The Gambia Monthly Economic Bulletin- June 2009

THE GAMBIA QUARTERLY

ECONOMIC BULLETIN1
PART-TWO

June 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/ Quarterly Economic Bulletin provides an update on recent economic
developments and policies in the Republic of the Gambia. The Bulletin is prepared by a research team
comprising Tamsir Cham, Director; Momodou Taal, Principal Economist, Amie Khan, Senior Economist,
and Ceesay Chiel, Economist in the Economic Management and Planning Unit (EMPU) and Tarun Das,
Macroeconomic Adviser (ISPEFG); Ministry of Finance and Economic Affairs (MOFEA); with key
inputs from the Debt Management Adviser, Fiscal/Financial Adviser, the Central Bank of Gambia (CBG),
the Gambian Bureau of Statistics (GBOS), and the Gambian Revenue Authority (GRA).

Any questions and feedback can be addressed to: Either Tamsir Cham (tamsirc@hotmail.com) or
Tarun Das (das.tarun@hotmail.com)

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 The Gambia Monthly Economic Bulletin- June 2009

Political and Administrative Structure

The Gambia is divided into seven regions comprising two Municipalities namely, Banjul City
Council (BCC) and the Kanifing Municipal Council (KMC) and five provincial administrative
regions namely, Western Region (WR), North Bank Region (NBR), Lower River Region (LRR),
Central River Region (CRR) and Upper River Region (URR).

Politically, the relevant units are Local Government Areas (urban), Districts, Wards and Villages.
The Gambia has 35 districts and about 1870 villages with an average of 13 compounds.
Basic Facts about Gambia:
Fiscal year: 1st January to 31st December
Items (Year) Units Value Rank in the World
from top
in descending order
Area (2009) Sq. km. 11,300 171 out of 248
countries
Population (2008) Million 1.735 148 out of 241
countries
GDP PPP (2004) Million US$ 3284 167 out of 224
countries
GDP Nominal (2006) Million US$ 511 199 out of 229
countries
GDP PPP per capita (2004) US$ 1945 177 out of 223
countries
GDP per capita (2006) US$ 329 192 out of 207
countries

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 The Gambia Monthly Economic Bulletin- June 2009

Poverty Ratio (% of people Percent 59 7 out of 59 countries

below One-US$) (2000)
Source: http://www.nationmaster.com
2.3 Consumer Price Index and Inflation

• As measured by the Consumer Price Index (CPI), annual point-to-point CPI inflation
accelerated significantly from 1.6% in May 2008 to 5.9% in May 2009, and the 12-month
average inflation rate accelerated to 5.8% in May 2009 from 4.9% a year ago.

• Food and drinks (with weights of 55.2% in overall CPI) recorded average inflation of
7.1% in May 2009, up from 1.9% a year ago, and contributed 70.8% to overall inflation in
May 2009.

• Non-food items (with weights of 44.8% in overall CPI) recorded annual inflation of 4.5%
in May 2009 compared to 1% a year ago and contributed 29.2% to inflation.

• Among other groups, in May 2009, clothing and textiles recorded annual inflation of
4.7%, housing and utilities 5.5%, restaurants and hotels 5.8% and house rent 3.1%.

Table-2.3 CPI Inflation Rates in May 2009 (in percentage)

Items Weights May-2008 May-2009 Inflation Wi (CPIi1 – Contributio

Wi (%) Index Index (%) CPIi0) n2 (%)
Overall 100.0 113.81120.51 5.9 652.2 100.0
Food 55.2 125.75
117.39 7.1 461.5 70.8
Tobacco 0.7 106.13
104.30 1.8 1.3 0.2
Clothing 11.3 106.25111.2 4.7 55.7 8.5
Utilities 3.4 122.11
115.77 5.5 21.6 3.3
Furnishing 5.2 114.97
111.52 3.1 18.1 2.8
Health 1.0 101.77
101.04 0.7 0.7 0.1
Transport 4.4 119.95
118.86 0.9 4.8 0.7
Telecom 3.0 101.98
101.54 0.4 1.3 0.2
Recreation 8.0 103.94
104.67 0.7 5.8 0.9
Education 1.5 101.87 102.25 0.4 0.6 0.1
Hotels 0.4 109.89 116.3 5.8 2.3 0.4
Misc. 5.9 112.56 125.79 11.8 78.4 12.0
non-food 44.8 109.08 114.03 4.5 221.7 29.2
Source of basic data: Gambian Bureau of Statistics (GBOS).

2
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 525.0 / 746.7 = 70.3%.

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 The Gambia Monthly Economic Bulletin- June 2009

Sub-group wise inflation in May2009(%)

Misc.
Education

Telecom

Health
Series1
Utilities

Tobacco
Overall
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

Contribution to Inflation in May2009(%)

Transport Others
1% 14%
Furnishing
3%
Utilities
3%

Clothing
9%

Food
70%

12.0

10.0

8.0
Food
6.0
All
4.0

2.0

0.0
07-Ja

08-Ja

09-Ja
Nv

Nv
Mar

Mar

Mar
Jul

Jul
May

May

May
Sp

Sp

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 The Gambia Monthly Economic Bulletin- June 2009

2.4 Factors affecting inflation and Anti-inflationary Measures

• Due to combined result of various fiscal and monetary measures undertaken by the
government and the Central Bank of Gambia, the 12-month average CPI inflation rate
moderated to 4.5% in 2008, compared to 5.4% in 2007, despite a significant rise of
international prices of food and petroleum products and substantial increase of salaries
of civil services at home in 2008.

• Hardening of international prices of food products and petroleum oil, and disruptions in
the supply of foodstuffs from the neighboring countries put pressures on consumer
prices in the Gambia since 2007.

• Government responded by reducing the sales tax on rice imports from 15% to 5% in July
2007 and eliminating it altogether in May 2008.

• To compensate for revenue loss, the authorities increased other taxes (on car parts and
used vehicles). Pump prices of petroleum products were increased in May 2008 by 10–
24% to remove an implicit budget subsidy that had emerged in the preceding months
and to bring them in line with import costs.

• To check effective demand and inflationary pressures on the economy the

CBG raised the bank rate from 9% to 10% in June 2007 and raised its
rediscount rate from 14% to 15% in June 2007 and further to 16% in October 2008.

• In March 2008, in response to tight monetary conditions and against a

backdrop of falling inflation, the CBG reduced the statutory minimum reserve
requirement of banks from 16% to 14%.

• Appreciation of the dalasi helped cushion the impact on inflation to some extent in 2008,
but this exchange rate advantage has been lost in 2009 due to Dalasi depreciation.

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 The Gambia Monthly Economic Bulletin- June 2009

CPI Inflation in Gambia (%)

8.0
2006 7.0
2007 6.0
2008 5.0
2009
4.0
3.0
Jan 2.0
4.0
1.0
2.0
5.1 0.0

Aug

Nov
Apr
Feb

Sep

Dec
Jun

Oct
May

July
Jan

Mar
7.0

Feb 2006 2007 2008 2009

2.8
2.1
5.0
7.0

Mar
3.8
4.2
3.1
6.7

Apr
2.7
6.3
1.4
6.3

May
2.7
6.6
1.6
5.9

Jun
2.2
6.4
2.2

July
1.5
6.3
3.8
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The Gambia Monthly Economic Bulletin- June 2009

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 The Gambia Monthly Economic Bulletin- June 2009

2.5 Projection of CPI inflation during June-December 2009

Two alternative projections of inflation rates during the remainder of the year 2009 have been
done under the following assumptions:

(1) Alternative-1: It is assumed that the CPI variation for a month over the previous month
in 2009 will be the average CPI variation for the month over the previous month in last
two years (2008 and 2007). Thus, June 2009 CPI is estimated by the following formula:

Projected CPI for June 2009 = May 2009 CPI + (June 2008 CPI + June 2007 CPI – May 2008
CPI – May 2007 CPI)/ 2. CPI for the subsequent months is projected by the similar formula.

(2) Alternative-2: It is assumed that the variation of CPI for a month over the previous
month in 2009 will be the same as that for the respective month over the previous month
in 2008. For example, CPI for June 2009 is estimated by the following formula:

Projected CPI for June 2009 = Actual CPI for May 2009 + (June 2008 CPI – May 2008 CPI).
CPI for the subsequent months is projected by the similar formula.

(3) Alternative-3: Average of inflation rates under Alternatives 1 and 2.

Results are presented in Table 2.5 which indicates that inflation is expected to decelerate
continuously during the remaining month of the year 2009 and the year-end inflation is
expected to range around 4.3 percent.

Table-2.5: Projections of CPI inflation during June-December 2009 (in percentage)

2007 2008 2009- 2009- 2007 2008 2009- 2009- Ave-
Alt1 Alt2 Alt1 Alt2 rage
Jan 106.86 112.31 120.13 120.13 2.0 5.1 7.0 7.0 7.0
Feb 107.01 112.34 120.25 120.25 2.1 5.0 7.0 7.0 7.0
Mar 109.36 112.73 120.3 120.3 4.2 3.1 6.7 6.7 6.7
Apr 111.64 113.21 120.36 120.36 6.3 1.4 6.3 6.3 6.3
May 112.05 113.83 120.51 120.51 6.6 1.6 5.9 5.9 5.9
Jun 111.98 114.48 120.80 121.16 6.4 2.2 5.5 5.8 5.7
July 111.95 116.21 121.65 122.89 6.3 3.8 4.7 5.7 5.2
Aug 112.09 117.65 122.44 124.33 6.4 5.0 4.1 5.7 4.9
Sep 111.86 118.96 122.98 125.64 6.0 6.3 3.4 5.6 4.5
Oct 111.95 119.29 123.19 125.97 6.0 6.6 3.3 5.6 4.4
Nov 112.13 119.54 123.41 126.22 6.0 6.6 3.2 5.6 4.4
Dec 112.26 119.93 123.67 126.61 6.0 6.8 3.1 5.6 4.3
Q1 107.7 112.5 120.2 120.2 2.8 4.4 6.9 6.9 6.9
Q2 111.9 113.8 120.6 120.7 6.4 1.7 5.9 6.0 6.0
Q3 112.0 117.6 122.4 124.3 6.2 5.0 4.0 5.7 4.9
Q4 112.1 119.6 123.4 126.3 6.0 6.7 3.2 5.6 4.4

2.6 Government Fiscal Performance in Jan-June 2009

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 The Gambia Monthly Economic Bulletin- June 2009

• Columns (5) and (6) of Table-2.6.1 present major item-wise revenue realization and
expenditure of the government in the first half of 2009 (i.e. Jan-June 2009) and Jan-June
2008 respectively. Columns (7) and (8) indicate annual percentage changes of major items
of revenues and expenditure in Jan-June 2009 compared with those in Jan-June 2008.

• It may be observed from the table that, in terms of percentage increases, the government’s
fiscal performance has been mixed in Jan-June 2009 compared with that in Jan-June 2008.

• In Jan-June 2008 total revenues and grants declined by 1.2%, as tax revenues decreased
by 3.8% and non-tax revenues declined by 2.3% over Jan-June 2007. On contrast, Jan-
June 2009 has witnessed 15.5% increase in total revenue and grants aided by 13.3%
increase in taxes, 8.9% increase in non-tax revenues and 64% increase in grants.

• During Jan-June 2009, total expenditures and net lending has increased by 20.4% over Jan-
June 2008 due to 18% increase in personnel emoluments, 55.2% increase of capital
expenditure and 6.3% increase by interest payments over Jan-June 2008.

• Overall, there is a fiscal deficit of D197.7 million, and basic surplus of D70.2 million in Jan-
June 2009, compared to a fiscal deficit of D86 million and basic surplus of D70.2 million in
Jan-June 2008.

Table-2.6.1 Govt Financial Performance in Jan-June 2009 compared with Jan-June 2008
% change over
2008 2008 BE 2009 BE 2009 2008 Prev. period
Items Actual Mln Dal. Mln. Dal. Jan-June Jan-June 2009 2008
Mln Dal. Actual Actual Jan-June Jan-June
(1) (2) (3) (4) (5) (6) (7) (8)
Revenue and grants 3644.6 4475.5 4582.1 2215.9 1918.5 15.5 -1.2
Domestic Revenue 3479.0 3770.9 3771.0 2054.6 1820.0 12.9 -3.8
Tax Revenue 3161.3 3362.6 3390.5 1849.0 1631.2 13.3 -0.3
Nontax Revenue 317.7 408.3 380.5 205.6 188.8 8.9 -26.3
Grants 165.6 704.7 811.1 161.3 98.5 63.7 102.5
Exp & Net Lending 4134.8 5016.0 5362.9 2413.6 2004.6 20.4 14.7
Current Expenditure 3011.4 2683.2 3838.0 1640.5 1543.8 6.3 29.3
Personnel Emoluments 905.5 917.5 1035.2 530.5 449.7 18.0 34.0
Other Charges 1397.5 1143.4 1957.5 701.1 709.6 -1.2 57.7
Interest 708.4 622.3 845.3 408.9 384.5 6.3 -5.9
External 153.5 72.3 147.3 97.6 79.5 22.7 -23.5
Domestic 554.9 550.0 698.0 311.2 305.0 2.1 0.1
Cap Exp & Net Lending 1123.4 2332.8 1524.9 773.1 460.7 67.8 -16.7
Capital Expenditure 1016.6 2223.2 1468.2 613.8 395.6 55.2 -18.9
Net Lending 106.8 109.6 56.7 159.2 65.2 144.4 -0.8
Overall Bal Inc. grants -490.2 -540.4 -780.8 -197.7 -86.0 129.7 -144.4
Basic balance -155.5 259.3 -267.8 158.2 70.2 125.3 -88.1
Basic Primary Bal 552.9 881.6 577.5 567.1 454.7 24.7 -54.5
Nominal GDP (IMP Prg) 17959 17859 19904 19904 17859 11.5 11.6
Notes: (1) Overall balance= (Revenue and grants) minus (expenditure and net lending).
(2) Basic balance= Domestic revenue minus (expenditure and net lending) plus externally
financed capital expenditure; (3) Basic primary balance= Basic balance plus interest
payments

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 The Gambia Monthly Economic Bulletin- June 2009

• Columns (2) and (3) of Table-2.6.2 present the major item-wise performance of revenues
and expenditure in Jan-June 2009 and Jan-June 2008 respectively as percentages of the
corresponding budget estimates for the full year. It is evidenced from the table that as
percentages of the respective budget estimates, government revenue collections and
expenditures have performed better in Jan-June 2009 than those in Jan-June 2008.

• Columns (7) and (8) of Table-2.6.2 present the major item-wise performance of revenues
and expenditure in Jan-June 2009 and Jan-June 2008 respectively, as percentages of the
corresponding nominal GDP (IMF Program estimate) for the full year. It is observed from the
table that, in terms of the percentages of GDP, the total revenues and expenditures have
also performed better in Jan-June 2009 than those in Jan-June 2008.

• The revenue and expenditure ratios to GDP are also observed to be on track in Jan-June
2009 as compared with the 2009 budget estimates (given in column-5).

Table-2 .6.2 Govt Financial Performance in Jan-June 2009 compared with Jan-June 2008
2009 2008 2008 2009 BE 2008 AC 2009 2008
Jan-Jun Jan-Jun Jan-Jun Full Year Full Year Jan-Jun Jan-Jun
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 48.4 42.9 52.6 23.0 20.3 11.1 10.7
Domestic Revenue 54.5 48.3 52.3 18.9 19.4 10.3 10.2
Tax Revenue 54.5 48.5 51.6 17.0 17.6 9.3 9.1
Nontax Revenue 54.0 46.2 59.4 1.9 1.8 1.0 1.1
Grants 19.9 14.0 59.5 4.1 0.9 0.8 0.6
Exp & Net Lending 45.0 40.0 48.5 26.9 23.0 12.1 11.2
Current Expenditure 42.7 57.5 51.3 19.3 16.8 8.2 8.6
Personnel Emoluments 51.2 49.0 49.7 5.2 5.0 2.7 2.5
Other Charges 35.8 62.1 50.8 9.8 7.8 3.5 4.0
Interest 48.4 61.8 54.3 4.2 3.9 2.1 2.2
External 66.3 110.0 51.8 0.7 0.9 0.5 0.4
Domestic 44.6 55.4 55.0 3.5 3.1 1.6 1.7
Cap Exp & Net Lending 50.7 19.7 41.0 7.7 6.3 3.9 2.6
Capital Expenditure 41.8 17.8 38.9 7.4 5.7 3.1 2.2
Net Lending 281.0 59.4 61.0 0.3 0.6 0.8 0.4
Overall Bal 25.3 15.9 17.6 -3.9 -2.7 -1.0 -0.5
Inc.grants3
Basic balance4 -59.1 27.1 -45.2 -1.3 -0.9 0.8 0.4
Basic Prim. Balance5 98.2 51.6 82.2 2.9 3.1 2.8 2.5
Source: Economic Planning and Management Unit (EMPU), DODFEA.
2.7 Projection of Fiscal Outturn for the Year 2009

Column (2) of the Table-2.6.3 below presents detailed item-wise revenues and expenditure in
Jan-June 2009. We have estimated the ratios of actual realization for any item in Jan-June to

3
(1) Overall balance= (Revenue and grants) minus (expenditure and net lending).
4
(2) Basic balance= Domestic revenue minus (expenditure and net lending) plus externally
financed capital expenditure;
5
(3) Basic primary balance= Basic balance plus interest payments
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 The Gambia Monthly Economic Bulletin- June 2009

the final 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 five years are presented in column (3) of the Table-2.6.3. Taking these ratios as
norms to take care of seasonality, expected revenue and expenditure outcomes for the full year
2009 are estimated by the following formula and are presented in column (4).

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

Comparison of the expected outcome with the budget estimates given in Column (5) leads to
the following conclusions:

(a) Total domestic revenue and tax revenue targets as given in the Appropriation Budget for
2009 are not expected to be realized by actual collections in 2009.
(b) There is likely to be shortfall in grants realization unless the subsequent disbursements
are significantly augmented.
(c) There is also expected shortfall in non-tax revenues.

(d) There is likely to be expenditure overrun of capital expenditure, while actual current
expenditure is expected to show some surplus over the budgeted expenditure.
(e) Overall, it is expected to have a fiscal deficit of D1118 million (amounting to 5.6% of
nominal GDP under IMF Program estimate) compared to budget estimate of fiscal deficit
at D780.7 million (amounting to 3.9 percent of GDP).

2.6.3 Government Financial and Fiscal Performance in Jan-June 2009 and Expected Outturn for 2009
Items 2009- Ratio of Jan-Apr performance in Avera 2009 2009
Jan- Annual Outturn (in Percentage) ge Proj. Budget
June 2004- 2005- 2006- 2007- 2008- 2004- Out- Esti-
mate
Actual Ja-Jun Ja-Jun Ja-Jun Ja-Jun Ja-Jun 2009 turn6
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
1.Rev & grants (2+5) 2215.9 55.7 52.6 51.2 53.0 51.7 4473.1 4582.2
2.Dom. Revenue (3+4) 2054.6 52.4 51.8 51.5 54.6 52.5 3876.1 3771.1
3.Tax Rev (3.1+3.2) 1849.0 52.7 52.1 52.2 53.6 51.9 3506.2 3390.6
3.1 Direct Tax (a to e) 544.0 58.8 53.4 56.0 59.3 52.8 940.8
(a) Personal 230.9 61.3 64.0 59.2 45.5 57.2 57.4 402.1
(b) Corporate 247.8 56.0 45.3 53.7 66.4 50.9 54.5 454.9
(c) Capital Gains 12.0 63.8 56.5 40.5 66.3 34.9 52.4 23.0
(d) Payroll 35.3 85.3 86.2 87.6 89.0 71.2 83.8 42.2
(e) Other 17.9 - 93.5 95.5 98.0 97.1 96.0 18.6

6
Expected outturn for an item in 2009 = 100 X (actual realization in 2009-Q1) / average realization ratio (in
percentage) during the last five years (2004-2008)

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 The Gambia Monthly Economic Bulletin- June 2009

2.6.3 Government Financial and Fiscal Performance in Jan-June 2009 and Expected Outturn for 2009
Items 2009 Ratio of Jan-Apr performance in Avera 2009 2009
Jan- Annual Outturn (in Percentage) ge Proj. Budget
June 2004- 2005- 2006- 2007- 2008- 2004- Out- Esti-
mate
Actual Ja-Jun Ja-Jun Ja-Jun Ja-Jun Ja-Jun 2009 turn7
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
3.2 Indirect Tax 1305.0 50.5 51.5 50.6 51.3 51.3 2565.4
3.2.1 Dom Tax on G&S 312.7 50.8 56.3 51.4 55.8 56.3 584.1
(a) Stamp Duties 9.0 58.1 48.3 60.2 53.2 73.9 58.7 15.3
(b) Excise Duties 80.6 50.9 45.7 47.2 49.4 53.2 49.3 163.6
(c) Dom Sales Tax 223.1 50.5 58.4 52.3 58.3 55.9 55.1 405.1
3.2.2 Tax on Ext Trade 992.3 50.4 50.1 50.3 49.8 49.0 1981.3
(a) Duty (i+ii) 603.1 51.9 51.2 54.7 48.6 49.3 1176.3
(i) Oil 361.7 59.5 44.6 60.6 46.9 45.7 51.4 703.1
(ii) Non-oil 241.3 49.5 53.7 51.3 49.5 51.1 51.0 473.2
(b) Sale tax on imp (i+ii) 389.2 48.6 48.9 45.3 51.0 48.7 805.1
(i) Oil 63.9 51.3 47.3 49.8 51.5 51.7 50.4 126.9
(ii) Non-oil 325.3 48.1 49.3 43.9 50.9 47.6 48.0 678.2
4. Nontax Rev (a to d) 205.6 49.7 49.7 44.1 61.6 59.4 52.9 369.8 380.5
(a) Govt Charges 107.3 48.2 62.6 60.9 74.6 78.8 65.0 165.0
(b) NTR from CRD 2.1 - 65.3 66.1 57.7 54.6 60.9 3.5
(c) NTR from CED 51.0 - 50.4 - 45.5 51.5 49.1 103.7
(d) Others 45.2 55.0 37.2 50.0 46.1 43.3 46.3 97.6
5. Grants 161.3 70.2 61.6 45.3 25.0 40.3 48.5 597.0 811.1
6. Exp & Net Lend (7+8) 2413.6 57.0 54.8 54.0 48.1 47.5 5590.9 5362.9
7. Cur. .Exp (7.1 to 7.3) 1640.5 46.4 53.4 54.1 46.2 49.9 3314.4 3838.0
7.1 Pers. Emoluments 530.5 47.6 49.6 48.0 49.3 45.8 48.0 1104.1 1035.2
7.2 Other Charges 701.1 44.0 47.2 53.5 41.2 50.8 47.3 1481.5 1957.5
7.3 Interest (a+b) 408.9 49.1 59.1 59.1 50.2 53.9 728.8 845.3
(a) External 97.6 54.4 54.7 50.6 45.0 51.8 51.3 165.0 147.3
(b) Domestic 311.2 47.2 60.3 61.9 52.2 54.5 55.2 563.8 698
8. Cap Exp & Net Lend. 773.1 70.8 54.0 53.9 52.8 41.0 2276.5 1524.9
8.1 Capital Exp. (a+b) 613.8 70.3 53.8 56.1 50.1 38.9 2006.0 1468.2
(a) Ext. Financed (i+ii) 355.8 74.3 54.5 57.5 57.1 50.4 58.7 1558.0
(i) Loans 194.5 74.5 53.8 59.1 67.7 46.0 961.0
(ii) Grants 161.3 73.8 58.3 45.3 25.0 59.5 597.0
(b) GLF Capital 258.0 31.2 44.3 28.7 22.1 27.5 30.7 448.0
8.2 Net lending 159.2 43.1 44.6 - 86.8 61.0 58.9 270.5 56.7
9. Overall fis. bal (1-6) -197.6 -1118 -780.7
10. Basic balance 158.2 440.1 -267.7
11. Basic Primary Bal. 567.0 1168.9 577.6
Memorandum Items: As percentage of IMF Program Nominal GDP (equal to D19904 million)
12. Overall fis. bal (1-6) -1.0 -5.6 -3.9
13. Basic balance 0.8 2.2 -1.3
14. Basic Primary Bal. 2.8 5.9 2.9

7
Expected outturn for an item in 2009 = 100 X (actual realization in 2009-Q1) / average realization ratio (in
percentage) during the last five years (2004-2008)

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 The Gambia Monthly Economic Bulletin- June 2009

2.8 External Debt

As per the latest Joint Fund-Bank Debt Sustainability Analysis (DSA)8, 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, with IDA as the
largest creditor (39 percent of total outstanding debt). At end-2007, post-completion point, the
stock of external public debt fell to US$299.4 million (46.0 percent of GDP).

In January 2008, Paris Club creditors agreed to cancel outstanding claims (US$13 million in PV
terms at end-2006) on The Gambia. Bilateral agreements have been signed with Paris Club
creditors and Kuwait. Agreements on the delivery of debt relief have also been reached with the
EU/EC, OPEC Fund for International Development (OFID), the Islamic Development Bank
(IsDB), and the International Fund for Agricultural Development (IFAD) but are still pending with
the Economic Community of West African States (ECOWAS), Saudi Arabia, Taiwan Province of
China, Libya, China, and India.

The current DSA concludes that The Gambia remains at a high risk of debt distress after HIPC
and MDRI debt relief due to the high level of debt as well as the country’s vulnerability to
shocks. The World Bank’s Country Policy and Institutional Assessment (CPIA), classifies The
Gambia as a “poor performer” based on an average of the ratings for the preceding three
years and the table below presents the policy-dependent debt burden thresholds. The PV of
debt-to-GDP and the PV of debt-to-revenue ratios remain comfortable. Debt service payments
remain manageable throughout the projection period, rising no higher than 10 percent of exports
and revenue. But, the PV of debt-to-exports ratio breaches the debt-burden threshold for
a protracted period.

Given continuing risks, the staffs urge authorities to prepare a medium-term debt
management strategy (including the debt of public enterprises and contingent liabilities). Staffs
also recommend that the authorities continue to rely on a combination of grants and highly
concessional borrowing in external financing and exercise restraint in contracting new loans.
The major risks to The Gambia’s debt sustainability include lower than expected economic and
export growth, higher than expected new borrowing, and a deterioration in fiscal balance. In light
of these risks, staffs underline the importance of sustained policy and governance reforms.

Table2.7: Policy Dependent Debt Burden Thresholds under Debt Sustainability Analysis
Indicators Strong Moderate Weak The Gambia
Performer Performer Performer 2008
NPV of External Debt to GDP Ratio (%) 50 40 30 22
NPV of External Debt to Exports Ratio (%) 200 150 100 117
NPV of External Debt to Revenue Ratio (%) 300 250 200 117
Debt service to Exports Ratio (%) 25 20 15 9
Debt Service to Revenue Ratio (%) 35 30 25 9
2.9 Domestic Debt and Treasury Bills Outstanding

8
Joint IMF/World Bank Debt Sustainability Analysis, Prepared by the Staffs of the
International Monetary Fund and the International Development Association, Approved by
Emilio Sacerdoti and Dominique Desruelle (IMF) and Sudhir Shetty and Carlos Alberto Braga
(IDA), February 3, 2009.

35
 The Gambia Monthly Economic Bulletin- June 2009

• At the end of May 2009, outstanding domestic debt stood at D5.6 billion (amounting to
28.4% of GDP), down by 5.5% from the outstanding domestic debt at D6 billion
(amounting to 33.3% of GDP) a year ago.

• The share of Treasury bills increased from 80.4% at the end of May 2008 to 84.5% at the
end of May 2009, share of Sukuk Al-Salam from 0.8% to 1.4% and that of Government
bonds increased from 4.2% to 4.4% over the period.

• On contrary, the share of Non-interest bearing Treasury Notes declined from 14.6% to
9.7% over the period

Table-2.8.1: Outstanding Domestic Public Debt as on 30 April 2009

Type of debt Million Dalasi % change in Composition (in
30 May 30 May April 09 percentage)
2008 2009 over April 2008 30 May 30 May
2008 2009
Treasury bills 4806 4772 -0.7 80.4 84.5
Sukuk Al-Salam 47 76 61.5 0.8 1.4
Government Bonds 250 250 0.0 4.2 4.4
NIB Treasury Notes 873 547 -37.4 14.6 9.7
Total 5977 5645 -5.5 100 100
Memo Item: Domestic debt as % of nominal GDP (As per IMF Program, nominal GDP equals
D17959 for 2008 and D19904 for 2009)
As % of nominal 33.3 28.4
GDP

Domestic Debt Sustainability

As per the analysis made by the CBG, the Gambia’s domestic debt is unsustainable. Out of
three sustainability indicators given in Table-2.8.2, only one indicator viz. debt to revenue ratio is
satisfied. However, debt to GDP ratio may be satisfied during 2009.

Table-2.8.2 Primary Benchmarks for Domestic Debt Sustainability Ratios (%)

Item Threshold 2006 2007 2008 2009
Projected
1. Debt service to 28-63 142 124 118 91
revenue ratio
2. Debt to GDP ratio 20-25 33 30 27 31
3. Debt to revenue 92-167 180 158 166 147
ratio
Note: (1) Debt service the sum of interest payments plus the amortization (i.e. repayment of principal)
including the rollover of treasury Bills. (2) There are no internationally agreed levels of thresholds. The
thresholds used here are those used by the Debt Relief International (DRI) for many HIPC countries.
Source: Central Bank of Gambia

Holders of Domestic Debt

36
 The Gambia Monthly Economic Bulletin- June 2009

As regards holders, commercial banks held 65% followed by parastatals 21%, other non-banks
14% and CBG 5.4% at the end of May 2009.

Instruments of Debt

At end May 2009, Treasury Bills were the major instrument accounting for 93% of interest
bearing domestic debt, followed by government bonds (5.4%) and Sukuk Al Salam
(1.6%).Commercial banks were the major purchasers of Treasury Bills (68%) followed by
Parastatals (17%) and other non-banks (15%) at the end of May 2009.

PERCENTAGE OF INTEREST-BEARING DOMESTIC DEBT BY HOLDER

30 May 2008 30 May 2008 30 May 2009 30 May 2009
Face Value Book Value Face Value Book Value
Central Bank 5.1% 5.6% 4.9% 5.4%
Comm Banks 59.2% 59.0% 64.8% 64.9%
Parastatals 20.3% 19.8% 21.2% 21.1%
Other Non Banks 15.4% 15.6% 14.0% 14.1%
Total 100.0% 100.0% 100.0% 100.0%

DEBT INSTRUMENT AS PERCENTAGE OF INTEREST-BEARING DOMESTIC DEBT -

30 May 2008 30 May 2008 30 May 2009 30 May 2009
Face Value Book Value Face Value Book Value
Treasury Bills 94.2% 93.6% 93.6% 93.0%
Sukuk Al Salaam 0.9% 1.0% 1.5% 1.6%
Government Bonds 4.9% 5.4% 4.9% 5.4%
Total 100.0% 100.0% 100.0% 100.0%

PERCENTAGE OF TOTAL TREASURY BILLS BY HOLDER - 30 May 2009

30 May 2008 30 May 2008 30 May 2009 30 May 2009
Face Value Book Value Face Value Book Value
Central Bank 0.2% 0.2% 0.0% 0.0%
Comm Banks 61.9% 62.0% 67.7% 68.1%
Parastatals 21.6% 21.1% 17.4% 16.9%
Other Non Banks 16.3% 16.7% 14.9% 15.0%
Total 100.0% 100.0% 100.0% 100.0%

PERCENTAGE OF TOTAL SUKUK AL SALAAM BILLS BY HOLDER - 30 May 2009

30 May 2008 30 May 2008 30 May 2009 30 May 2009
Face Value Book Value Face Value Book Value
Central Bank 0.0% 0.0% 0.0% 0.0%
Comm Banks 100.0% 100.0% 92.6% 92.6%
Parastatals 0.0% 0.0% 0.0% 0.0%
Other Non Banks 0.0% 0.0% 7.4% 7.4%
Total 100.0% 100.0% 100.0% 100.0%
Source: Central Bank of Gambia

37
 The Gambia Monthly Economic Bulletin- June 2009

2.10 Treasury Bills Yields

• Yields on treasury bills fluctuated widely in recent months. Despite significant decline of
CPI inflation from 7% in January 2009 to 5.9% in May 2009, Average yield on the 91-day
increased from 10.5% in Jan 2009 to 12.5% in May 2009, yield of 182-day bills
increased from 12.1% to 13.8% and that of 364-day bills increased from 14.4% to 15.3%
over the period.

• This implies that the margins of yields over inflation rates are increasing over time and
need to be corrected by adopting appropriate monetary policies.

Table 2.9 Interest Rates (yields on treasury bills in percentage per annum)
2007 2008 2009
3-M 6-M 12-M 3-M 6-M 12-M 3-M 6-M 12-M
Jan 10.5 12.7 13.6 10.6 11.4 13.6 10.5 12.1 14.4
Feb 12.0 13.4 13.8 10.9 11.9 13.7 11.1 12.8 14.4
Mar 12.6 13.4 13.7 11.0 12.1 13.6 11.4 12.7 14.4
Apr 13.0 13.4 13.8 10.9 11.9 13.3 12.0 13.0 14.6
May 12.8 13.3 13.8 10.2 11.3 13.0 12,.5 13.8 15.3
Jun 12.6 13.1 13.9 10.0 11.2 13.3
Jul 12.5 13.2 13.9 9.6 10.6 12.6
Aug 12.6 12.9 13.6 8.8 10.2 12.1
Sep 11.6 12.2 12.9 8.9 11.0 13.1
Oct 10.6 11.7 12.5 10.3 11.4 13.6
Nov 10.5 11.5 12.5 10.1 13.4 13.7
Dec 10.4 11.6 13.6 9.9 12.5 14.0

Trends of Yields of Treasury Bills during 2007-2009

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 The Gambia Monthly Economic Bulletin- June 2009

2.11 Money Supply in May 2009

• Annual growth rate of broad money supply (M3) accelerated from 7.5% in May 2008 to
17.3% in May 2009.

• On the supply side, 17.3% growth in money supply in May 2009 was supported by
18.1% growth in currency, 10.4% growth in demand deposits, 10.8% growth in savings
deposits and 38.1% growth in time deposits.

• On the demand side, growth was mainly due to 35% growth in domestic credits, while
net foreign assets decreased by 6.1% over a year ago.

• Domestic credit increased from D6.1 billion in May 2008 to D7 billion in May 2009,
supported by 44% growth in government borrowing, 67% growth in credits to public
entities and 33.3% growth in credits to the private sector, over a year ago.

Table-2.10: Money Supply in May 2009

Components May 2007 May 2008 May2009 May2008 May2009 May2008 May2009
Mill.D. Mill.D. Mill.D. % Share % Share % change % change
over over
May2007 May2008
1.Broad Money Supply (M3) 7982.95 8580.60 10063.47 100.0 100.0 7.5 17.3
(2+3)
2.Narrow Money (2.1+2.2) 4166.13 4360.90 4929.14 50.8 49.0 4.7 13.0
2.1 Currency 1721.53 1495.11 1765.32 17.4 17.5 -13.2 18.1
2.2 Demand deposits (a+b) 2444.6 2865.79 3163.82 33.4 31.4 17.2 10.4
(a) Private sector 2226.34 2553.18 2636.51 29.8 26.2 14.7 3.3
(b) Official 218.26 312.61 527.31 3.6 5.2 43.2 68.7
3.Quasi money (3.1+3.2) 3816.82 4219.70 5134.33 49.2 51.0 10.6 21.7
3.1 Savings deposits (a+b) 2656.37 2534.74 2807.56 29.5 27.9 -4.6 10.8
(a) Private sector 2652.32 2526.35 2795.28 29.4 27.8 -4.7 10.6
(b) Official 4.05 8.39 12.28 0.1 0.1 107.2 46.4
3.2 Time deposits (a+b) 1160.45 1684.96 2326.77 19.6 23.1 45.2 38.1
(a) Private sector 756.41 1275.15 1673.49 14.9 16.6 68.6 31.2
(b) Official 404.04 409.81 653.28 4.8 6.5 1.4 59.4
Demands for money (1+2) 7982.96 8580.6 10063.47 100.0 100.0 7.5 17.3
1.Net foreign assets (1.1+1.2) 4657.68 3557.09 3341.49 41.5 33.2 -23.6 -6.1
1.1 Monetary Authorities 2626.1 2644.07 2656.77 30.8 26.4 0.7 0.5
1.2 Commercial banks 2031.58 913.02 684.72 10.6 6.8 -55.1 -25.0
2.Net Domestic Assets 3325.28 5023.51 6721.98 58.5 66.8 51.1 33.8
(2.1+2.2)
2.1 Domestic credit 4078.76 5184.13 7000.52 60.4 69.6 27.1 35.0
(a) Credits to government 1471.47 1895.83 2731.16 22.1 27.1 28.8 44.1
(b) Credits to public entities 197.52 385.71 645.3 4.5 6.4 95.3 67.3
(c) Credits to private sector 2226.48 2719.3 3624.06 31.7 36.0 22.1 33.3
(d) Credits to forex bureau 183.29 183.29 0 2.1 0.0 0.0 -100.0
2.2 Other items, net -753.48 -160.62 -278.54 -1.9 -2.8 -78.7 73.4
Source: Economic Research and Statistics Department of CBG.

39
 The Gambia Monthly Economic Bulletin- June 2009

2.12 Sectoral Distribution of Bank Credits

Bank credits increased by 40.2% in March 2009 over March 2008. There was significant
increase across all sectors. While credits to agriculture increased by 66.2%, manufacturing
credits increased by 76.9%, building credits by 39.3%, transport credits by 27.4% and
distributive trade credits by 27.5% in March 2009 over March 2008. Credits to financial
institutions and other commercial credits also registered significant increases, while tourism
credits recorded the lowest increase by 16.5% among all the sectors.

As regards composition of bank credits, trade had the largest share (23%), followed
by other commercial credits (17%), miscellaneous sectors (16%), building (11%),
transport (9%), agriculture (8%), tourism (7%), manufacturing (5%), and financial
institutions (4%) in 2008.

Sectors Outstanding credits Annual GR Composition of bank credits

(Million Dalasi) in Mar 2009 (in percentage)
March-2008 March 2009 (%) Mar-2008 Mar-2009
Agriculture 178.507 296.65 66.2 6.7 7.9
Fishing 16.268 19.156 17.8 0.6 0.5
Manufacturing 99.959 176.846 76.9 3.7 4.7
Building 286.313 398.95 39.3 10.7 10.7
Transportation 253.027 322.375 27.4 9.5 8.6
Trade 679.72 866.5 27.5 25.5 23.2
Tourism 214.237 249.526 16.5 8.0 6.7
Financial Inst. 84.225 135.869 61.3 3.2 3.6
Other comm. 529.002 657.543 24.3 19.8 17.6
Others 327.238 617.467 88.7 12.3 16.5
Total credits 2668.496 3740.882 40.2 100.0 100.0

40
 The Gambia Monthly Economic Bulletin- June 2009

2.13 Commercial Banks’ Assets

• The banking industry remains sound. Total industry assets increased by 16.2% on year-
on-year basis from D11.1 billion at end-May 2008 to D12.9 billion at end-May 2009.

• Gambian banks do not have large exposure to foreign assets or foreign liabilities. At
end- May 2009, foreign assets constituted only 7.5% of total assets (foreign exchange
1.4%, balances abroad 5.4% and foreign investment 0.7%), down from 11.7% a year
ago (foreign exchange 1.8%, balances abroad 8.9% and foreign investment 1%).

• At end- May 2009, loans and advances to the public sector increased by 125.3%, while
those to the private sector increased by 20.6% over May-2008.

• At end- May 2009, investments in government Treasury Bills by the banks remained
invariant while banks’ other investment increased by 67% over May 2008.

• The Banking sector continues to function efficiently with sufficient capital and liquidity.
The industry’s risk-weighted capital adequacy ratio stood at 34.84% in March 2009,
significantly above the statutory requirement of 8%.

• Non-performing loans rose from 7.3% in Sep 2008 to 9.5% in Dec 2008, but declined to
7.1% in March 2009 and were adequately provisioned in compliance with the statutory
norms and requirements. However, commercial banks’ Return on Assets (ROA) declined
from 2.10% in March 2008 to 1.43% in 2009.

Table-2.13: Commercial Banks Assets at the end-May 2009 (Million Dalasi)

Assets May-2007 May-2008 May-2009 Composition (%) % ch. My08 % ch. My09
May-2008 May-2009 over My07 over My08
1. Notes and coins 146.8 163.6 161.4 1.5 1.2 11.4 -1.3
2. Foreign exchange 150.9 201.7 181.7 1.8 1.4 33.7 -9.9
3. Local Bank balance 842.8 897.5 879.8 8.1 6.8 6.5 -2.0
ii. CBG 838.4 879.7 872.2 7.9 6.7 4.9 -0.9
iii. Banks locally 4.4 17.8 7.6 0.2 0.1 304.2 -57.3
4. Balances abroad 1,972.1 986.6 695.3 8.9 5.4 -50.0 -29.5
5. Bills purchased 13.7 19.3 148.6 0.2 1.1 40.8 670.1
6. Loans and advances 2,101.1 2,747.8 3,724.0 24.7 28.8 30.8 35.5
i. Public sector 60.6 248.8 560.6 2.2 4.3 310.5 125.3
ii. Private sector 2,040.5 2,499.0 3,163.4 22.5 24.5 22.5 26.6
7. Investments 2,436.7 3,290.7 3,371.2 29.6 26.1 35.0 2.4
i. Govt Treasury Bills 2,225.3 3,015.1 3,015.0 27.1 23.3 35.5 0.0
ii. Others 137.9 160.6 268.2 1.4 2.1 16.4 67.0
iii Foreign Investments 73.5 115.0 88.0 1.0 0.7 56.5 -23.5
8. Fixed assets 432.6 661.9 907.1 6.0 7.0 53.0 37.1
9. Guarantees 1,180.8 1,269.9 1,844.7 11.4 14.3 7.5 45.3
10. Other assets 711.6 882.9 1,009.8 7.9 7.8 24.1 14.4
11. Total ass ets (1 to 10) 9,989.2 11,121.9 12,923.6 100.0 100.0 11.3 16.2
12. Net Balance (11-9) 8,808.4 9,852.0 11,078.9 88.6 85.7 11.8 12.5

41
 The Gambia Monthly Economic Bulletin- June 2009

2.14 Commercial Banks’ Liabilities

• As mentioned earlier, Gambian banks do not have large exposure to foreign liabilities.
At end-May 2009, external sector related liabilities constituted only 1.5% of total liabilities
(non-residents deposits 1.3%, balances with banks abroad 0% and external debt 0.2%),
down from 2.8% a year ago (non-residents deposits 0.9%, balances with banks abroad
0.8% and external debt 1.1%).

• In May 2009 banks’ total deposits increased by 17.1% over May 2008, aided by a growth
of 10.4% in demand deposits, 10.8% in savings deposits and 38.1% in time deposits.

• In May 2009 banks capital and reserves increased by 9.3%, while bank balances
decreased by 10.3% and borrowings declined by 35.1% over May 2008.

• At end May 2009, direct contingent liabilities (i.e. guarantees) of banks increased by
45.3% over end-May 2008 and constituted 14.3% of total liabilities.

Table-2.13: Commercial Banks Liabilities at the end-May 2009 (Million

Dalasi)
LIABILITIES (IN D'000) May-2007 May-2008 May-2009 Composition (%) % ch. My08 % ch. My09
May-2008 May-2009 over My07 over My08
1. Capital and reserves 1,123.3 1,354.7 1,481.3 12.2 11.5 20.6 9.3
2. Demand deposits 2,444.6 2,865.8 3,163.8 25.8 24.5 17.2 10.4
i Res idents 2,174.7 2,537.2 2,613.1 22.8 20.2 16.7 3.0
ii Non residents 51.6 15.9 23.4 0.1 0.2 -69.1 47.1
iii Government entities 218.3 312.6 527.3 2.8 4.1 43.2 68.7
3. Savings deposits 2,656.4 2,534.7 2,807.6 22.8 21.7 -4.6 10.8
i Res idents 2,573.9 2,456.2 2,718.1 22.1 21.0 -4.6 10.7
ii Non residents 78.4 70.1 77.2 0.6 0.6 -10.6 10.0
iii Government entities 4.0 8.4 12.3 0.1 0.1 107.3 46.3
4. Time depos its 1,160.5 1,685.0 2,326.8 15.1 18.0 45.2 38.1
i Res idents 741.3 1,258.4 1,613.3 11.3 12.5 69.8 28.2
ii Non residents 15.1 16.7 60.2 0.2 0.5 10.9 259.7
iii Government entities 404.0 409.8 653.3 3.7 5.1 1.4 59.4
Total deposits 6,261.4 7,085.5 8,298.2 63.7 64.2 13.2 17.1
5. Bank Balances 99.7 149.3 133.9 1.3 1.0 49.7 -10.3
i Head office & branches 93.3 52.5 129.0 0.5 1.0 -43.7 145.7
ii Other banks abroad 6.5 91.7 4.9 0.8 0.0 1322.3 -94.7
iii. Banks locally - 5.0 - 0.0 0.0 - -100.0
6. Borrowings from 75.2 241.0 156.3 2.2 1.2 220.4 -35.1
i Cent. bank of Gambia - - - 0.0 0.0
ii Other banks locally 10.0 - 10.0 0.0 0.1
iii Head office & branches 65.2 113.7 124.3 1.0 1.0 74.3 9.4
iv Other banks abroad - 127.3 22.0 1.1 0.2 -82.7
v. Other sources - - - 0.0 0.0
7. Guarantees 1,180.8 1,269.9 1,844.7 11.4 14.3 7.5 45.3
8. Other liabilities 1,248.8 1,021.5 1,009.1 9.2 7.8 -18.2 -1.2
9. Total liabilities (1 to 8) 9,989.2 11,121.9 12,923.6 100.0 100.0 11.3 16.2
10. Net balance (9-7) 8,808.4 9,852.0 11,078.9 88.6 85.7 11.8 12.5
Source: Central Bank of Gambia.

42
 The Gambia Monthly Economic Bulletin- June 2009

2.15 Interest Rates and Central Bank Policy Rates

Interest rate on government treasury bills declined from 31% in 2003 to 14.9% in 2006 and
further to 13.7 per cent in 2007. It ranged in between 13.1% to 14.7% during 2008. The bank
rate of the Central bank declined from 29% in 2003 to 9% in 2007, but was raised to 10% at the
end of 2007 to check effective demand and inflationary pressures on the economy.

The Central bank rediscount rate declined from 34% in 2003 to 14% in 2004. In order to counter
emerging inflationary pressures, the CBG raised its rediscount rate from 14% to 15% in June
2007, In response to tight monetary conditions and against a backdrop of falling inflation, the
CBG reduced the statutory minimum reserve requirement of banks from 16% to 14% in March
2008. Given the acceleration in inflation and the weakening of the Dalasi, the MPC decided to
increase the Rediscount Rate by one percentage point to 16.0% in October 2008.

Despite significant fall of the yields on treasury bills in recent years, maximum short-term
deposit rates and commercial banks’ lending rates remain very high, and there exist wide
interest rate spreads. Successful disinflation allowed the weighted yield on treasury bills to fall
from over 25% in early 2005 to 14.6% in January 2009. By contrast, commercial banks’ lending
rates remained sticky above 20% due to high operating costs and risks of bank credits.
Appropriate monetary policies are necessary to reduce the maximum short-term deposit
rates and the lending rates.

Table-2.14: Trends of Nominal Interest rates (per cent per annum, end period)
Items 2000 2001 2002 2003 2004 2005 2006 2007 2008
Bank lending rare- min 18 18 17 21 21 21 18 18 18
Bank lending rare- max 24 24 24 36.5 36.5 30 28 27 27
Deposit rate (SB) min 8 8 8 8 10 5 5 5 4
Deposit rate (SB) max 10 10 10 17 17 10 7 7 7
Time dep (3 months) min 9.5 9.5 6 7 8 5 5 5 5
Time dep (3 months) max 12.5 12.5 13 22 22 14 8.5 12.9 13.6
Time dep (6 months) min 10 10 6 8 8 7 6 6 6
Time dep (6 months) max 12.5 12.5 13 22 22 15 13 12.9 13.6
Time dep (12 month) min 11 11 7 10 12 7 6 7 7
Time dep (12 month) max 12.5 12.5 13 22 23 13 13 12.9 13.6
Govt treasury bills 12 15 20 31 30 16 12.8 13.7 13.6
CBG Bank Rate 10 13 18 29 28 14 9 10 10
CBG Rediscount Rate 15 18 23 34 33 19 14 15 16
Range = Maximum – Minimum
Bank lending rate 6 6 7 15.5 15.5 9 10 9 9
Deposit rate (SB) 2 2 2 9 7 5 2 2 3
Time deposits (3 months) 3 3 7 15 14 9 3.5 7.9 8.6
Time deposits (6 months) 2.5 2.5 7 14 14 8 7 6.9 7.6
Time deposits (12 month) 1.5 1.5 6 12 11 6 7 5.9 6.6
Some important factors influencing interest rates
Inflation (GDP-Deflator) 3.6 15.2 16.1 23.8 17.6 4.2 2.0 5.0 4.1
CPI-Inflation 0.9 4.5 8.6 17.0 14.3 5.0 2.1 5.4 4.9
Real GDP-Growth Rate 5.5 5.8 0.7 2.4 -0.7 2.0 6.6 6.3 7.2
Exchange rate change (%) 12.2 22.7 27.0 43.2 5.3 -4.8 -1.8 -11.4 -9.8
Source: Central Bank of Gambia (CBG)

2.16 Balance of Payments (BOP) and Foreign Exchange Reserves

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 The Gambia Monthly Economic Bulletin- June 2009

(i) BOP Situation in 2008

(a) Overall BOP outcome in 2008 was not as bad as they were anticipated earlier. Year end
foreign exchange reserves at US$125.2 million were still equal to 5.7 months of c.i.f. imports
compared to US159.4 million equal to 6.2 months at end-2007

(b) BOP estimates indicate an overall deficit of D767.3 billion (-) $34.2 million), amounting to (-)
3.4 percent of GDP in 2008 compared to an estimated surplus of D741.7 million ($29.8
million), amounting to 3.6 percent of GDP in 2007, reflecting the deterioration in both the
current and the capital and financial accounts. The Net Usable Reserve of the CBG stood at
US$95.6 million at end-March 2009 and was above the IMF Program target (floor) by US$3.6
million.

(c) The goods account deficit improved from a deficit of D3.52 billion, amounting to 17.2 percent
of GDP in 2007 to a deficit of D2.92 billion, amounting to 12.8 percent of GDP in 2008, or a
decline by 17.14%.

(d) Exports of goods at D3.18 billion amounted to 14% of GDP in 2008 compared to D3.29 billion
amounting to 16.1% of GDP- a decline by only 3.4%. However, due to appreciation of
average exchange rate of dalasi per US$, goods exports in terms of US$ increased from
US$132.2 million in 2007 to US$141.6 in 2008.

(e) The c.i.f. import bill declined by 10.1% from D7.43 billion, amounting to 36.4 percent of GDP,
in 2007 to D6.67 billion, amounting to 29.3 percent of GDP, in 2008.

(f) Current account deficit including official transfer declined from (-) D1.46 billion, amounting to
7.2 percent of GDP, in 2007 to (-) D1.11 billion, amounting to 4.9 percent of GDP in 2008.

(ii) BOP Situation in 2009

• Provisional balance of payments estimates for the first quarter of 2009 indicate an overall deficit
of D468.9 million (US $17.9 million) compared to D7.42 million (US $0.34 million) in the first
quarter of 2008. The current account deficit, including official transfers, amounted to D234.3
million compared to a surplus of D4.94 million a year ago. The capital and financial account
widened from a deficit of D12.36 million in the fourth quarter of 2008 to D234.53 million in the first
quarter of 2009.

• Revised balance of payments projections by the CBG indicate an overall deficit of D13.8 million
(US$0.5 million) in 2009 compared to D811.30 million (US$30.3 million) in 2008. The current
account deficit, including official transfers is expected to widen to D3.8 billion (19% of GDP) in
2009 from D3.6 billion (17.8% of GDP) in 2008. The capital and financial account balance is
expected to improve from a surplus of D2.7 billion in 2008 to D3.8 billion in 2009.

(iii) Foreign Exchange Reserves

• The volume of transactions in the inter-bank foreign exchange market totaled D33.3 billion
(US$1.4 billion) in January-May 2009 compared to D36.5 billion (US$1.7 billion) a year ago. At
end-May 2009, gross international reserves stood at D2.6 billion (US$119.7 million) equivalent to
4.0 months of import cover.

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 The Gambia Monthly Economic Bulletin- June 2009

Table 2.16 BOP Summary Table for 2007-2008

Items 2007 2008 2007 2008 2007 2008 2007 2008

Million Dalasi Million US$ AS % of GDP Annual %
change
1 Goods balance (1.1-1.2) -4138 -3499 -166.3 -156.0 -20.3 -15.4 8.5 -15.4
1.1 Exports of goods (a+b+c) 3289 3176 132.2 141.6 16.1 14.0 7.6 -3.4
a. Exports of goods in trade 266 330 10.7 14.7 1.3 1.5 -17.2 24.1
statistics
b. Re-exports 2781 2489 111.8 111.0 13.6 10.9 9.2 -10.5
c. Other goods 242 356 9.7 15.9 1.2 1.6 29.5 47.5
1.2 Imports of goods c.i.f 7427 6675 298.5 297.6 36.4 29.3 8.1 -10.1
2 Services, net (2.1 to 2.7) 1663 1338 66.8 59.6 8.1 5.9 188.4 -19.6
2.2 Travel 1869 1624 75.1 72.4 9.2 7.1 11.4 -13.1
2.3 Communications 103 214 4.1 9.6 0.5 0.9 -43.2 107.9
2.5 Construction 224 120 9.0 5.3 1.1 0.5 -46.4
2.6 Information technology -33 -71 -1.3 -3.2 -0.2 -0.3 49.0 115.2
2.7 Others business -500 -550 -20.1 -24.5 -2.4 -2.4 -60.3 10.0
3 Income, net (3.1 + 3.2) -1111 -757 -44.6 -33.8 -5.4 -3.3 4.5 -31.8
3.1 Investment income -1129 -931 -45.4 -41.5 -5.5 -4.1 6.7 -17.5
3.2 Compensation to labor 19 174 0.7 7.8 0.1 0.8 -553. 836.0
4
4 Transfers, net 2123 1809 85.3 80.7 10.4 8.0 -13.7 -14.8
(4.1+4.2+4.3)
4.1 Official transfer 130 137 5.2 6.1 0.6 0.6 -22.7 5.2
4.2 Remittances 965 1196 38.8 53.3 4.7 5.3 -45.4 23.9
4.3 Other transfer 1028 476 41.3 21.2 5.0 2.1 96.6 -53.6
5 Current account balance
5.1 Incl. official transfers -1463 -1110 -58.8 -49.5 -7.2 -4.9 -20.5 -24.2
(1+2+3+4)
5.2 Excl. off. Transfer (5.1 - -1594 -1247 -64.1 -55.6 -7.8 -5.5 -20.7 -21.8
4.1)
6 Capital Account 43 24 1.7 1.1 0.2 0.1 -62.4 -43.3
7 Financial Account 2162 318 86.9 14.2 10.6 1.4 6.2 -85.3
(7.1+7.2)
7.1 Foreign direct investment 1902 1556 76.4 69.4 9.3 6.8 -17.6 -18.2
7.2 Other investment 112 -1430 4.5 -63.7 0.5 -6.3 -56.2 -1379
7.3 Reserve change 148 192 6.0 8.5 0.7 0.8 -128. 29.3
2
8 Capital and Financial 2205 342 88.6 15.3 10.8 1.5 2.5 -84.5
A/C (6+7)
9 Overall BOP Balance 742 -767 29.8 -34.2 3.6 -3.4 139.8 -203.
(5.1+8) 5
Foreign Exchange 4441 3673 159.4 125.2 21.8 16.1 20.1 -17.3
Reserves
Equivalent to months of 6.2 5.7 6.2 5.7
imports c.i.f
Ave. Exch. Rate (D/$) 24.88 22.43
GDP at cmp (Million 20413 22754 820.5 1014.4
Dalasi)
Source: Central Bank of Gambia (CBG)

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 The Gambia Monthly Economic Bulletin- June 2009

2.17 Exchange Rate

• During the last one year, 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.

• During 2009 also the Dalasi has depreciated against major currencies in every month
until May 2009 over the corresponding month in 2008.

• At the end of May 2009, Dalasi has appreciated marginally against British Pound by
0.1%, while it depreciated by 29.7%, 16.9% , 12.4% and 4.3% against US$, CHF, Euro
and CFA respectively over May 2008.

Table-2.17 Inter-bank exchange rates - end of period mid-market rates

(Dalasi per unit of foreign currency)
Year Month UK US$ CHF Euro CFA
(5000)
2008 Jan 44.27 22.34 19.91 32.89 252.85
Feb 42.58 21.88 19.57 32.28 243.98
Mar 40.87 19.46 19.15 30.83 239.16
Apr 39.52 20.12 19.16 31.43 235.95
May 40.25 20.64 19.46 32.1 245.84
June 40.77 20.65 19.27 32.07 245.51
July 41.65 20.94 19.9 32.21 251.05
Aug 40.73 21.37 20.08 32.23 249.47
Sept 41.65 23.12 19.86 33.02 249.30
Oct 40.49 24.89 20.15 32.89 258.09
Nov 40.56 26.26 20.07 33.28 258.31
Dec 40.14 26.54 22.94 35.67 259.15
2009 Jan 37.25 26.07 20.85 33.52 262.81
Feb 37.38 26.11 22.04 33.6 257.78
Mar 38.18 26.38 23.31 35.22 259.30
Apr 38.94 26.56 22.8 35.07 259.13
May 40.20 26.78 22.75 36.09 256.38
July 10 43.73 26.63 24.50 37.50 274.00
Rate of appreciation (-) / depreciation (+) of Dalasi
over the corresponding month in 2008 (%)
2009 Jan -15.9 16.7 4.7 1.9 3.9
Feb -12.2 19.3 12.6 4.1 5.7
Mar -6.6 35.6 21.7 14.2 8.4
Apr -1.5 32.0 19.0 11.6 9.8
May -0.1 29.7 16.9 12.4 4.3
July 10 5.0 27.1 23.1 16.4 9.1
Source: Central Bank of Gambia (CBG)

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 The Gambia Monthly Economic Bulletin- June 2009

3. Assessment of Quantitative Targets agreed with IMF under

The Gambia’s three-year Poverty Reduction and Growth Facility (PRGF) arrangement was
approved by the IMF’s Executive Board in February 2007. The third review was completed on
September 8, 2008 and the Fourth Review was done in February 2009. The updated Letter of
Intent (LOI) and Memorandum of Economic and Financial Policies (MEFP), and Technical
Memorandum of Understanding (TMU) were signed jointly by the honorable Mousa Gibril Bala-
Gaye, Secretary of State (Finance and Economic Affairs) and honorable Momodou Bamba
Saho, Governor, Central Bank of Gambia on February 3, 2009.

The MEFP reviewed progress in implementing the Government’s PRGF supported program in
2008, and set out the policies that the Government will pursue in 2009. The Government of
Gambia committed that the program, as usual, will continue to be monitored based on agreed
quantitative targets and a set of structural performance criteria and benchmarks indicated in the
MEFP as per program reviews.

The quantitative financial targets for end–March 2009 and end-September 2009 are
performance criteria; and those for end–December 2008, end–June 2009, and end-December
2009 are indicative targets. The Performance criteria for end March 2009 and the actual
performance are indicated in the following table 3.1.

It may be observed from the table that all quantitative targets have been satisfied at the
end of March 2009.

Performance Targets Stock end- Target at Status at

Dec 2006 end-Mar end-Mar
2009 2009
Net domestic assets of the central bank (ceiling) 38.7 797.7 127.3
adjusted for privatization proceeds (Million Dalasi)

Basic balance (floor) defined as domestic revenue --- 616.9 738.1

minus expenditure and net lending, excluding externally
financed capital expenditure. Adjusted downward by the
dalasi equivalent of the amount of external budget
support in excess of the projected levels up to a
cumulative maximum in of US$10 million in 2009

New external payments arrears of the central 0.0 0.0 0.0

government (ceiling)

Net usable international reserves (floor) adjusted for 94.9 92 95.6

privatization proceeds. Adjusted upward
(downward) by the extent to which actual
receipts exceed (fall short of) projected level of
privatization receipts (Million US$)

New non-concessional debt contracted or guaranteed 0.0 0.0 0.0

by the government with original maturity of more than
one year (ceiling)

Outstanding stock of external public debt with original 0.0 0.0 0.0
maturity of one year or less (ceiling)

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 The Gambia Monthly Economic Bulletin- June 2009

Bearing in mind the linkages of the key macroeconomic sectors of monetary, fiscal and external
sectors, the net usable reserves target was set at $92 million for the first quarter of 2009.
Similarly, the net domestic asset target was set at D797.7 for the same period. The Central
Bank through pro-active, consistent and prudent use of various policy instruments, was able to
meet all the agreed quantitative targets for end-March 2009.
With regard to the performance of the monitored variables vis-à-vis their end-March 2009 target,
the NUR totaled D2.5 billion (US$95.6 million) at end-march 2009 and was above the end-
march target (floor) by D108.8 million (US$3.6 million). Similarly, the NDA of the Central Bank
amounting to D127.3 million was below target ceiling by D220.7 million.

The target for basic fiscal balance (floor) was fixed at D616.7 million for the end of March 2009.
Government achieves a basic balance of D738.1 million.

Government did not default on the payment of debt services on any external debt. As agreed
government did not contract or guarantee any new non-concessional external loan having
maturity exceeding one year. There is also no non-concessional external debt outstanding
having original maturity exceeding one year.

48