.3 = 71.9%.

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 The Gambia Monthly Economic Bulletin- April 2009

2.3 Government Financial Performance in the First Quarter (Q1) of 2009

• Columns (5) and (6) of Table 2.3.1 present major item-wise revenue realization and
expenditure of the government in the first quarter of 2009 (2009-Q1) and that of 2008 (2008-
Q1) respectively. Columns (7) and (8) indicate the percentage changes of major items of
revenues and expenditure in 2009-Q1 compared with those in 2008-Q1.

• It may be observed from the table that, in terms of percentage changes, the government’s
fiscal performance has been significantly better in 2009-Q1 than in 2008-Q1.

• In the 2008-Q1 total revenues and grants had declined by 1.4%, as tax revenues increased
by only 1.9% while non-tax revenues declined by 38.1% over 2007-Q1. On contrast, 2009-
Q1 has witnessed 15.5% increase in total revenue and grants aided by 15.2% increase in
taxes and 60.7% increase in grants, while non-tax revenues declined by only 6.6% over
2008-Q1.

• During the first quarter of the current year, total expenditures and net lending has increased
by 15.8% over 2008-Q1 due to 12.5% increase in personnel emoluments and more than
doubling (114.4% increase) of capital expenditure while interest payments declined by 8.9%
over 2008-Q1.

• Overall there is a fiscal balance of 77.8 million Dalasi in 2009-Q1, higher than the overall
fiscal balance of 66.4 million Dalasi in 2008-Q1, despite significant increase of capital
expenditure in 2009-Q1.

Table 2.3.1 Govt Financial Performance in 2009Q1 compared with 2008Q1

% change over prev.

Items 2008 2008 BE 2009 BE 2009-Q1 2008-Q1 period
Actual Mln Mln. Jan-Mar Jan-Mar ’09-Q1 ’08-Q1
Mln Dal. Dal. Dal. Actual Actual
(1) (2) (3) (4) (5) (6) (7) (8)
Revenue and grants 3644.6 4,475.5 4582.2 1,142.3 988.6 15.5 -1.4
Domestic Revenue 3479 3,770.9 3771.1 1,061.4 938.2 13.1 -4.0
Tax Revenue 3161.3 3,362.6 3390.5 977.2 848.2 15.2 1.9
Nontax Revenue 317.7 408.3 380.5 84.1 90.1 -6.6 -38.1
Grants 165.64 704.7 811.1 80.9 50.4 60.7 102.7
Exp & Net Lending 4134.8 5,205.1 5362.9 1,067.5 922.2 15.8 -3.9
Current Expenditure 3011.4 2,812.3 3838.0 709.2 720.2 -1.5 21.3
Personnel Emoluments 905.53 917.5 1035.2 252.9 224.9 12.5 34.8
Other Charges 1397.5 1,143.4 1957.5 256.0 275.5 -7.1 43.3
Interest 708.42 622.3 845.3 200.3 219.8 -8.9 -6.3
External 153.52 72.3 147.3 44.0 57.6 -23.7 -21.1
Domestic 554.89 550.0 698.0 156.4 162.2 -3.6 0.4
Cap Exp & Net Lending 1123.4 2,332.8 1524.9 358.3 202.1 77.3 -44.8
Capital Expenditure 1016.6 2,223.2 1468.2 375.3 175.0 114.4 -39.2
Net Lending 106.77 109.6 56.7 -17.0 27.0 -162.9 -65.4
Overall fiscal balance -490.2 -729.5 -780.7 77.8 66.4 17.2 55.1
Primary Balance 218.2 -107.2 64.6 278.1 286.2 -2.8 3.2
Nominal GDP 22788 22788 25253 25253 22590 11.0 10.5

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 The Gambia Monthly Economic Bulletin- April 2009

An analysis of Table 2.3.2 leads to the following observations:

• Columns (2) and (3) present the major item-wise performance of revenues and expenditure
as percentages of the corresponding budget estimates in 2009-Q1 and 2008-Q1
respectively. It is evidenced from the table that as percentages of the budget respective
estimates, government revenue collections and expenditures have performed better in the
first quarter of 2009 than those in the first quarter of 2008.

• Columns (7) and (8) present the major item-wise performance of revenues and expenditure
as percentages of the corresponding GDP at current market prices in 2009-Q1 and 2008-Q1
respectively. It is observed from the table that, in terms of the percentages of GDP, the total
revenues and expenditures have performed better in the first quarter of 2009 than in the first
quarter of 2008.

• The revenue and expenditure ratios to GDP are also observed to be on track in 2009-Q1..

Table 2.3.2 Govt Financial Performance in 2009Q1 compared with 2008Q1

2009-Q1 2008-Q1 2008-Q1 2009 BE 2008 AC 2009-Q1 2008-Q1

Items as % of as % of as % of as % of as % of as % of as % of
Budget Budget actual GDP GDP GDP GDP
(1) (2) (3) (4) (5) (6) (7) (8)
Revenue and grants 24.9 22.1 27.1 18.3 16.1 4.6 4.4
Domestic Revenue 28.1 24.9 27.0 15.0 15.4 4.2 4.2
Tax Revenue 28.8 25.2 26.8 13.5 14.0 3.9 3.8
Nontax Revenue 22.1 22.1 28.3 1.5 1.4 0.3 0.4
Grants 10.0 7.1 30.4 3.2 0.7 0.3 0.2
Exp & Net Lending 19.9 17.7 22.3 21.4 18.3 4.3 4.1
Current Expenditure 18.5 25.6 23.9 15.3 13.3 2.8 3.2
Personnel Emoluments 24.4 24.5 24.8 4.1 4.0 1.0 1.0
Other Charges 13.1 24.1 19.7 7.8 6.2 1.0 1.2
Interest 23.7 35.3 31.0 3.4 3.1 0.8 1.0
External 29.9 79.7 37.5 0.6 0.7 0.2 0.3
Domestic 22.4 29.5 29.2 2.8 2.5 0.6 0.7
Cap Exp & Net Lending 23.5 8.7 18.0 6.1 5.0 1.4 0.9
Capital Expenditure 25.6 7.9 17.2 5.9 4.5 1.5 0.8
Net Lending -30.0 24.7 25.3 0.2 0.5 -0.1 0.1
Overall fiscal balance -10.0 -9.1 -13.5 -3.1 -2.2 0.3 0.3
Primary Balance 430.5 -267.0 131.2 0.3 1.0 1.1 1.3

Source: Economic Planning and Management Unit (EMPU), DODFEA.

Column (2) of the Table 2.3.3 below presents detailed item-wise revenues and expenditure of
the expenditure in the first quarter of 2009. We have estimated the ratios of realization for any
item in the first quarter to the actual outturn for the item during the complete year for the last
five years viz, 2004, 2005, 2006, 2007 and 2009. Item-wise average ratios (as percentage to the
actual outturn for the year) for these years are presented in column (3) of the table 2.3.3. Taking
these ratios as norms, expected revenue and expenditure outcomes for the full year 2009 are
estimated by the following formula and are presented in column (4).

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 The Gambia Monthly Economic Bulletin- April 2009

Expected outcome for an item in 2009 = 100 X (actual realization in 2009-Q1) / average
realization ratio (in percentage) during the last five years (2004-2008)

Comparison of the expected outcome with the budget estimates given in Column (5) indicate
that total domestic revenue and tax revenue targets are expected to be achieved. However,
there is likely to be shortfall in grants realization unless the subsequent disbursements are
significantly augmented. There is also expected shortfall in non-tax revenues.

Table-2.3.3 Government Fiscal Performance in the First Quarter of 2009

2009-Q1 Average Q1 realization 2009 2009
Actual as % of actual outcome Expected Budget
(Average ratio in Q1 in last Outcome6
five years 2004-2009)
(1) (2) (3) (4) (5)
1.Revenue and grants (2+5) 1142.2 4249.6 4582.2
2.Domestic Revenue (3+4) 1061.3 4001.6 3771.1
3.Tax Revenue (3.1+3.2) 977.2 3695.4 3390.6
3.1 Direct Tax (a to e) 308.2 1088.8
(a) Personal 140.3 25.8 544.8
(b) Corporate 115.0 25.2 456.4
(c) Capital Gains 6.2 29.5 21.2
(d) Payroll 30.1 69.4 43.4
(e) Other 16.5 71.5 23.1
3.2 Indirect Tax (3.2.1+3.2.2) 669.1 2606.6
3.2.1 Dom Tax on G&S 165.3 632.6
(a) Stamp Duties 5.1 22.4 22.9
(b) Excise Duties 40.3 21.2 189.9
(c) Dom Sales Tax 117.8 28.6 412.6
(e) Others 2.0 28.0 7.1
3.2.2 Tax on Ext Trade (a+b) 503.8 1974.0
(a) Duty (i+ii) 310.7 1166.9
(i) Oil 195.1 27.5 710.2
(ii) Non-oil 115.6 25.3 456.7
(b) Sales tax on imp (i+ii) 193.1 807.1
(i) Oil 25.3 24.1 105.0
(ii) Non-oil 167.7 23.9 702.1
4. Nontax Revenue (a to d) 84.1 306.2 380.5
(a) Govt Charges 56.9 35.5 160.3
(b) NTR from CRD 1.6 24.1 6.7
(c) NTR from CED 25.1 19.4 129.2
(d) Others 0.5 5.0 10.0
5. Grants 80.9 32.6 248.0 811.1

6
Estimated on the basis of the formula as explained in the text,

15
 The Gambia Monthly Economic Bulletin- April 2009

2009-Q1 Average Q1 realization 2009 2009

Actual as % of actual outcome Expected Budget
(Average ratio in Q1 in last Outcome7
five years 2004-2009)
(1) (2) (3) (4) (5)
6. Exp & Net Lending (7+8) 1067.5 4468.1 5362.9
7. Current Exp (7.1+7.2+7.3) 709.2 2825.7 3838.0
7.1 Personnel Emoluments 252.9 26.6 949.3 1035.2
7.2 Other Charges 256.0 22.0 1165.7 1957.5
7.3 Interest (a+b) 200.3 710.7 845.3
(a) External 44.0 32.6 134.8 147.3
(b) Domestic 156.4 27.1 575.9 698
8. Cap Exp & Net Lending 358.3 1642.4 1524.9
8.1 Capital Expenditure 375.3 1585.7 1468.2
(a) Externally Financed 269.3 32.9 819.8
(b) GLF Capital 106.0 13.8 765.9
8.2 Net lending -17.0 56.7 56.7
9. Overall fiscal bal (1-6) 74.7 -218.5 -780.7
10. Primary Balance (9+7.3) 275.1 492.2 64.6

As regards expenditure, there is likely to be expenditure overrun of capital expenditure, while

actual current expenditure is expected to shoow some surplus over the budgeted expenditure.

Overall, it is expected to have a fiscal deficit of 218.5 million Dalasi (amounting to 0.9 percent
oof GDP at current market prices) compared to budget estimate of fiscal deficit at 780.7 million
Dalasi (amounting to 3.1 percent of GDP).

7
Estimated on the basis of the formula as explained in the text,

16
 The Gambia Monthly Economic Bulletin- April 2009

2.4 Public Debt

(a) External Debt

The stock of external debt declined substantially at end-2007 following HIPC and MDRI debt
relief. At the end of 2006, prior to completion point, the stock of nominal external public debt was
US$676.7 million (133.1 percent of GDP). Multilateral creditors accounted for 84 percent of this
debt. At end-2007, post-completion point, the stock of external public debt fell to US$299.4
million (46.0 percent of GDP).

(b) Outstanding Domestic Debt

• As on 28 February 2009, outstanding domestic debt stood at D5.9 billion (amounting to

24.8% of GDP) compared to D5.5 billion (amounting to 24.3% of GDP) a year ago.

• Treasury bills, accounting for 79.5% of total domestic debt, declined by 1.1% to D4.7
billion at the end of February 2009.

• At end-Feb 2009 the CBG provided 8% of interest bearing domestic debt, commercial
banks 63%, Parastatals 14%, Sukuk Al Salaam 2% and others 14%.

Outstanding Domestic Public Debt, 28 February 2009

Type of debt Million Dalasi Composition (in percentage)

28 Feb 2008 28 Feb 2009 28 Feb 2008 28 Feb 2009
Treasury bills 4749 4696 86.6 79.5
Sukuk Al-Salam 71 92 1.3 1.5
Government Bonds 250 250 4.6 4.2
Non-interest bearing 415 873 7.6 14.8
Treasury Notes
Total 5485 5911 100.0 100.0

Composition of Interest Bearing Domestic Debt (in percentage)

Book Value Face Value

28 Feb 2008 28 Feb 2009 28 Feb 2008 28 Feb 2009

By Holders
Central Bank 9 8 8 8
Commercial Banks 56 64 56 63
Parastatals 18 15 18 15
Other Non Banks 18 13 18 14
Total 100 100 100 100
By Instruments
Treasury Bills 93 92 94 93
Sukuk Al Salaam 2 2 1 2
Government Bonds 5 6 5 5
Total domestic debt (%) 100 100 100 100
Source: Banking Operations Department of the Central Bank of Gambia (CBG).

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 The Gambia Monthly Economic Bulletin- April 2009

2.5 Money Supply in February 2009

• Annual growth rate of broad money supply (M3) accelerated from 19.3% in January
2009 to 20.4% in February 2009. On the contrary, annual growth rate of reserve money
decelerated from 12.7% in January 2009 to 4.9% in February 2009.

• On the supply side, 20.4% growth in money supply in February 2009 was supported by
7.4% growth in currency, 30% growth in demand deposits, 5.6% growth in savings
deposits and 44.9% growth in time deposits.

• On the demand side, growth was mainly due to 41.5% growth in domestic credits, while
net foreign assets declined by 10 percent over a year ago.

• Domestic credit increased from D4.8 billion in Feb 2008 to D6.8 billion in Feb 2009,
supported by 41.6% growth in government borrowing and 53.3% growth in credits to the
private sector, while credits to public entities declined by 34.5% over a year ago.

Compo- Compo- Annual

sition in sition in growth in
Components of money Feb 2008 Feb 2009 Feb 2008 Feb 2009 Feb 2009
supply Mill. Dalasi Mill. Dalasi (in %) (in %) over Feb-
2008 (in %)
1.Broad Money Supply (M3)
(2+3) 8242.23 9924.91 100.0 100.0 20.4
2.Narrow Money (2.1+2.2) 4116.23 4971.49 49.9 50.1 20.8
2.1 Currency 1673.74 1796.85 20.3 18.1 7.4
2.2 Demand deposits (a+b) 2442.49 3174.64 29.6 32.0 30.0
(a) Private sector 2252.95 2692.91 27.3 27.1 19.5
(b) Official 189.54 481.73 2.3 4.9 154.2
3.Quasi money (3.1+3.2) 4126.00 4953.42 50.1 49.9 20.1
3.1 Savings deposits (a+b) 2611.89 2759.36 31.7 27.8 5.6
(a) Private sector 2567.32 2753.31 31.1 27.7 7.2
(b) Official 44.57 6.05 0.5 0.1 -86.4
3.2 Time deposits (a+b) 1514.11 2194.06 18.4 22.1 44.9
(a) Private sector 1187.78 1687.09 14.4 17.0 42.0
(b) Official 326.33 506.97 4.0 5.1 55.4

Demands for money (1+2) 8242.23 9924.93 100.0 100.0 20.4

1.Net forign assets (1.1+1.2) 3769.22 3393.76 45.7 34.2 -10.0
1.1 Monetary Authorities 2830.31 2729.92 34.3 27.5 -3.5
1.2 Commercial banks 938.91 663.84 11.4 6.7 -29.3
2.Net Domestic Assets
(2.1+2.2) 4473.01 6531.17 54.3 65.8 46.0
2.1 Domestic credit 4812.57 6809.44 58.4 68.6 41.5
(a) Credits to governnment 1839.02 2604.04 22.3 26.2 41.6
(b) Credits to public entities 292.04 191.4 3.5 1.9 -34.5
(c) Credits to private sector 2498.22 3830.71 30.3 38.6 53.3
(d) Credits to forex bureau 183.29 183.29 2.2 1.8 0.0
2.2 Other items, net -339.56 -278.27 -4.1 -2.8 -18.0
Source: Economic Research and Statistics Department of CBG.

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 The Gambia Monthly Economic Bulletin- April 2009

2.6 Commercial Banks’ Assets

• The banking industry remains sound. Total industry assets increased by 19.5% to D12.5
billion year-on-year at end-Dec 2008, and stood at D12.3 billion at end-Jan 2009, up by
14% over those at the end-Jan 2008.

• Gambian banks do not have large exposure to foreign assets or foreign liabilities. At
end-Jan 2009, foreign assets constituted only 9.2% of total assets (foreign exchange
1.9%, balances abroad 6.4% and foreign investment 0.9%), down from 14.4% a year
ago (foreign exchange 1.9%, balances abroad 11.7% and foreign investment 0.8%).

• At end-Jan 2009, loans and advances to the public sector declined by 33.8% while those
to the private sector increased by 49.4% over Jan-2008.

• At end-Jan 2009, investments in government Treasury Bills increased by 10.2 percent

while banks’ foreign investment increased by almost 40 percent.

• The risk-weighted capital adequacy ratio stood at 35.9% in Dec 2008, well above the
statutory requirement of 8%.

• Non-performing loans rose from 7.3% in Sep 2008 to 9.5% in Dec 2008, but were
adequately provisioned in compliance with the statutory requirements.

Commercial Banks Assets at the end-Feb 2009 (Million Dalasi)

Composition (%) % change
Assets Dec-08 Feb-08 Feb-09 Dec-08 Feb-08 Feb-09 Over
Feb-08
1. Notes and coins 217.3 141.5 224.5 1.7 1.3 1.8 58.6
2. Foreign exchange 401.3 172.5 279.2 3.2 1.6 2.3 61.9
3. Local Bank balance 854.7 934.5 1,004.0 6.9 8.9 8.2 7.4
ii. CBG 851.9 908.0 954.4 6.8 8.6 7.8 5.1
iii. Banks locally 2.8 26.5 49.6 0.0 0.3 0.4 87.1
4. Balances abroad 758.4 1,042.4 618.7 6.1 9.9 5.1 -40.6
5. Bills purchased 40.9 5.6 115.3 0.3 0.1 0.9 1974.5
6. Loans and advances 3,263.1 2,476.3 3,576.1 26.2 23.5 29.3 44.4
i. Public sector 325.7 155.1 88.7 2.6 1.5 0.7 -42.8
ii. Private sector 2,937.4 2,321.2 3,487.4 23.6 22.0 28.5 50.2
7. Investments 3,231.1 3,069.8 3,255.7 25.9 29.2 26.6 6.1
i. Govt Treasury Bills 2,949.5 2,793.5 2,950.9 23.7 26.5 24.1 5.6
ii. Others 139.9 135.0 182.5 1.1 1.3 1.5 35.2
iii Foreign
Investments 141.6 141.3 122.3 1.1 1.3 1.0 -13.4
8. Fixed assets 840.1 579.9 868.0 6.7 5.5 7.1 49.7
9. Guarantees 1,435.8 1,088.7 1,360.5 11.5 10.3 11.1 25.0
10. Other assets 1,425.5 1,019.1 920.8 11.4 9.7 7.5 -9.6
11. Total assets (1 to 10) 12,468.2 10,530.3 12,222.8 100.0 100.0 100.0 16.1
12. Net Balance (11-9) 11,032.4 9,441.6 10,862.4 88.5 89.7 88.9 15.0
Source: Central Bank of Gambia.

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 The Gambia Monthly Economic Bulletin- April 2009

2.7 Commercial Banks’ Liabilities

• As mentioned earlier, Gambian banks do not have large exposure to foreign liabilities.
At end-Jan 2009, external sector related liabilities constituted only 3.1% of total liabilities
(non-residents deposits 0.9%, balances with banks abroad 1.6% and external debt
0.6%), down from 4.1% a year ago (non-residents deposits 2%, balances with banks
abroad 1.5% and external debt 0.6%).

• In January 2009 commercial banks’ total deposits increased by 21 percent over January
2008, contributed by a growth of 25.3 percent in demand deposits, 5.1 percent growth in
savings deposits and 42.5 percent growth in time deposits.

• In January 2009 banks capital and reserves increased by 26 percent, bank balances
increased by 33.6% while borrowings declined by 38.5% over January 2008.

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 The Gambia Monthly Economic Bulletin- April 2009

Commercial Banks Liabilities at the end-Feb 2009 (Million Dalasi)

LIABILITIES Comp-sition (%) %
(in million dalasi) change
over Feb-
Dec-08 Feb-08 Feb-09 Dec-08 Feb-08 Feb-09 2008
1. Capital and reserves 1,448.0 1,253.7 1,498.1 11.6 11.9 12.3 19.5
2. Demand deposits 3,286.7 2,442.5 3,174.6 26.4 23.2 26.0 30.0
i Residents 2,653.5 2,194.6 2,603.5 21.3 20.8 21.3 18.6
ii Non residents 39.5 58.3 89.4 0.3 0.6 0.7 53.3
iii Government entities 593.6 189.5 481.7 4.8 1.8 3.9 154.2
3. Savings deposits 2,737.9 2,611.9 2,759.4 22.0 24.8 22.6 5.6
i Residents 2,638.8 2,494.5 2,673.8 21.2 23.7 21.9 7.2
ii Non residents 75.0 72.8 79.5 0.6 0.7 0.7 9.1
iii Government entities 24.0 44.6 6.0 0.2 0.4 0.0 -86.4
4. Time deposits 1,938.9 1,514.1 2,194.1 15.6 14.4 18.0 44.9
i Residents 1,386.2 1,171.4 1,559.8 11.1 11.1 12.8 33.2
ii Non residents 18.1 16.3 127.2 0.1 0.2 1.0 678.6
iii Government entities 534.6 326.3 507.0 4.3 3.1 4.1 55.4
Total deposits 7,963.5 6,568.5 8,128.1 63.9 62.4 66.5 23.7
5. Bank Balances 137.0 134.3 163.1 1.1 1.3 1.3 21.4
i Head office & branches 86.7 14.2 121.3 0.7 0.1 1.0 755.4
ii Other banks abroad 50.3 120.1 41.7 0.4 1.1 0.3 -65.2
6. Borrowings from 414.6 293.0 193.4 3.3 2.8 1.6 -34.0
i CBG - - - 0.0 0.0 0.0
ii Other banks locally 12.0 10.0 - 0.1 0.1 0.0 -100.0
iii Head office & branches 201.1 124.7 120.9 1.6 1.2 1.0 -3.0
iv Other banks abroad 201.5 75.2 72.4 1.6 0.7 0.6 -3.7
v. Other sources - 83.1 - 0.0 0.8 0.0 -100.0
7. Guarantees 1,435.8 1,088.7 1,360.5 11.5 10.3 11.1 25.0
8. Other liabilities 1,069.3 1,192.1 879.8 8.6 11.3 7.2 -26.2
9. Total liabilities (1 to 8) 12,468.2 10,530.3 12,222.8 100.0 100.0 100.0 16.1
10. Net balance (9-7) 11,032.4 9,441.6 10,862.4 88.5 89.7 88.9 15.0
Source : Central Bank of The
Gambia

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 The Gambia Monthly Economic Bulletin- April 2009

2.9 Balance of Payments and Foreign Exchange Reserves

• Balance of Payments estimates indicate an overall deficit of D1.30 billion ($54.6 million)
in 2008 compared to an estimated surplus of D796.80 million ($32.0 million) in 2007,
reflecting the deterioration in both the current and the capital and financial accounts.

• The goods account balance deteriorated to a deficit of D5.27 billion in 2008, or by

23.4%. Exports are estimated at D2.16 billion in 2008, or a decrease of 5.1 per cent from
2007. The import bill rose to D7.41 billion, or 13.3 per cent from 2007.

• Projections for 2009 indicate deterioration in the overall balance emanating from the on-
going slowdown in global economic activity which is expected to adversely impact
remittances, foreign direct investment and tourism.

Foreign Exchange Reserves

• Reflecting the widening of the current account deficit, gross external reserves stood at
US$116.8 million at end-January 2009 compared to US$140.4 million in January 2008.

• Volume of transactions in the inter-bank foreign exchange market in the year to end-
January 2009 amounted to D35.1 billion (US$1.3 billion) compared to D37.8 billion
(US$1.7 billion) a year ago.

2.10 Exchange Rate

• During January to December 2008, the Dalasi depreciated against major international
currencies traded in the inter-bank market except the British Pound, reflecting the impact
of the global financial crisis on remittances and tourism as well as increased demand for
foreign exchange to meet the high cost of imports.

• Since January 2009, Dalasi has appreciated against major international currencies.

27 March 2009 37.25 26.14 22.59 300.00 257.18 34.15

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 The Gambia Monthly Economic Bulletin- April 2009

3. Recent Policy Developments and Issues

3.1 IMF approves US$9.2 million Augmentation for PRGF

In February 2009, the IMF Executive Board has approved US$9.2 million Augmentation and
US$7.5 million disbursement for the Gambia under the Poverty Reduction Growth Facility
(PRGF) Arrangement to help mitigate the impact of the global slowdown

The IMF has complemented the Gambian authorities for the satisfactory implementation of the
PRGF-supported program and their commitment to prudent economic policies, which have
contributed to robust growth and moderate inflation. Nevertheless, The Gambia was not spared
from the adverse impact of the global economic crisis, which led to a decline in foreign
exchange reserves and widening of the current account deficit as a result primarily of reduced
income from tourism and remittances.

The IMF appreciated the commitment of the authorities to achieve sustained growth and poverty
reduction by maintaining fiscal discipline, reducing the still high debt level, and promoting private
sector development. The government will increase the share of budgetary resources allocated
to poverty reduction, in line with the priorities of the poverty reduction strategy, and faster
progress toward achieving the Millennium Development Goals (MDGs). Fiscal policy is being
strengthened to ensure long-term fiscal sustainability. Going forward, it will be important to
improve the revenue base, rationalize taxation, better align the budget with PRSP priorities, and
further strengthen public financial management.

The IMF also appreciated the commitment of the Central Bank of the Gambia (CBG) to maintain
a monetary policy designed to keep inflation at single-digit levels, and to rebuild international
reserves for providing a stronger buffer against adverse external developments.

However, the IMF cautioned that the Gambia remains at high risk of debt distress, even after
receiving HIPC and MDRI debt relief, due to high levels of debt in relation to exports and
vulnerability to external shocks. They have requested the government to formulate a national
debt strategy to ensure long-term sustainability, and to rely on grants for financing the country's
development programs.

3.2 The Joint (Fund-Bank) Staff Advisory Note (JSAN) on PRSP

In October 2008 the Gambian National Planning Commission (NPC) completed the first Annual
Progress Report (APR) of the 2007 Poverty Reduction Strategy Paper (PRSP). The APR notes
that the country’s poverty rates are high and the poor remain highly vulnerable to exogenous
shocks. As per the latest poverty survey, fifty eight percent of the households are poor. There
are concerns that the high growth in recent years was concentrated in sectors such as
telecommunication and tourism which had limited impact on the poverty reduction.

In February 2009 the staffs of the IMF and World Bank jointly prepared the Joint Staff Advisory
Note (JSAN) on the PRSP-APR for The Gambia. The JSAN recommends the following priority
tasks by the government.

(a) developing a comprehensive agricultural sector strategy;

(b) maintaining macro-economic stability;
(c) prioritizing improvement of governance; and
(d) refining PRSP performance indicators.

23